Overlooked Law Designed to Help Tribes
Jany K. Jacob
(Reprinted from Seattle Daily Journal of Commerce)

        A federal law that is often overlooked by both Indian contractors and non-Indian contractors alike is the Buy Indian Act. This law was enacted in 1910 and may be found at 25 U.S.C. Section 47. The Buy Indian Act authorizes the Secretary of Interior to preferentially employ Indian labor or purchase Indian goods. The statute mandates, “So far as may be practicable Indian labor shall be employed, and purchases of the products . . .of Indian industry may be made in the open market in the discretion of the Secretary of the Interior.” Essentially, it allows the Bureau of Indian Affairs (BIA) to negotiate with native contractors to the exclusion of all others when awarding contracts on reservations.

        The Department of Interior is afforded broad discretion, both in deciding whether to employ 100% set asides and in determining the criteria that will be used to qualify an Indian-owned business or enterprise for preferential contract awards. It has long been the BIA policy that it would only resort to non-Indian owned construction companies where there were “no qualified Indian contractors within the normal competitive area that can fill or are interested in filling the procurement requirement.” To avoid circumvention of the Buy Indian Act through the use of front companies with nominal Indian owners, the BIA considers ownership of the Indian business or enterprise as a whole in the qualification process.

        The language of the statute leaves enough wiggle room for native contractors and non-Indian contractors to make interesting arguments on both sides as to why they should be awarded the bid. Two cases in particular illustrate the types of issues that frequently arise. In Lakota Contractors Association v. the U.S. Department of Health and Human Services et al., native contractors sued various federal agencies and officials for not restricting bidding to Indian contractors on a reservation project in South Dakota. The native contractors sought to prevent the award of the contract to the lowest bidder, a non-Indian owned construction company. In the Lakota case, the federal government financed the construction of a health care facility for the local Indian population, and then set out to fund the construction of a residential facility to house the clinic personnel. The contracting officer was more or less informed that the tribe desired to avoid delay in the construction of the housing facility so that the operation of the health care clinic would not be jeopardized as a result. Accordingly, the contracting officer reviewed the history and experience of the Indian contractors available for the job and decided to open bid the project. The appellate court for the Eighth Circuit decided that the contracting officer was afforded ample discretion in the Buy Indian Act to openly bid the contract and that it did not abuse this discretion. For this, the Eighth Circuit court relied upon two key phrases in the statute: “so far as may be practicable” and “in the discretion of the Secretary of the Interior.”

        In Andrus v. Glover Construction Co., the BIA invited three native contractors to bid on a road construction project for the repair and improvement of a segment of the road within BIA jurisdiction. The BIA then awarded the contract to the only Indian contractor to respond to its invitation. A non-Indian owned roadbuilding contractor challenged BIA’s decision to award the contract through such negotiation rather than through advertisement.

        The U.S. Supreme Court questioned whether road construction contracts are subject to the Buy Indian Act in the Andrus case. The Court ruled that even if road construction contracts come within the purview of the Act, the Act was limited by a 1965 law requiring advertising and competitive bidding by federal agencies of road construction contracts. The high court reasoned that, under principles of statutory construction, the two laws should be interpreted so that they may co-exist, and that the 1965 law should take precedence because it plainly states that it is “paramount. . .to any other law.”

        Between $65 and $75 million in contracts are awarded annually under the Buy Indian Act. Congress enacted this piece of legislation to assuage the rampant unemployment and poverty in Indian country and stimulate the tribal economy by supporting Indian-owned construction companies. Since federal agencies continue to invoke the Buy Indian Act, contractors may have much to gain by being aware of this little-known statute.