B-170608, APR 28, 1971

B-170608: Apr 28, 1971

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COMPLAINTS BY COMPANIES DENIED PERMISSION TO BID ALLEGE THAT AWARD MADE IMPROPERLY TO "STRAW" INDIAN COMPANY AND THAT INDIAN CAPITAL IS UNFAIRLY FAVORED OVER INDIAN LABOR. SUGGEST BUREAU OF INDIAN AFFAIRS RE-VERIFY OWNERSHIP OF LUKEE ENTERPRISES TO CONFIRM ITS STATUS AS A COMPANY WHICH IS AT LEAST 51% INDIAN-OWNED AS REQUIRED BY BUREAU STANDARDS FOR SUCH AWARD. THIS MATTER WAS FORWARDED TO US BY A CONGRESSIONAL SOURCE WHO HAD RECEIVED COMPLAINTS FROM ATTORNEYS REPRESENTING COMPANIES WHICH WERE NOT PERMITTED TO BID ON THE INVOLVED CONTRACTS. HAVE THE 51 PERCENT INDIAN OWNERSHIP REQUIRED TO QUALIFY FOR NEGOTIATION PURSUANT TO A BUREAU OF INDIAN AFFAIRS MEMORANDUM SETTING OUT QUALIFICATIONS FOR SUCH AWARDS.

B-170608, APR 28, 1971

CONTRACTS - AWARDS - BUY INDIAN ACT CONCERNING PLACEMENT OF CERTAIN CONTRACTS FOR LAUNDRY SERVICES BY BUREAU OF INDIAN AFFAIRS UNDER THE SO-CALLED "BUY INDIAN ACT", 25 U.S.C. 47. COMPLAINTS BY COMPANIES DENIED PERMISSION TO BID ALLEGE THAT AWARD MADE IMPROPERLY TO "STRAW" INDIAN COMPANY AND THAT INDIAN CAPITAL IS UNFAIRLY FAVORED OVER INDIAN LABOR. SUGGEST BUREAU OF INDIAN AFFAIRS RE-VERIFY OWNERSHIP OF LUKEE ENTERPRISES TO CONFIRM ITS STATUS AS A COMPANY WHICH IS AT LEAST 51% INDIAN-OWNED AS REQUIRED BY BUREAU STANDARDS FOR SUCH AWARD. FURTHER, THAT THE BUREAU IN ITS REVIEW OF PRESENT GUIDE LINES FOR SUCH AWARDS CONSIDER THE FEASIBILITY OF FAVORING FIRMS EMPLOYING INDIAN LABOR AS OPPOSED TO POSSESSING INDIAN OWNERSHIP.

TO MR. SECRETARY:

BY LETTERS DATED NOVEMBER 30, 1970, FEBRUARY 16, AND MARCH 15, 1971, THE DEPUTY ASSISTANT SECRETARY FOR ADMINISTRATION AND THE DIRECTOR OF SURVEY AND REVIEW FURNISHED US WITH REPORTS CONCERNING THE PLACEMENT BY THE BUREAU OF INDIAN AFFAIRS OF CERTAIN CONTRACTS FOR LAUNDRY SERVICES BY SOLE -SOURCE NEGOTIATION UNDER THE SO-CALLED "BUY INDIAN" ACT, 25 U.S.C. 47.

THIS MATTER WAS FORWARDED TO US BY A CONGRESSIONAL SOURCE WHO HAD RECEIVED COMPLAINTS FROM ATTORNEYS REPRESENTING COMPANIES WHICH WERE NOT PERMITTED TO BID ON THE INVOLVED CONTRACTS. THE ATTORNEYS ALLEGED THAT ONE OF THE FIRMS CHOSEN TO RECEIVE AN AWARD, LUKEE ENTERPRISES, INC., DID NOT, IN FACT, HAVE THE 51 PERCENT INDIAN OWNERSHIP REQUIRED TO QUALIFY FOR NEGOTIATION PURSUANT TO A BUREAU OF INDIAN AFFAIRS MEMORANDUM SETTING OUT QUALIFICATIONS FOR SUCH AWARDS, APPARENTLY ON THE BASIS THAT THE CLAIMED INDIAN OWNERSHIP IS A SHAM. A FURTHER INTIMATION OF IMPROPRIETY IS CONTAINED IN THE STATEMENT TO A PRIVATE INVESTIGATOR BY THE WIFE OF THE 51 -PERCENT OWNER OF A SECOND FIRM RECEIVING A "BUY INDIAN" AWARD, ELITE LAUNDRY COMPANY, INC., TO THE EFFECT THAT ELITE "FINALLY WISED UP" BY TAKING SOME UNSPECIFIED ACTION IN ORDER TO RECEIVE "BUY INDIAN" AWARDS. THIRD AWARD, PROPOSED AT THE TIME OF THE COMPLAINTS TO BE MADE TO AN INDIAN-OWNED FIRM ALLEGEDLY NOT POSSESSING REQUIRED EQUIPMENT OR CAPITAL, IS ALSO CRITICIZED. FINALLY, THE COMPLAINT IS MADE BY ONE OF THE ATTORNEYS THAT "IT WOULD SEEM THAT THE BUREAU OF INDIAN AFFAIRS HAS EXERCISED ITS DISCRETION AGAINST MANY INDIANS WHO NEED EMPLOYMENT AND IN FAVOR OF ONE INDIAN WHO HAPPENS TO HAVE THE CAPITAL OR BACKING TO HAVE BOUGHT INTO A BUSINESS."

YOUR REPORTS TO OUR OFFICE POINT OUT THAT ON AUGUST 22, 1968, POLICY MEMORANDUM ISSUED BY THE COMMISSIONER OF INDIAN AFFAIRS IMPLEMENTS THE STATUTORY INJUNCTION THAT INDIAN LABOR AND INDUSTRY BE FAVORED, WHERE PRACTICABLE, BY ALLOWING, WITHIN THE DISCRETION OF THE BUREAU, THE NEGOTIATION OF CONTRACTS WITH INDIAN FIRMS (THOSE HAVING 51 PERCENT OR MORE INDIAN OWNERSHIP IN THIS INSTANCE) ON A SOLE-SOURCE OR WHERE FEASIBLE, A COMPETITIVE BASIS, TO THE EXCLUSION OF NON-INDIAN FIRMS.

YOU ADVISE THAT FISCAL YEAR 1971 CONTRACTS WERE AWARDED TO LUKEE ENTERPRISES FOR THE EASTERN NAVAJO AND SHIPROCK AGENCIES AND TO ELITE LAUNDRY COMPANY, INC., FOR THE CHINLE AND FORT DEFIANCE AGENCIES UNDER THE "BUY INDIAN" GUIDELINES. A THIRD CONTRACT, FOR THE TUBA CITY AGENCY, WAS AWARDED TO LUKEE ENTERPRISES ON AN UNRESTRICTED ADVERTISED COMPETITIVE BASIS AFTER THE FIRM ORIGINALLY SLATED TO RECEIVE A "BUY INDIAN" AWARD FAILED TO SECURE NECESSARY FINANCING.

ON THE QUESTION OF THE LEGITIMACY OF THE INDIAN OWNERSHIP OF LUKEE ENTERPRISES, YOU ITERATE THE POSITION TAKEN IN A PREVIOUS SIMILAR CASE BEFORE OUR OFFICE THAT YOUR DEPARTMENT DOES NOT CONDONE "THE SETTING UP OF 'STRAW' ORGANIZATIONS WHICH APPEAR TO BE BUT IN REALITY ARE NOT BONA FIDE INDIAN INDUSTRIES," AND STATE THAT 52 PERCENT OF THE LUKEE ENTERPRISES, INC., STOCK IS HELD BY MRS. JUANITA LUKEE, AN ACOMA INDIAN. SUBSTANTIATION OF YOUR POSITION THAT MRS. LUKEE IS NOT A "STRAW," THE ADMINISTRATIVE FILE INDICATES THAT LUKEE ENTERPRISES WAS INCORPORATED PRIOR TO JUNE 1970 WITH HENRY LUKEE, MRS. JUANITA LUKEE'S HUSBAND AND A FULL BLOOD ZUNI INDIAN, AS OWNER OF 52 PERCENT OF THE 1,000 SHARES OF STOCK ORIGINALLY ISSUED. EVIDENCE OF THE BONA FIDE NATURE OF THE CORPORATION IS INDICATED BY A BILL OF SALE FROM CHARLES M. PRESTON, A WHITE MAN WHO IS THE 48 PERCENT STOCKHOLDER IN LUKEE ENTERPRISES, CONVEYING WASHERS, DRYERS, MOTOR VEHICLES, ETC., TO THE CORPORATION AND BY THE EXISTENCE OF SEVERAL PROMISSORY NOTES FROM THE CORPORATION PAYABLE TO MR. PRESTON AND OTHERS FOR THE PURCHASE OF VARIOUS LAUNDRY BUSINESSES AND EQUIPMENT. IT IS REPORTED THAT UPON HENRY LUKEE'S DEATH IN APRIL 1970, MRS. LUKEE BECAME CHAIRMAN OF THE BOARD OF LUKEE ENTERPRISES, INC., ALTHOUGH SHE HAD NO PREVIOUS LAUNDRY MANAGEMENT EXPERIENCE, AND ALSO APPARENTLY INHERITED THE 52 PERCENT SHARE OF LUKEE ENTERPRISES PREVIOUSLY HELD BY HER HUSBAND.

WHILE WE CANNOT CONCLUDE ON THE BASIS OF THE PRESENT RECORD THAT LUKEE ENTERPRISES IS NOT A BONA FIDE INDIAN CONCERN UNDER THE BUREAU OF INDIAN AFFAIRS GUIDELINES, WE NOTE THAT WHILE THE FILE NOTES THAT MRS. LUKEE IS CHAIRMAN OF THE BOARD AND OWNER OF 52 PERCENT OF THE ISSUED STOCK, IT CONTAINS NO INFORMATION, OTHER THAN A STATEMENT THAT THE WILL OF HENRY LUKEE WAS FILED FOR PROBATE, OF HOW AND WHEN MRS. LUKEE ACQUIRED HER 52- PERCENT OWNERSHIP IN THE BUSINESS. ALSO, WE NOTE THAT THE ORIGINAL 52- PERCENT OWNERSHIP OF HENRY LUKEE WAS PREDICATED ON HIS OWNERSHIP OF 520 OF THE 1,000 SHARES ORIGINALLY ISSUED, ALTHOUGH THE ARTICLES OF INCORPORATION OF THE CORPORATION PROVIDE FOR A TOTAL CAPITAL STOCK OF 100,000 SHARES. WE THEREFORE SUGGEST THAT THE 52 PERCENT OWNERSHIP OF MRS. LUKEE BE REVERIFIED BEFORE NEGOTIATION OF ANY ADDITIONAL "BUY INDIAN" CONTRACTS WITH LUKEE ENTERPRISES.

ON THE QUESTION OF THE "WISING UP" OF THE ELITE LAUNDRY COMPANY, THE ADMINISTRATIVE REPORT SUGGESTS THAT THIS COMMENT REFERRED TO THE FACT THAT A PURCHASE AGREEMENT IN MARCH 1969 CONVEYED 51 PERCENT OF ELITE'S STOCK TO RAY CHRISTENSEN, A HALFBLOOD NAVAJO INDIAN WHO HAD REPORTEDLY BEEN ASSOCIATED WITH ELITE FOR SEVERAL YEARS IN A MANAGERIAL, NONOWNERSHIP CAPACITY. ALTHOUGH THE ALLEGATION IS MADE THAT ELITE HAS QUALIFIED FOR "BUY INDIAN" CONTRACTS "FOR THE PAST FOUR YEARS," IT WOULD APPEAR THAT THE COMPANY DID NOT, IN FACT, QUALIFY UNDER PRESENT GUIDELINES UNTIL THE MARCH 1969 PURCHASE AGREEMENT MENTIONED ABOVE BROUGHT IN MAJORITY INDIAN OWNERSHIP. HOWEVER, WE WOULD THINK THAT THE BUREAU, AS A MINIMUM, IN THE INTERESTS OF ASSURING THAT THE "BUY INDIAN" PROGRAM IS BEING ADMINISTERED PROPERLY, WOULD HAVE INTERVIEWED MRS. CHRISTENSEN TO DISCOVER THE EXACT MEANING OF HER STATEMENT.

WITH RESPECT TO THE COMPLAINT THAT THE BUREAU OF INDIAN AFFAIRS PRACTICES IN AWARDING CONTRACTS FAVOR INDIAN-OWNED BUSINESSES OVER BUSINESSES EMPLOYING INDIAN LABOR, IT IS OUR UNDERSTANDING THAT THE PRESENT POLICY GUIDELINES ARE BEING REVIEWED TOWARD THE END OF BETTER PROTECTING THE INTERESTS OF INDIAN LABOR AND INDUSTRY. POSSIBLY, THE FEASIBILITY OF FAVORING FIRMS EMPLOYING INDIAN LABOR AS OPPOSED TO THOSE POSSESSING INDIAN OWNERSHIP COULD BE CONSIDERED IN THE REVIEWING PROCESS.