[Federal Register Volume 61, Number 145 (Friday, July 26, 1996)]
[Rules and Regulations]
[Pages 39210-39211]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-18506]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF DEFENSE-

GENERAL SERVICES ADMINISTRATION-

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION-

48 CFR Parts 26 and 52-

[FAC 90-40; FAR Case 91-028; Item IX] -
RIN 9000-AE52-


Federal Acquisition Regulation; Indian-Owned Economic Enterprises

AGENCIES: Department of Defense (DOD), General Services Administration 
(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Interim rule adopted as final with changes.

-----------------------------------------------------------------------

SUMMARY: The Civilian Agency Acquisition Council and the Defense 
Acquisition Regulations Council have agreed to convert the interim rule 
published in the Federal Register at 56 FR 41736, August 22, 1991, to a 
final rule with additional changes. The interim rule added FAR Subpart 
26.1, Indian Incentive Program, which allows contractors to recover 
certain costs of subcontracting with Indian organizations and Indian-
owned economic enterprises. This regulatory action was not subject to 
Office of Management and Budget review under Executive Order 12866, 
dated September 30, 1993, and is not a major rule under 5 U.S.C. 804.

EFFECTIVE DATE: September 24, 1996.

FOR FURTHER INFORMATION CONTACT: Mr. Ralph DeStefano at (202) 501-1758 
in reference to this FAR case. For general information, contact the FAR 
Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-
4755. Please cite FAC 90-40, FAR case 91-028.

SUPPLEMENTARY INFORMATION:

A. Background-

    Section 7 of Public Law 100-442 amended the Indian Financing Act of 
1974 by adding a new Section 504 (25 U.S.C. 1544) to encourage the use 
of Indian organizations and Indian-owned economic enterprises in 
subcontracting by allowing the prime contractor ``an additional amount 
of compensation equal to 5 percent of the amount paid.'' The statute 
allows this ``[n]otwithstanding any other provision of law.'' -
    The interim rule published on August 22, 1991, added language at 
FAR Subpart 26.1, Indian Incentive Program. Minor amendments to the 
interim rule were made at 57 FR 20376, May 12, 1992, and 60 FR 48258, 
September 18, 1995. All comments received on the interim rule were 
considered in formulation of the final rule.-
    The final rule makes, among other changes, one major revision to 
the interim rule as a result of the analysis of public comments. The 
principal distinction between the interim rule and the final rule is 
how each treats the payment language under 25 U.S.C. 1544. The interim 
rule allowed prime contractors to recover certain costs of 
subcontracting with Indian organizations and Indian-owned economic 
enterprises based on the difference in price between the acceptable low 
non-Indian subcontractor and the price, if provided, of the acceptable 
low Indian-owned subcontractor when the Indian-owned subcontractor's 
price exceeds the price of acquiring the supplies or services from a 
non-Indian subcontractor. The final rule permits payment of a flat 5 
percent bonus to the prime contractor of the amount paid to the Indian 
subcontractor by the prime contractor. Also, the final rule adds the 
definitions of ``Indian'' and ``Indian tribe'' to FAR 26.101 and the 
clause at 52.226-1 and adds the definition of ``Interested party'' to 
52.226-1. The final rule allows civilian agencies to include the clause 
in all contracts (FAR 26.104(b)) where certain criteria apply, 
regardless of whether the contract includes a subcontracting plan 
pursuant to FAR 52.219-9.

B. Regulatory Flexibility Act-

    The Regulatory Flexibility Act, 5 U.S.C. 601 et seq., applies to 
this final rule and a Final Regulatory Flexibility Analysis (FRFA) has 
been performed. A copy of the FRFA may be obtained from the FAR 
Secretariat

C. Paperwork Reduction Act-

    The Paperwork Reduction Act does not apply because the changes to 
the FAR do not impose recordkeeping or information collection 
requirements, or collections of information from offerors, contractors, 
or members of the public which require the approval of the Office of 
Management and Budget under 44 U.S.C. 3501 et seq.

List of Subjects in 48 CFR Parts 26 and 52-

    Government procurement.

    Dated: July 16, 1996.
Edward C. Loeb,
Director, Federal Acquisition Policy Division.

Interim Rule Adopted as Final With Change-

    Accordingly, the interim rule amending 48 CFR Parts 26 and 52 and 
published at 56 FR 41736, August 22, 1991, is adopted as a final rule 
with the following changes.-
    1. The authority citation for 48 CFR Parts 26 and 52 continues to 
read as follows:

    -Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42 
U.S.C. 2473(c).

PART 26--OTHER SOCIOECONOMIC PROGRAMS-

    2. Section 26.101 is amended by revising the definitions of 
``Indian organization'' and ``Interested party''; and adding, in 
alphabetical order, the definitions for ``Indian'' and ``Indian tribe'' 
to read as follows:


26.101   Definitions.

* * * * *-
    Indian means any person who is a member of any Indian tribe, band, 
group, pueblo, or community which is recognized by the Federal 
Government as eligible for services from the Bureau of Indian Affairs 
(BIA) in accordance with 25 U.S.C. 1452(c) and any ``Native'' as 
defined in the Alaska Native Claims Settlement Act (43 U.S.C. 1601).-
    Indian organization means the governing body of any Indian tribe or 
entity established or recognized by the governing body of an Indian 
tribe for the purposes of 25 U.S.C., chapter 17.
* * * * *-
    Indian tribe means any Indian tribe, band, group, pueblo, or 
community,

[[Page 39211]]

including native villages and native groups (including corporations 
organized by Kenai, Juneau, Sitka, and Kodiak) as defined in the Alaska 
Native Claims Settlement Act, which is recognized by the Federal 
Government as eligible for services from BIA in accordance with 25 
U.S.C. 1452(c).-
    Interested party means a prime contractor or an actual or 
prospective offeror whose direct economic interest would be affected by 
the award of a subcontract or by the failure to award a subcontract.-
    3. Section 26.102 is revised to read as follows:


26.102   Policy.-

    Indian organizations and Indian-owned economic enterprises shall 
have the maximum practicable opportunity to participate in performing 
contracts awarded by Federal agencies. In fulfilling this requirement, 
the Indian Incentive Program allows an incentive payment equal to 5 
percent of the amount paid to a subcontractor in performing the 
contract, if the contract so authorizes and the subcontractor is an 
Indian organization or Indian-owned economic enterprise.-
    4. Section 26.103 is amended in the first sentence of paragraph (b) 
by revising ``1849 ``C'' Street'' to read ``1849 C Street''; and 
revising the ZIP Code to read ``20245''; in the second sentence of 
paragraph (c) by removing ``15'' and inserting ``45''; and adding 
paragraph (f) to read as follows:


26.103   Procedures.

* * * * *-
    (f) Subject to the terms and conditions of the contract and the 
availability of funds, contracting officers shall authorize an 
incentive payment of 5 percent of the amount paid to the subcontractor. 
Contracting officers shall seek funding in accordance with agency 
procedures.-
    4. Section 26.104 is amended by revising the introductory text of 
paragraph (b) to read as follows:


26.104   Contract clause.

* * * * *-
    (b) Contracting officers in civilian agencies may insert the clause 
at 52.226-1, Utilization of Indian Organizations and Indian-Owned 
Economic Enterprises, in solicitations and contracts if--
* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES-

    5. Section 52.226-1 is amended by revising the clause date and 
revising paragraph (a); in paragraph (b) by revising the definition of 
``Indian organization'' and adding, in alphabetical order, the 
definitions of ``Indian'', ``Indian tribe'' and ``Interested party''; 
and by revising paragraphs (c) and (d) to read as follows:


52.226-1   Utilization of Indian Organizations and Indian-Owned 
Economic Enterprises.

* * * * *

UTILIZATION OF INDIAN ORGANIZATIONS AND INDIAN-OWNED ECONOMIC 
ENTERPRISES (SEP 1996)

    (a) For Department of Defense contracts, this clause applies 
only if the contract includes a subcontracting plan incorporated 
under the terms of the clause at 52.219-9, Small, Small 
Disadvantaged and Women-Owned Small Business Subcontracting Plan. It 
does not apply to contracts awarded based on a subcontracting plan 
submitted and approved under paragraph (g) of the clause at 52.219-
9.
    (b) * * *
    Indian means any person who is a member of any Indian tribe, 
band, group, pueblo or community which is recognized by the Federal 
Government as eligible for services from the Bureau of Indian 
Affairs (BIA) in accordance with 25 U.S.C. 1452(c) and any 
``Native'' as defined in the Alaska Native Claims Settlement Act (43 
U.S.C. 1601).
    Indian organization means the governing body of any Indian tribe 
or entity established or recognized by the governing body of an 
Indian tribe for the purposes of 25 U.S.C., chapter 17.
* * * * *
    Indian tribe means any Indian tribe, band, group, pueblo or 
community, including native villages and native groups (including 
corporations organized by Kenai, Juneau, Sitka, and Kodiak) as 
defined in the Alaska Native Claims Settlement Act, which is 
recognized by the Federal Government as eligible for services from 
BIA in accordance with 25 U.S.C. 1542(c).
    Interested party means a prime contractor or an actual or 
prospective offeror whose direct economic interest would be affected 
by the award of a subcontract or by the failure to award a 
subcontract.
    (c) The Contractor agrees to use its best efforts to give Indian 
organizations and Indian-owned economic enterprises (25 U.S.C. 1544) 
the maximum practicable opportunity to participate in the 
subcontracts it awards to the fullest extent consistent with 
efficient performance of its contract.
    (1) The Contracting Officer and the Contractor, acting in good 
faith, may rely on the self-certification of an Indian organization 
or Indian-owned economic enterprise as to its eligibility, unless an 
interested party challenges its status or the Contracting Officer 
has independent reason to question that status. In the event of a 
challenge to the self-certification of a subcontractor, the 
Contracting Officer shall refer the matter to the U.S. Department of 
the Interior, Bureau of Indian Affairs (BIA), Attn: Chief, Division 
of Contracting and Grants Administration, 1849 C Street, NW, MS-
334A-SIB, Washington, DC 20245. The BIA will determine the 
eligibility and notify the Contracting Officer. The 5 percent 
incentive payment will not be made within 50 working days of 
subcontract award or while a challenge is pending. If a 
subcontractor is determined to be an ineligible participant, no 
incentive payment will be made under the Indian Incentive Program.
    (2) The Contractor may request an adjustment under the Indian 
Incentive Program to the following:
    (i) The estimated cost of a cost-type contract.
    (ii) The target cost of a cost-plus-incentive-fee prime 
contract.
    (iii) The target cost and ceiling price of a fixed-price 
incentive prime contract.
    (iv) The price of a firm-fixed-price prime contract.
    (3) The amount of the equitable adjustment to the prime contract 
shall be 5 percent of the estimated cost, target cost or firm-fixed-
price included in the subcontract initially awarded to the Indian 
organization or Indian-owned economic enterprise.
    (4) The Contractor has the burden of proving the amount claimed 
and must assert its request for an adjustment prior to completion of 
contract performance.
    (d) The Contracting Officer, subject to the terms and conditions 
of the contract and the availability of funds, shall authorize an 
incentive payment of 5 percent of the amount paid to the 
subcontractor. Contracting Officers shall seek funding in accordance 
with agency procedures. The Contracting Officer's decision is final 
and not subject to the Disputes clause of this contract.

(End of clause)

[FR Doc. 96-18506 Filed 7-25-96; 8:45 am]
BILLING CODE 6820-EP-P