Overview
This section establishes the federal policy of providing Indian-owned economic enterprises and Indian organizations the maximum practicable opportunity to participate in federal government contracts. It specifically outlines the financial incentive available to prime contractors who utilize these entities as subcontractors.
Key Rules
- Participation Mandate: Federal agencies must ensure that Indian organizations and Indian-owned economic enterprises have the maximum practicable opportunity to participate in contract performance.
- Incentive Payment: Prime contractors may receive an incentive payment equal to 5 percent of the total amount paid to a qualifying Indian subcontractor.
- Contractual Authorization: The 5 percent incentive is only applicable if the specific contract explicitly authorizes such a payment.
- Subcontractor Eligibility: To trigger the incentive, the subcontractor must qualify as either an "Indian organization" or an "Indian-owned economic enterprise."
Practical Implications
- Prime contractors can leverage this program to improve their profit margins or offset subcontracting costs by actively sourcing and mentoring Native American-owned businesses.
- Contractors must ensure the appropriate FAR clause (52.226-1) is included in their prime contract to remain eligible for the 5 percent rebate on payments made to qualified subcontractors.