Indian Self-Determination Act:

Shortfalls in Indian Contract Support Costs Need To Be Addressed

RCED-99-150: Published: Jun 30, 1999. Publicly Released: Jun 30, 1999.

Additional Materials:

Contact:

Barry T. Hill
(202) 512-9775
contact@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

Pursuant to a legislative requirement, GAO provided information on the Bureau of Indian Affairs' (BIA) and the Indian Health Service's (IHS) management of contract support funding under the Indian Self-Determination and Education Assistance Act, focusing on: (1) to what extent and for what reasons contract support costs and the associated funding shortfalls changed over the past decade, and what can be expected in the future for these costs; (2) how the shortfalls in funding for contract support costs affected tribes; and (3) whether the act's provisions for contract support costs have been consistently implemented.

GAO noted that: (1) tribes' allowable contract support costs have tripled from 1989 through 1998--increasing from about $125 million to about $375 million; (2) the total amount of program dollars contracted by tribes--upon which contract support costs are based--has increased; (3) the total cost of tribes' administration of contracts has increased; (4) although the amounts appropriated for contract support costs have increased, Congress has not funded contract support to keep pace with these increases, resulting in funding shortfalls; (5) in fiscal year (FY) 1998, almost $280 million of the about $375 million that was allowable for contract support costs was appropriated, resulting in a shortfall of about $95 million; (6) projections of future contract support costs are difficult to calculate because the number of programs tribes will elect to contract and the amount of funding they will receive are uncertain; (7) for the forseeable future, tribes' allowable contract support costs are unlikely to dip below the FY 1998 level of $375 million and will likely increase, as they have done in the past; (8) according to the 94 tribes that GAO communicated with during its review, shortfalls in funding for contract support costs have caused financial difficulties and frustration for the tribes administering the programs; (9) they have had to take a number of steps to cope with shortfalls in contract support funding; (10) reducing their contract support costs to within the amount of funding provided has been one such step; (11) however, the tribes noted that this has decreased the efficiency and productivity of their tribal administrative functions; (12) to make up for the shortfall, the tribes reported using program funds, which reduced services to tribal members, or using tribal resources, which precluded the use of those resources to supplement program funds or to develop tribal business ventures; (13) the contract support policies and practices of the Bureau, the Health Service, and the Department of the Interior's Office of Inspector General have been inconsistent, which may result in some tribes receiving more contract support funding than they are allowed and in others receiving less; (14) GAO also found some inconsistencies in the calculation and the application of indirect cost rates that were used to determine tribes' allowable contract support costs; and (15) the impasse between providing full funding for contract support costs and limiting these costs continues in Congress.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: As of August 1, 2003, no new legislation had been introduced in the 108th Congress to reform the payment of contract support costs for Indian programs. No legislation was introduced in the 107th Congress. During the 106th Congress, Representatives Don Young and J.D. Hayworth introduced the "Tribal Contract Support Cost Technical Amendments of 2000" on March 30, 2000 (H.R. 4148). The bill provided for the consolidation of contract funds with contract support funds, as called for by one of the alternatives in GAO's report. A hearing was held on the bill on May 16, 2000, and the bill was passed by the House of Representatives on October 18, 2000. The Senate did not act on the bill before the adjournment of the 106th Congress.

    Matter: Congress, in its deliberations on how to best provide funding for the Indian Self-Determination Act, may wish to consider a number of alternatives to the current mechanism for funding Indian contract support costs.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: An October 5, 2001 memorandum from the Acting Director of the Bureau of Indian Affairs' Office of Tribal Services directed awarding officials to include, as part of their post award procedures, a review to determine whether an overpayment had been made to tribes using provisional-final indirect cost rates.

    Recommendation: The Secretaries of the Interior and of Health and Human Services should ensure that the two agencies correctly adjust funding when tribes use provisional-final indirect cost rates.

    Agency Affected: Department of the Interior

  2. Status: Closed - Implemented

    Comments: The revised policy guidance issued by the Department of Health and Human Services' Indian Health Service on February 4, 2000--Indian Health Service Circular No. 2000-01--directs that adjustments be made when tribes use provisional-final rates. When the final rate is lower than the provisional rate, the local Indian Health Service Area Office "is required to determine if the reduction has resulted in the awardee receiving more...funds than is otherwise permissible under the new rate." Any excess funds can be used to offset other shortfalls in funding for contract support costs. Furthermore, "If the awardee refuses to...return these funds, then the Area Office is expected to file a claim against the awardee in the amount of the overpayment in accordance with the Contract Disputes Act."

    Recommendation: The Secretaries of the Interior and of Health and Human Services should ensure that the two agencies correctly adjust funding when tribes use provisional-final indirect cost rates.

    Agency Affected: Department of the Interior

  3. Status: Closed - Implemented

    Comments: The Department of Health and Human Services' Indian Health Service issued its revised policy guidance on contract support costs--Indian Health Service Circular No. 2000-1--on February 4, 2000. The policy has a section clarifying the computation of direct contract support costs, which was discussed by the Indian Health Service with tribes and Interior's Bureau of Indian Affairs. Although the Indian Health Service has this policy, the Bureau of Indian Affairs does not yet have a policy for paying direct contract support costs.

    Recommendation: The Secretaries of the Interior and Health and Human Services should ensure that BIA and IHS work together, and with Congress and Indian tribes, to coordinate their practices and policies governing the payment of direct contract support costs and to help ensure that their payment is consistent between the two agencies.

    Agency Affected: Department of Health and Human Services

  4. Status: Closed - Implemented

    Comments: The Bureau of Indian Affairs has agreed to begin paying direct contract support costs. On December 6, 2002, the New Mexico District Court approved a settlement involving the Department of the Interior for the payment of direct contract support costs for fiscal years 1993 and 1994, "non-capped" years. With this policy change the Bureau of Indian Affairs and the Indian Health Service will have consistent policies on direct contract support costs as we recommended.

    Recommendation: The Secretaries of the Interior and Health and Human Services should ensure that BIA and IHS work together, and with Congress and Indian tribes, to coordinate their practices and policies governing the payment of direct contract support costs and to help ensure that their payment is consistent between the two agencies.

    Agency Affected: Department of Health and Human Services

 

Explore the full database of GAO's Open Recommendations »

Oct 10, 2014

Sep 30, 2014

Sep 22, 2014

Jul 9, 2014

May 14, 2014

Apr 30, 2014

Mar 26, 2014

Jan 13, 2014

Dec 9, 2013

Dec 6, 2013

Looking for more? Browse all our products here