Norman Hollow, chairman of the Assiniboine and Sioux tribes in Montana, is scheduled to receive an Interior Department award in Billings today for his years of work on behalf of his people.

But at the same time one government agency is patting him on the back, another, the Small Business Administration, is in the process of disqualifying his tribe from receiving millions of dollars worth of government contracts for Army camouflage netting.

The tribe's business had qualified for the SBA's so-called 8(a) program, which sets aside certain contracts for minority businesses. But C.R. Suarez, SBA's regional administrator in Denver, ruled Wednesday that A&S Tribal Industries is no longer eligible for the contracts because it can't show that it is owned and managed by "identifiable, disadvantaged persons" as the law requires. The company is owned collectively by the tribe, not individual members, and its manager is a non-Indian from the Brunswick Corp.'s defense division.

"It's an unfortunate situation," Suarez said in a telephone interview yesterday. "It's a worthwhile concern. But I'm bound by what is on the books now."

His ruling also applies to the Devils Lake Sioux Manufacturing Corp. on the Fort Totten, N.D., reservation. That contract is complicated by the fact that Brunswick owns 49 percent of the company and provides more than $9 million in raw material for the contract in what appears to be an "interlocking relationship," Suarez said.

Herbert E. Ennis, president of Brunswick's defense division, said the ruling is "a terrible tragedy" because the two firms provide employment for hundreds of Indians in locations where few jobs are available.

He noted that Robert L. Wright Jr., SBA's associate administrator for minority small business, wrote him just last month that the agency thinks any such ruling should only apply to new applicants.

Peter Terpeluk, SBA's acting deputy administrator, said yesterday that Suarez's decision is being reviewed in Washington. "We are acutely aware of what this means to the tribes," he said. "Any decision will take into account the entire picture, not just a single contract . . . . This is still very much alive."

Terpeluk said Suarez "followed the SOP standard operating procedure ." But he said SBA administrator James Sanders "is quite concerned" about the issue of tribal eligibility and "his personal leaning is to let tribes in the program."

Sen. Mark Andrews (R-N.D.) has introduced an amendment to the minority set-aside provisions of the Small Business Act to make it clear that tribally owned businesses are eligible.

"The thing that has us concerned is the job situation out there," Terpeluk said. "We don't want to be putting people out on the street if we don't have to."

A&S Tribal Industries and the Devils Lake Sioux Manufacturing Corp. have been operating since 1974, making the netting and other equipment for the Army. Ennis said that the Fort Peck tribes recently added a $2 million metal stamping operation, on the assumption that they would remain eligible for the SBA program.

Marvin Sonosky, a Washington lawyer who has represented the Montana tribes for the past 20 years, said yesterday that the A&S tribal corporation "lifted those people out of the bottom of the economy, off welfare. The men are working, there's dignity in the home. They're buying furniture and cars."

The Defense Department has been satisfied with the quality of the Indian work, he said. "It looks like someone else started complaining, like someone is out to get the Indians."