Overview
This section prescribes the administrative process for verifying the eligibility of Indian organizations and Indian-owned economic enterprises, including the formal challenge procedure handled by the Bureau of Indian Affairs (BIA). It also establishes the mechanism for the 5 percent incentive payment provided to prime contractors who utilize these entities as subcontractors.
Key Rules
- Good Faith Reliance: Contracting officers (COs) and prime contractors may generally accept a firm's representation of its status as an Indian organization or enterprise unless it is challenged or there is independent reason for doubt.
- BIA Jurisdiction: All status challenges must be referred to the U.S. Department of the Interior Bureau of Indian Affairs (BIA) for a final determination.
- BIA Timelines: The BIA must acknowledge receipt of a challenge within 5 working days and issue a written determination within an additional 45 working days.
- Challenge Requirements: For a challenge to be considered timely, it must be in writing, provide detailed evidence, and be submitted prior to the award of the subcontract.
- Impact on Award: If a challenge is received pre-award, the prime contractor must withhold the subcontract award unless the CO agrees that delayed performance would harm the prime contract. Challenges filed after award only apply prospectively.
- Incentive Payment: COs shall authorize an incentive payment equal to 5 percent of the amount paid to the subcontractor, provided funds are available and contract terms are met.
Practical Implications
- Prime contractors are financially incentivized to perform due diligence on their supply chain, as they can receive a 5 percent "bonus" on payments made to qualified Indian-owned subcontractors.
- While the BIA determination process is lengthy (up to 50 working days), the regulation protects contract continuity by allowing the CO and prime to rely on the subcontractor's representation if the BIA fails to respond within the prescribed window.