The Bureau of Indian Affairs (BIA) has issued a new draft policy for determining tribes’ contract support costs (CSCs) under self-determination contracts and self-governance funding agreements and has requested comments by July 29.

The draft policy, issued via a Federal Register notice on March 25, 2016, was proposed in response to the Supreme Court ruling in Salazar v. Ramah Navajo Chapter, which stated “the Government must pay each tribe’s contract support costs in full” and “the Government’s obligation to pay contract support costs should be treated as an ordinary contract promise.”

Inside the Draft Policy

The draft policy seems to simplify the BIA’s approach and makes some changes that appear favorable to many tribes. These changes relate to the calculation of direct and indirect CSCs. The proposed policy:

• Calculates direct CSCs as a flat 15 percent of the budgeted salaries; as a result, tribes won’t be required to negotiate amounts based on expected actual costs.
• Confirms direct CSCs are part of the direct cost base on which indirect costs are calculated.
• Calculates indirect CSCs as the current approved indirect cost rates multiplied by the secretarial 106(a)(1) amount awarded to the tribe, minus exclusions and pass-throughs.
• Indicates tribes without a current indirect-cost rate may use the last approved rate that’s less than four years old.
• Creates a process for tribes with no indirect cost rate—or an approved rate that is more than four years old—to obtain CSC funding through negotiation of a lump-sum amount.
• Allows tribes to receive indirect CSCs at a flat 30 percent of direct costs if they didn’t qualify for a single audit in the preceding year and don’t have an approved indirect cost rate less than four years old.

Providing Comments

Tribes now have an opportunity to provide feedback to the BIA on the above policy changes, which impact how the BIA will fund and calculate CSCs going forward.

The draft policy can be found on the BIA’s Web site, and written comments are due by July 29, 2016. Additionally, the BIA will host four live consultation sessions, also detailed on its Web site, to discuss the draft policy.

Related CSC Changes

The federal government’s 2016 omnibus spending bill, passed in December 2015, includes language that prohibits tribes from rebudgeting CSCs received under the Indian Self-Determination and Education Assistance Act to other program areas. It also requires that all CSC funds not expended by the tribe for the current year be applied to CSCs otherwise due for subsequent fiscal years. This will make it very important for tribes to track unspent (carryover) BIA indirect CSC funds separately from other (direct) funds.  

We're Here to Help

Moss Adams will issue another Alert when the Department of Health and Human Services’ Indian Health Services releases its proposed CSC policy changes. In the meantime, contact your Moss Adams professional for questions on how these proposed changes may impact your tribe.