On Jan. 13, 2022, the Indian Health Service (IHS), part of the Department of Health and Human Services (HHS), published a Final Rule governing implementation of the Buy Indian Act. See 87 FR 2067. This Final Rule clarifies many aspects of the Buy Indian Act and makes the necessary changes to HHS Acquisition Regulations and Federal Acquisition Regulations (FAR). The Final Rule goes into effect on March 14, 2022, and the Buy Indian Act rules regarding set-aside procurements go into effect on March 22, 2022.
The IHS expects that these changes will result in $200 million in contract opportunities to Indian-owned and controlled businesses in Fiscal Year 2022. This would be a significant increase from the Fiscal Year 2021 amount of about $56 million. This increase will be achieved largely through set-aside procurements. And, this also provides increased opportunities for non-Tribal businesses to partner or team with Tribal 8(a) businesses.
To do so, however, requires, at least, some basic background information.
What Are Tribal 8(a)s?
To be classified as a Tribal 8(a) business, 51% or more Native American or Native Alaskan tribal owned businesses submit evidence of federal or state recognition of the tribe.
The GAO recently studied the Small Business Administration’s (SBA) verification process, which is simply a multi-level eligibility review. If a business is owned by a person who claims to be a member of a tribe, the SBA will crosscheck the name of the tribe on that individual’s tribal card against the federal Bureau of Indian Affairs’ list of federally recognized tribes. If listed, the SBA accepts the tribe’s eligibility. If not listed, the SBA will crosscheck the name of the tribe with the state’s list where the tribe or person is domiciled. A single recognized tribe can have multiple 8(a) businesses — each business must sell different products or services from the other businesses.
What Special Treatment Do Tribal 8(a)s Receive?
Tribal 8(a)s are presumed to be socially disadvantaged, a requirement to participate in the 8(a) program. The requirements to establish economic disadvantage — another requirement of the 8(a) program — are more lax; it can be done by presenting data related to the tribal unemployment rate, the number of tribal members, the per capita income of tribal members, and other similar data. See 13 C.F.R. 124.109(b)(2). Tribal 8(a)s are also subject to the nine-year limitation on participation in the program; however, the tribe itself may own several different companies that participate in the 8(a) program.
Like other 8(a) companies, Tribal 8(a)s receive special opportunities in the form of set-aside contracts and sole source procurements. Unlike other 8(a) companies, Tribal 8(a)s can receive sole source procurements up to $22 million for Tribal 8(a) program participants. See 13 C.F.R. 124.506.
How Tribal 8(a)s Can Impact a Non-8(a) Business
Companies can team with Tribal 8(a)s in teaming agreements, can enter into Mentor-Protégé agreements or Joint Venture arrangements with Tribal 8(a)s. Through these arrangements, non-Tribal 8(a)s can offer their business’ expertise in program management and prime contracting support to relatively new tribal-owned 8(a) businesses. Tribal 8(a)s also seek out contractors who can offset any past performance concerns — such as a lack of past performance due to the novelty of the business or questionable past performance — that may weigh against the Tribal 8(a) in a proposal evaluation.
When searching for a way to award a sole source procurement above the general 8(a) thresholds, federal agencies are more likely to award the contract to Tribal 8(a)s because of the higher exemption amounts. Additionally, the presumption that a Tribal 8(a) is socially disadvantaged removes a potential bid protest ground that the business is not eligible for the program on that basis.
In short, creating an arrangement with a Tribal 8(a) can offer more contract opportunities for non-Tribal 8(a)s while providing a partner who can own multiple, separate 8(a) businesses. The expectation that there will be $144 million in additional opportunities for Tribal 8(a) businesses only enhances the probability of success in these arrangements.