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tions implementing Public Law 93–638. We believe our experience in analyzing the act and the proposed regulations will permit us to speak with some degree of authority on this subject matter.

The process employed in analyzing the proposed regulations was through a statewide conference sponsored by the Alaska Federation of Natives, Inc., on September 23-26, 1975, out of which was established our formal comments to the Indian Health Service (IHS) and the Bureau of Indian Affairs (BIA) on the proposed regulations.

In summary, the following are our major concerns on the IHS and BIA proposed regulations implementing title I of Public Law 93-638.

One: Our first and foremost problem identified is the definition of "Indian Tribe” and “Tribal Organization" of the act which does not account for the unique Alaska situation. We have recommended to BIA and IHS inclusion of nonprofit regional native associations. It is the position of the Alaska Federation of Natives, Inc. that Congress, in its declaration of policy under Public Law 93–638, did not intend to exclude those organizations that have been contracting with IHS and BIA in the past and currently. We feel it is the oversight of Congress not to account for the unique Alaska situation. BIA has currently let a contract to study the unique Alaska situation.

Two: The Department of Health, Education, and Welfare (HEW) proposed rules are without any statement of policy. A policy is meant to remind HEW employees of congressional intent in passing Public Law 93-638 and should make it clear that the purpose of the act and the intention of HEW are to further Indian self-determination. BIA has seen fit to include a meaningful statement of policy. There is no rational basis why such a statement could not be included in the HEW regulations.

Three: There are both duplication and inconsistencies between the BIA and IHS regulations. There is absolutely no excuse whatsoever for placing upon Indians the burden of administering contracts under a single law through the use of two separate agency regulations. It is, therefore, our recommendation that this committee support the establishment of a formal working group to develop a single regulation implementing Public Law 93–638. Pursuant to a joint meeting called by AFN, Inc., the National Congress of American Indians (NCAI), the National Tribal Chairman's Association (NTCA), the United Southeast Tribes (USET), the National Indian Education Association (NIEA), and the Red Lake task force met October 19, 1975, to discuss Public Law 93–638 and decided that AFN, Inc., NCAI, NTCA, USET, NIEA, and the Coalition of Indian Controlled School Boards (CICSB) be named as the group to work with BIA, IHS and the Civil Service Commission to come up with one regulation for Public Law 93-638. It was further decided that appropriation be made through Congress to accomplish this task with a reasonable time frame.

Four: Specific to the HEW proposed regulations dealing with “Assumption and Reassumption" of contract programs in section 36.233, HEW has introduced a new concept—suspension. It is an absolutely outrageous proposal because it is tantamount to default by termination and places an unconscionable burden upon an Indian contractor. It is, therefore, our recommendation—as explained in our formal comments to HEW—that the concept of suspension be dropped and in its place be substituted something similar to a convenience termination under which the contractor will be financially protected during any turbulent reassumption.

Five: Section 14H-70.611, BIA proposed regulations, and section 36.222, IHS proposed regulations, on indemnity and insurance is totally unacceptable because both agencies have unfairly placed the entire insurance burden on the contractor. The Government has required that the contractor idenmnify and hold harmless the Government against all loss, cost damages, and claim expenses of any liability whatsoever because of a wide range of liabilities. In section 102(c) and 103 (c) of the act, the two agencies require that the carrier waive soverign immunity within the limits of their policy, apparently presuming that sovereign immunity would be a bar to recovery against any claims above the limits of the policy. It is, therefore, strongly recommended that the above-mentioned clauses be stricken in their entirety and rewritten in such a manner to permit the Government to absorb the costs of liabilities brought about by actions of the third parties.

Six: Section 14H-704 of BIA proposed regulations and section 36.218 of the IHS proposed regulations, “Types of Contracts,” are restricted to the cost-reimbursement type. Nothing in the law restricts the type of contract a tribal organization may use. It is anachronistic and paternalistic on the part of the agencies to limit the type of contracts to cost-type contracts. We herewith recommend an entire mix of contract types to implement the act. This will serve a double purpose of making a contractor more sophisticated in the use of different types of contracts.

Seven: In order to accomplish the provisions of section 104 of Public Law 93–638, it is mandatory for Congress to appropriate funds to carry out these provisions, otherwise the act is meaningless. We are referring to the grant section. Ability to contract is contingent largely on the availability of front-end money to develop the executive branch of the tribal organization through grants.

Eight: The following sections dealing with: (a) Evaluation criteria, (b) suspension and termination of grants, (c) review, (d) waiver provisions, (e) price reduction for defective cost or pricing data, (f) amendments to regulations, (g) subcontracting, (h) eligibility and applications, (i) processing time of applications, (j) accounts, audits, and records-standard clauses, (k) annual reporting ,(1) unexpended funds under contracts, (m) exemption from bonds, (n) tribal appeals to proposed declinations and (0) additional proposed regulations not covered in IHS and BIA proposed regulations are herewith attached and incorporated in our formal comments to you.

Mr. Chairman, we further submit one document that is extremely important, that the regulations promulgate and consider an evolving document subject to changes as experience dictates. Our formal comments submitted to the BIA for grants and personnel are inclusive of HEW comments that have been submitted.

Another thing I would like to bring up is that, the way I view the act, in order for a gain to be made in the long run, Congress should be prepared to take a short run risk and loss with its Indian people, knowing that because of section 109 of the act, reassumption is possible. If there is gross mismanagement of that fund or if the violation of the rights, health, safety, or welfare of any person is there. This allows us to contract without fear of reassumption.

Initially at perhaps a level lower than that of the Government due to a higher travel overhead rate for the most part and a very low level maintenance budget which IHS and BIA are allowed to operate under right now.

Mr. Chairman, we have some brief answers to the five questions you posed to us. You might want to ask the panel certain questions in regards to these and we have them attached to the testimony, and perhaps make some additional comments.

Senator ABOUREZK. I might take 20 seconds of your time and make a comment. With regard to the National Tribal Chairmen's Association's testimony this morning-is Mr. Forrest still here? I want to read page 137 of the hearings on S. 1017 held June 4, 1973. Testimony was by Mr. Upicksoun, chairman of the education committee of NTCA. I will read one paragraph that is pertinent to what your testimony was. Mr. Forrest, when you said that the S. 1017 legislation legislates the tribe out of existence. I quote: “The National Tribal Chairmen's Association supports title I, the Indian Self-Determination Act and recommends that this title be enacted." That apparently is a change of position on the part of NTCA. Thank you for letting me use part of your time.

Mr. Clark. Mr. Chairman, may be I might go over some of the points on the questions that I believe are somewhat significant. In the first question, you ask if the regulations satisfactorily explain the conditions in which the Bureau and Indian Health Service will deal with an entity as an Indian tribe or tribal organization for contracting purposes in conformity with the provisions of the act applicable principles of Federal Indian law and the needs of the Indian people. This is a fairly complex question but how we answered was, the two regulations that have been developed by the agencies are far too complex. They pose more stringent requirements on Indians than the Federal Government requires for regular Government contractors. For example, reassumption in the HEW regulations introduces a new philosophy, namely suspension, which exposes the tribal contractor to a financial risk which is unheard of in Government contracting and is far more stringent than a termination for convenience. There is no way for the contractor to reasonably protect himself from unreasonable financial exposure to his subcontractors when the contracting officer has the unilateral authority to stop work with impunity. This would not be tolerated by any Government contractor under normal contracting rules. This also exposes the tribes to financial risk during this period. The BIA regulations reassumption coverage provides that a tribe shall not have a new contract unless the problems resulting in suspension is alleviated. This is a more stringent policy than the Government has in normal default of a Government contractor.

There are two sets of regulations for one law, taking in two different philosophies often outside the intent of Congress. For example, Congress has a policy statement in the act which is picked up by BIA, but not by HEW. So, in some places the regulations incorporate the intentions of the act and in other places do not. As mentioned, HEW has no policy statement of how the Secretary expects his employees to implement the act through its regulations. The conditions in which BIA and IHS contract with tribes or tribal organizations for contracting in conformity with the provisions of the act therefore are vague and are contradictory to each other.

In regards to meeting the needs of Indian people, it states in HEW regulations that tribes are to meet HEW standards or be subject to default and reassumption. We cannot do so. For example, if IHS/ BIA has an overhead of 3 percent and we can assume they are operating on a maintenance level budget and the tribe decides to contract out a particular function, they cannot do so for less than a 16-percent overhead rate. This automatically means the level of services—quality/ quantity—are lower than that provided by IHS/BIA and makes the tribe subject to reassumption. This, however, does not mean that tribes are doing a bad job but means they have less dollars to do the job required due to certain standards set by the Government that they themselves often do not meet, but expect to require a tribe or private contractor to meet.

In regard to No. 2, the regulations require regional assurances for submission in dealing with contracts but with our proposed amendments to the regulations, they are adequate for both the tribe and the Federal Government for the time being.

Three: You ask if the regulations define properly the regulations subject to contracting under 93-638. Again, no; they are far too general. Perhaps an addendum attached to the regulations can be developed.

In regards to 4: Do grants regulations adequately carry out congressional intention? In order to accomplish the provisions of section 104 of Public Law 93-638, it is mandatory for Congress to appropriate funds to carry out these provisions, otherwise the act is limited to tribes who are capable to contracting. Ability to contract is contingent largely on the availablity of front-end money to develop the executive branch of the tribal organization through grants and for other purposes.

An oversight by Congress does not currently allow the secretaries to waive any provisions of such grant laws and regulations which they determine are not appropriate for the purposes of the grant involved, or inconsistent with the provisions of this act.

In regards to 5: Do the regulations governing Federal assistance for education including educational services and school construction of Indian children in public schools deal fairly with the various types of organizations eligible for such assistance? The answer is no, as written without our proposed changes taking in the unique Alaskan situation. I was referring mainly to the educational services rather than school construction. I think that is taken care of under 407.13 of section B, subsection II, under Bureau regulations. Fred might expand a little more on that.

Senator ABOUREZK. I am informed that your attorney, Mr. Pompan, has had considerable experience in the promulgating of regulations. The committee would appreciate having his response to the administration's proposed Public Law 93-638 rules and regulations.

Mr. POMPAn. The regulations, anything is possible, sir, and they can operate. But it will be a horrendous task, close to impossible to do it effectively. The Department of Defense, which you know is pretty complex, they had this same problem in 1960. Under Mr. McNamara, they took a 3-year effort to eliminate multiple regulations and they came up with a single one which is operating today. Without it, it would be impossible to buy any. There must be a single reg, there will be and it is just a question of when you will do it; you cannot operate effectively this way.

64-882 0.76.18

There must be a formal group to do it. There must be a formal group

Senator ABOUREZK. Do you think that IHS and BIA ought to get together?

Mr. POMPAN. They must. I think they should and I say you cannot operate unless you do it; you cannot.

Senator ABOUREZK. Is a representative from IHS present !

Mr. POMPAN. When I say you cannot, you can do anything but what you have in the Federal contracting, you have sophisticated contractors like Boeing, Lockheed, you name them, and they cannot operate with an Army reg and Navy reg and Air Force reg. They have to have a single reg or else they are constantly caging their eyeballs and uncaging them. There must be at the relatively unsophisticated level of the tribe—there must be one single set of regs.

Senator ABOUREZK. I think that's a good suggestion and I hope both agencies are here listening. They are here listening and I hope they are hearing it.

Mr. PomPan. It is a much harder job in HEW because they are much larger. The IHS people do not have the procurement capability. They are under a procurement capability to the Public Health Service and they, of course, have other responsibilities. They are not about to do what section 106 says; 106 says that the Secretaries have the authority to do what they want in the way of regulations. The Secretary of HEW, through their attorneys, have totally neglected that authority. They have taken the Federal procurement regulations, which descend from the armed services procurement regulations which are worse than the IRS regulations and they have taken that and almost verbatim given it to, again, a relatively unsophisticated contracting people.

What you have here is more than just that; it is an unconscionable act. What it does, it sets the tone. When you give the Indian a set of regulations, at least 75 percent of which are totally unrelated to the act and unnecessary, simply because the agencies, HEW primarily, but both the agencies have neglected to take the 7-day-a-week approach to make the thing work and really find out how should the advance payment clause really read? Should it read this way? Should I put a clause in that descends from the McClellan committee on Public Law 87-663, should I take that out of the Armed Services procurement reg where it was designed to assure that contractors like Boeing, and so forth, do not make unreasonable profit or that the data they put in for negotiations are accurate so that there is not unreasonable profit?

Should I take that and put it into a contract for nonprofit Indian tribal contract? It's absolutely outrageous. In short, it is probably a good job for the amount of time, but to take the regulations the way they have and put them in word for word almost in unconscionable: it is unreasonable. It almost predicts that it will not work effectively and it must change. It has to be a formal working group.

One other thing: There is a very important point that I think must come through and I am not sure that it has come through. That is, that in all contracts there must be a requirement and against that require

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