FAR Council to hear tribal concerns about new sole-source law

By Robert Brodsky

August 31, 2010

Alaska native corporations and Indian tribes soon will have an opportunity to voice concerns about a new law requiring closer scrutiny of noncompetitive contracts, which some fear will unfairly affect their businesses.

The Federal Acquisition Regulatory Council announced on Tuesday it will host a series of outreach events in October with tribal representatives to discuss implementing a mandate requiring procurement officers to justify in writing their use of sole-source contracts in excess of $20 million. An agency supervisor would have to sign off on the justification, which would be made public within 14 days of the award.

The sole-source provision became law when President Obama signed fiscal the 2010 Defense Authorization Act in October 2009. Despite an April 2010 deadline, the law has yet to take effect pending input from Native American stakeholders.

The regulatory change could have serious implications for tribes, native Hawaiian organizations and Alaska native corporations operating in the Small Business Administration's 8(a) business development program.

Typically, agencies are allowed to bypass competition and direct sole-source contracts to 8(a) participants only for awards of at least $3.5 million for services and $5.5 million for manufacturing. But tribal corporations have no such restrictions, and many ANCs exercise that exemption.

In fiscal 2008, companies owned by Alaskan regional and tribal corporations earned $5 billion in federal contracts, nearly 10 times the $506 million they earned in fiscal 2000, according to a 2009 Government Executive analysis.

While the new provision technically refers to all contracts, administration officials concede the rule could significantly affect tribes, ANCs and native Hawaiian organizations.

A primary concern among tribal groups is the rule would be misinterpreted as a cap on the size of sole-source contracts, rather than a requirement for justification and approval. The contracting officer's justification must include a description of the agency's needs, a determination that the contract is in the government's best interest, and verification that its costs will be fair and reasonable.

"This is not meant to be a cap," said Lael Echo-Hawk, legislative director for the Native American Contractors Association, a Washington trade group. "There seems to be some confusion about this. We are concerned that this is going to have a significant impact on our businesses and have a chilling effect on contracting officers."

Meetings will be scheduled in Washington; Albuquerque, N.M.; and Fairbanks, Alaska; according to a notice published in the Federal Register.

"The FAR Council believes the conduct of tribal consultation and outreach … will be a valuable component of its deliberations in preparing to implement this law," the notice said. The council comprises acquisition officials from the Defense Department, General Services Administration and NASA.

Executive Order 13175, which President Clinton signed in November 2000 and President Obama reauthorized last year, requires agencies to consult and collaborate with Indian tribes when developing federal polices with tribal implications.

"We want that outreach to be fair, but we also want it to be expeditious and to move forward very promptly," Office of Federal Procurement Policy Administrator Dan Gordon told the Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight in July.

Once the meetings are complete, it still could take several months before tribal officials' recommendations are documented and a final sole-source rule is implemented through a change to the FAR.

Those wanting to speak at one of the meetings can pre-register on the Defense Procurement and Acquisition Policy website. Registration is on a first-come first-serve basis. The council also will accept written comments on the proposal through the site.

By Robert Brodsky

August 31, 2010