U.S. agrees to fully fund 2014 service contracts with Indian tribes, lawmakers say

February 13

For the first time in decades, the federal government this year will pay Native American Indian tribes what they’re owed under the terms of health and social service contracts that have previously been underfunded by millions of dollars annually, according to lawmakers and congressional staff members.

The payments for 2014 are reflected in revised spending plans for the Bureau of Indian Affairs (BIA) and the Indian Health Service (IHS) that are to be delivered to the House and Senate appropriations committees within a week.

“This ought to put this issue to rest now,” said Rep. Tom Cole (R-Okla.), one of two Native Americans in Congress. He added that the failure to fully pay tribes “should have never happened in the first place.”

The Obama administration’s decision is a dramatic reversal from its proposed 2014 budget, which called for placing spending caps on individual contracts. Under the caps, tribes would again have been paid millions of dollars less than what they say they are owed and millions less than the agencies’ estimates of the payments due. The spending caps also would have been a step toward limiting payments in the future.

The revised budgets follow a Washington Post story in December that detailed the administration’s plans to impose the caps despite two U.S. Supreme Court rulings ordering the government to fully compensate the tribes.

Although the new plan fully funds contracts for 2014, it does not address the billions of dollars that the tribes say they are owed for past claims.

Congressional budget negotiators rejected the spending cap proposal last month, along with language that would have eliminated the tribes’ right to seek legal remedies in pursuit of contract claims.

The negotiators also told the two agencies that their original 2014 budget plans ran counter to Supreme Court rulings about the government’s agreements with the tribes, called “self-determination contracts.”

Unpaid claims under the contracts grew to an estimated $3 billion by late 2013, according to agency records, while hundreds of tribes severely cut education, health and public safety services.

“This issue has affected real people’s lives,” said Sen. Maria Cantwell (D-Wash.), former chairwoman of the Senate Committee on Indian Affairs.

Spokeswomen for the IHS and the BIA declined to comment about the revised spending plans.

The disputed contracts have their origins in the 1975 Indian Self-Determination Act, which gives tribes the option of receiving federal funding to run their own education, public safety and health-care programs. Those services — which were promised in perpetuity in tribal treaties — historically were delivered by the BIA and the IHS .

The unpaid claims are for “contract support costs,” which include travel expenses, legal and accounting fees, insurance costs and workers’ compensation fees. Such costs typically account for 20 percent of the value of a contract, said Lloyd Miller, an attorney for the tribes in a 2012 Supreme Court case.

Federal contractors worried that a precedent was being set, and the U.S. Chamber of Commerce supported the tribes in their legal battles with the administration.

“The Chamber is pleased that Congress has addressed full payment for Contract Support Costs, as we have long called for an equitable solution to this issue,” Dan Mahoney, director of the chamber’s Native American Enterprise Initiative, said in a statement Thursday. “We remain committed to ensuring that, going forward, any solution for future CSC funding is made in consultation with Indian Country.”

Attorneys for the tribes and tribal leaders said the administration’s decision sets a new standard for handling contracts in the future.

“Now these agencies get it,” Miller said. “These are contracts, and you have to pay your contract obligations.”

Cole was more cautious in his assessment. He said he believes that the revised budget plan represents a “potential turning point” but that members of Congress must remain “vigilant in this area.”

As of mid-December, fewer than 1 percent of unpaid claims had been resolved. But Miller and others involved in the settlement negotiations said momentum is building on this front.

Officials with the Yukon Kuskokwim Health Corp., a consortium of 56 tribes, recently disclosed a $40 million settlement with the IHS. And settlement conferences have been scheduled for the next two months in U.S. District Court to resolve dozens of other claims.

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