Indian Health Service Releases Final Rule on Buy Indian Act

Holland & Knight LLP

Highlights

  • The Indian Health Service (IHS), an agency within the U.S. Department of Health and Human Services (HHS), issued its Final Rule governing the implementation of the Buy Indian Act. It becomes effective March 12, 2022.
  • The IHS predicts that changes in the Final Rule will generate approximately $200 million in contract opportunities, an estimated $145 million above the Fiscal Year 2021 level of $55.9 million.
  • Indian Small Business Economic Enterprises (ISBEEs) and Indian Economic Enterprises (IEEs) interested in contracting with IHS should monitor the government point of entry (sam.gov) to identify opportunities for which there is a Buy Indian Act set-aside under this rule.

The Indian Health Service (IHS), an agency within the U.S. Department of Health and Human Services (HHS), published its Final Rule governing implementation of the Buy Indian Act (87 FR 2067) on Jan. 13, 2022. These Buy Indian Act rules become effective on March 22, 2022, and provide IHS the authority to set aside procurement contracts for businesses that are at minimum 51 percent Indian-owned and -controlled. The Final Rule changes 48 CFR Parts 326 and 352, revising HHS Acquisition Regulations (HHSAR) and Federal Acquisition Regulations (FAR). The IHS predicts that changes in the Final Rule will generate approximately $200 million in contract opportunities, an estimated $144.1 million above Fiscal Year 2021 levels ($55.9 million).

Overview of Provisions

Of interest to Indian Country, the Final Rule:

  • Provides Interagency Consistency: It attempts to better align IHS Buy Indian Act acquisition policies and procedures with U.S. Department of Interior (DOI), Bureau of Indian Affairs (BIA) to provide consistent implementation and transparency for Indian-owned and -controlled businesses.
  • Clarifies Priority of Buy Indian Act Set-Asides: It clarifies how IHS will prioritize granting Buy Indian Act set-aside awards to Indian Small Business Economic Enterprises (ISBEEs) and Indian Economic Enterprises (IEEs) ahead of other small businesses.
  • Updates the ISBEE/IEE Verification Process: It instructs the contracting officer (CO) to make every effort to allow an offeror to correct the information submitted to verify its status as an eligible ISBEE or IEE.
  • Provides Clarity on All Deviations and Challenges: It requires IHS to update its internal Indian Health Manual in support of the Buy Indian Act to provide for specific processes and details on training, reporting and compliance. The Final Rule clarifies that each IHS area office will be required to report quarterly on all deviations and challenges. IHS, tribes and the public can access public data in sam.gov to generate reporting of all IHS obligations set aside under the Buy Indian Act.
  • Expands Buy Indian Act Set-Aside Opportunities: It expands application of the Buy Indian Act to all construction projects. This includes the planning, design, construction and renovation of IHS, water supply and waste disposal facilities.
  • Excludes the Buy Indian Act From Applying to Lucrative Purchased/Referred Care (Contract Health) Services: The Final Rule promulgates for the first time a controversial IHS policy that has withheld the benefits of Buy Indian Act preferences from Indian-owned medical service providers when IHS procures services from medical specialty vendors such as air ambulance service providers. 48 CFR 326.602-2(b).
  • Expresses Ongoing Commitment to Work with BIA: Through the Final Rule, the IHS expressed its ongoing commitment to collaborate with BIA to improve its implementation of the Buy Indian Act.
  • Includes a Specific Challenge Process: The new Final Rule establishes a challenge process by which the CO or an eligible offeror can challenge the status representation of a competing offeror.

Conclusion and Considerations

While the Final Rule aligns HHSAR with the DOI's Buy Indian Act procurement regulations, those regulations still contain a number of unresolved issues related to IEE eligibility, not the least of which is a lack of elaboration on what qualifies as day-to-day management of an IEE and how those requirements align (or do not align) with other federal procurement programs such as the U.S. Small Business Administration's 8(a) Business Development Program.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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