Government Contacting - FAR Part 26 - Other Socioeconomic Problems

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FAR PART 26
Other Socioeconomic Programs
Link:
https://acquisition.gov/content/part-26-other-socioeconomic-programs
June 12, 2020

FAR 26.1 – Indian Incentive Program
Agenda
 What is the Indian Incentive Program?
 Who are some of the Organizations subject to the Indian Incentive Program?
 Scope of the Indian Incentive Program
 Purpose of the Indian Incentive Program
 Definitions of the Indian Incentive Program (including BIA and ANCSA)
 Indian Incentive Program Policy
 Indian Incentive Program Procedures
 Indian Incentive Program Contract Clause
 FAR 52.226-1 and DFARS 252.226-7001: Utilization of Indian Organizations and Indian-Owned Economic
Enterprises
 Directed Awards
 Summary

What is the Indian Incentive Program?
The Indian Incentive Program provides business opportunity to Native American
organizations including Alaska Natives and Native Hawaiians.

Who are some of the Organizations eligible under the Indian
Incentive Program?
Native American Organizations. Certain organizations who are deemed “Native American” may qualify under the Indian
Incentive Program. Native American Organizations include Indian Organizations, Indian-Owned Economic Enterprises,
Alaska Native Corporations, and Hawaiian Small Businesses Concerns.
Indian Organizations include, to name some, Cherokee, Sioux, Navaho, Choctaw and Chippewa tribes among many
others. Alaskan Native organizations are also considered Native American organizations and include, to name some,
Chenega, Arctic Slope, Aleut, Chugach, NANA among others as well. Native Hawaiian small business concerns also
qualify under the Indian Incentive Program.
Alaska Native Organizations. There are 2 types of Alaskan Native organizations (or “corporations”): Village and
Regional. There are 13 Regional corporations (Arctic Slope, Chugach) and over 200 Village corporations (Chenega).
Shareholders of village corporations are also members of the regional corporation in which their village resides.

Subpart 26.1 – Indian Incentive Program
Scope: The purpose of Subpart 26.1 is to provide incentives to
prime contractors to use Indian organizations and Indian-owned
economic enterprises as subcontractors.

Subpart 26.1 – Indian Incentive Program
Why did the US Government implement Subpart 26.1?
 Level the playing field for certain disadvantaged organizations.
 Provide Native American organizations a competitive
opportunity where, otherwise, they would be disadvantaged in
the market place selling to the US Government.

Subpart 26.101 – Indian Incentive Program - Definitions
Who are deemed as “Indian” and who are “Indian Organizations”?
 “Indian” means any person who is a member of any Indian tribe, band, group, pueblo or community that is
recognized by the Federal Government as eligible for service 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 (42
U.S.C. 1601).
 “Indian Organizations” 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, 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, that is recognized by the Federal Government as eligible for services from BIA in accordance with
25 U.S.C. 1452(c).

What is the Bureau of Indian Affairs?
The BIA is a part of the Department of Interior. The BIA was created in 1824 for the
purpose of representing Indian tribes and Alaska Native Villages and their respective
relationships with the US Government.
“The BIA’s mission is to enhance the quality of life, to promote economic opportunity,
and to carry out the responsibility to protect and improve the trust assets of American
Indians, Indian tribes and Alaska Natives.”
https://www.bia.gov/bia

What is the Alaska Native Claims Settlement Act?
The Alaska Native Claims Settlement Act (ANCSA) was signed into law in 1971 by President
Richard Nixon. At the time, the ANCSA was deemed to be the largest land settlement act
signed into law in US history.
The purpose of ANCSA was to stimulate economic development throughout Alaska and
resolve long-standing issues surrounding aboriginal land claims in Alaska.
ANCSA transferred titles to 12 Alaska Native regional corporations and over 200 local village
corporations. A 13th regional corporation was later formed for Alaska Natives who no longer
lived in Alaska. ANCSA was codified as 43 U.S.C. 1601 et seq.
https://en.wikipedia.org/wiki/Alaska_Native_Claims_Settlement_Act

Subpart 26.102 – Indian Incentive Program – Policy
Indian organizations and Indian-owned economic enterprises shall have the maximum
practical opportunity to participate in performing contracts award 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.

Subpart 26.103 – Indian Incentive Program – Procedures
(a) Contracting officers and prime contractors, acting in good faith, may rely on the representation 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.
(b) In the event of a challenge to the representation of a subcontractor, the contracting officer shall refer the matter to
the – US Department of Interior, BIA. The BIA will then determine eligibility.
(c) The BIA will acknowledge receipt of the request from the contracting officer within 5 working days. Within 45
additional working days, BIA will advise the contracting officer, in writing, of its determination.
(d) The contracting officer will notify the prime contractor upon receipt of the challenge.
1. In order to be timely, a challenge shall—
(i) Be in writing;
(ii) Identify the basis for the challenge;
(iii) Provide detailed support of the claim;
(iv) Be filed and received by the contracting officer prior to award of the subcontract in question.

Subpart 26.103 – Indian Incentive Program – Procedures (Cont.)
(d) – Cont.
2. If the notification of a challenge is received by the prime contractor prior to award, it shall withhold award
of the subcontract pending the determination by BIA, unless the prime contractor determines, and the contracting
officer agrees, that award must be made in order to permit timely performance of the prime contract.
3. Challenges received after award of the subcontract shall be referred to BIA, but the BIA determination shall
have the prospective application only.
(e) If the BIA determination is not received within the prescribed time period, the contracting officer and the prime
contractor may rely on the representation of the subcontractor. **
**Essential to obtain certifications and representations from all subcontractors**
(f) Subject to the terms and conditions of the contract and 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.

Subpart 26.104 – Indian Incentive Program – Contract Clause
Contracting officers in civilian agencies may insert clause 52.226-1, Utilization of Indian
Organizations and Indian-Owned Economic Enterprises, in solicitations and contracts if—
(a) In the opinion of the contracting officer, subcontracting possibilities exist for Indian
organizations or Indian-owned economic enterprises; and
(b) Funds are available for any increased costs as described in paragraph (b)(2) of the
clause 52.226-1.

FAR 52.226-1: Utilization of Indian Organizations and Indian-
Owned Economic Enterprises
Key Points of FAR 52.226-1:
1.) The Contractor must use 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.
2.) The Contractor and Contracting Officer, acting in good faith, may rely on the representations of an Indian
organization or Indian-owned economic enterprise as to its eligibility, unless an interested party challenges
its status.
“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.
Challenges are then referred to BIA as stated in FAR Part 26.103 - Procedures.

FAR 52.226-1: Utilization of Indian Organizations and Indian-
Owned Economic Enterprises
Key Points of FAR 52.226-1 (Cont.):
3.) 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.
4.) The amount of the adjustment to the prime contract is 5 percent of the estimated cost, target costs, or firm-fixed-
price included in the subcontract initially awarded to the Indian organization or Indian-owned economic enterprise.
5.) The contractor has the burden of proving the amount claimed and must assert its request for an adjustment prior to
completion of contract performance.
6.) The Contracting Officer, subject to the terms and conditions of the contract and the availability of funds, will
authorize an incentive payment of 5 percent of the amount paid to the subcontractor [subject to funding].

DFARS 252.226-7001: Utilization of Indian Organizations, Indian-
Owned Economic Enterprises and Hawaiian Small Business
Concerns
Key Points of DFARS 252.226-7001:
Definitions include “Hawaiian Small Business Concerns” means an entity that is –
1) A small business concern as defined under Section 3 of the Small Business Act (15 U.S.C. 632) and
relevant implementing regulations; and
2) Owned and controlled by a Native Hawaiian as defined by 25 U.S.C. 4221(9)
DFARS 252.226-7001 includes the same requirement of Contractor must use best efforts to give Indian
organizations and Indian-owned economic enterprises, and Native Hawaiian small business concerns the
maximum practicable opportunity to participate in the subcontracts it awards to the fullest extent
consistent with efficient performance of its contract.

Concerns (Cont.)
Key Points of DFARS 252.226-7001 (Cont.):
(d)(2)(i) In the event of a challenge… For matters relating to Native Hawaiian small business concerns:
Department of Hawaiian Home Lands
PO Box 1879
Honolulu, HI 96805
Phone: (808) 620-9500
Website: https://dhhl.Hawaii.gov/
The Department of Hawaiian Home Lands will determine the eligibility and will notify the Contracting
Officer.

Concerns (Cont.)
(e) No incentive payment will be made—
(1) While a challenge is pending; or
(2) If a subcontractor is determined to be an ineligible participant
(f)(1) The Contractor, on its own behalf or on behalf of a subcontractor at any tier, may request an incentive payment in
accordance with this clause.
(2) The incentive amount that may be requested is 5 percent of the estimated cost, target cost or fixed price included
in the subcontract at the time of award to the Indian organization, Indian-owned economic enterprise, or Native
Hawaiian small business concern.
(3) In the case of a subcontract for commercial items, the Contractor may receive incentive payment only if the
subcontracted items are produced or manufactured in whole or in part by an Indian organization, Indian-owned
economic enterprise, or Native Hawaiian small business concern.

Concerns (Cont.)
(f)(4) The Contractor has the burden of proving the amount claimed and shall assert its request for an incentive payment
prior to the completion of contract performance.
(5) The Contracting Officer, subject to the terms and conditions of the contract and the availability of funds, will
authorize the incentive payment of 5 percent of the estimated cost, target cost, or fixed price included in the subcontract
awarded to the Indian organization, Indian-owned economic enterprise, or Native Hawaiian small business concern.
(6) If the Contractor requests and receives an incentive payment on behalf of a subcontractor, the Contractor is
obligated to pay the subcontractor the incentive amount.
(g) The Contractor shall insert the substance of this clause, including paragraph (g), in all subcontracts exceeding
$500,000.

Other Advantages of Indian Incentive Program: Directed Awards
 The U.S. Government may, at its discretion, elect to provide directed awards to
businesses who qualify under any of the disadvantaged programs including the Indian
Incentive Program.
 Directed awards are where the U.S. Government does not necessarily have to compete
the award by issuing an RFP but rather can directly award a contract to any contractor
who qualifies as a socio-economic disadvantaged business.
 Here, the advantages for contractors who fall under the Indian Incentive Program (as
an example) can prime such award and then seek subcontracting assistance from other
contractors (large and small). (Subject to, as applicable, the Limitations on
Subcontracting FAR 52.219-14 clause)

Summary
 The Indian Incentive Program is a means to incentivize prime contractors to utilize Indian organizations,
Indian-owned Economic Enterprises and Native Hawaiian small business concerns as part of their team
when pursuing U.S. Government awarded contracts.
 The U.S. Government incentivizes prime contractors with an additional 5% of amount paid to the
subcontractor.
 Prime Contractors may proceed with awards to subcontractors whereby an Interested Party has
protested such subcontractors qualifications under the Indian Incentive Program, subject to the
Contracting Officer’s agreement, and pending verification by BIA; provided, however, such award is
necessary to effectuate timely delivery under the contract.
 Certain U.S. Government awards are directed awards – meaning they are directed specifically to the
Indian Incentive Program (for example, an 8(a) directed award). Here, there is an opportunity whereby
prime contractors who are not otherwise eligible may be a part of the team for such a directed award.

Thank You For Joining Us!
Sandy Levy
sandy.levy@chenega.com
(703) 646-4358

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JSchaus & Associates
Washington DC
PH: 202-365-0598
Hello@JenniferSchaus.com

Government Contacting - FAR Part 26 - Other Socioeconomic Problems

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