25 U.S.C. § 5325 — Contract funding and indirect costs

Page 738 TITLE 25—INDIANS § 5325 sion or amendment of contracts or grants at request or with consent of tribal organization and effective date for retrocession of contracts. Subsec. (e). Pub. L. 100–472, § 204(e), added subsec. (e) and struck out former subsec. (e) which authorized the Secretary to permit tribal organizations to use existing school buildings, hospitals, and other facilities and equipment therein in carrying out grants or contracts. Subsec. (f). Pub. L. 100–472, § 204(e), added subsec. (f). Former subsec. (f) redesignated (g). Subsec. (g). Pub. L. 100–472, § 204(f), redesignated former subsec. (f) as (g) and substituted reference to section 5321 of this title for reference to section 5321 of this title and former section 103 of Pub. L. 93–638. Former subsec. (g) redesignated (h). See Prior Provi- sions note set out under section 5322 of this title. Subsec. (h). Pub. L. 100–472, § 204(g), (h), redesignated former subsec. (g) as (h), substituted reference to sec- tions 5321 and 5322 of this title for reference to section 5321 of this title, former section 103 of Pub. L. 93–638, and section 5322 of this title, and reference to Health and Human Services for reference to Health, Education, and Welfare. Former subsec. (h), which related to min- imum amount of funds under terms of contracts, was struck out. See Prior Provisions note set out under sec- tion 5322 of this title. Statutory Notes and Related Subsidiaries CONTINUED AVAILABILITY OF CERTAIN FUNDS Pub. L. 105–277, div. A, § 101(e) [title I], Oct. 21, 1998, 112 Stat. 2681–231, 2681–246, provided in part that: ‘‘here- after funds made available to tribes and tribal organi- zations through contracts, compact agreements, or grants, as authorized by the Indian Self-Determination Act of 1975 [25 U.S.C. 5321 et seq.] or grants authorized by the Indian Education Amendments of 1988 (25 U.S.C. 2001 and 2008A [probably means prior versions of 25 U.S.C. 2001 and 2008a]) shall remain available until ex- pended by the contractor or grantee’’. § 5325. Contract funding and indirect costs (a) Amount of funds provided (1) The amount of funds provided under the terms of self-determination contracts entered into pursuant to this chapter shall not be less than the appropriate Secretary would have oth- erwise provided for the operation of the pro- grams or portions thereof for the period covered by the contract, without regard to any organiza- tional level within the Department of the Inte- rior or the Department of Health and Human Services, as appropriate, at which the program, function, service, or activity or portion thereof, including supportive administrative functions that are otherwise contractable, is operated. (2) There shall be added to the amount re- quired by paragraph (1) contract support costs which shall consist of an amount for the reason- able costs for activities which must be carried on by a tribal organization as a contractor to ensure compliance with the terms of the con- tract and prudent management, but which— (A) normally are not carried on by the re- spective Secretary in his direct operation of the program; or (B) are provided by the Secretary in support of the contracted program from resources other than those under contract. (3)(A) The contract support costs that are eli- gible costs for the purposes of receiving funding under this chapter shall include the costs of re- imbursing each tribal contractor for reasonable and allowable costs of— (i) direct program expenses for the operation of the Federal program that is the subject of the contract; and (ii) any additional administrative or other expense incurred by the governing body of the Indian Tribe or Tribal organization and any overhead expense incurred by the tribal con- tractor in connection with the operation of the Federal program, function, service, or ac- tivity pursuant to the contract, except that such funding shall not duplicate any funding provided under subsection (a)(1) of this section. (B) In calculating the reimbursement rate for expenses described in subparagraph (A)(ii), not less than 50 percent of the expenses described in subparagraph (A)(ii) that are incurred by the governing body of an Indian Tribe or Tribal or- ganization relating to a Federal program, func- tion, service, or activity carried out pursuant to the contract shall be considered to be reasonable and allowable. (C) On an annual basis, during such period as a tribe or tribal organization operates a Federal program, function, service, or activity pursuant to a contract entered into under this chapter, the tribe or tribal organization shall have the option to negotiate with the Secretary the amount of funds that the tribe or tribal organi- zation is entitled to receive under such contract pursuant to this paragraph. (4) For each fiscal year during which a self-de- termination contract is in effect, any savings attributable to the operation of a Federal pro- gram, function, service, or activity under a self- determination contract by a tribe or tribal orga- nization (including a cost reimbursement con- struction contract) shall— (A) be used to provide additional services or benefits under the contract; or (B) be expended by the tribe or tribal organi- zation in the succeeding fiscal year, as pro- vided in section 13a of this title. (5) Subject to paragraph (6), during the initial year that a self-determination contract is in ef- fect, the amount required to be paid under para- graph (2) shall include startup costs consisting of the reasonable costs that have been incurred or will be incurred on a one-time basis pursuant to the contract necessary— (A) to plan, prepare for, and assume oper- ation of the program, function, service, or ac- tivity that is the subject of the contract; and (B) to ensure compliance with the terms of the contract and prudent management. (6) Costs incurred before the initial year that a self-determination contract is in effect may not be included in the amount required to be paid under paragraph (2) if the Secretary does not receive a written notification of the nature and extent of the costs prior to the date on which such costs are incurred. (b) Reductions and increases in amount of funds provided The amount of funds required by subsection (a) of this section— (1) shall not be reduced to make funding available for contract monitoring or adminis- tration by the Secretary; Page 739 TITLE 25—INDIANS § 5325 (2) shall not be reduced by the Secretary in subsequent years except pursuant to— (A) a reduction in appropriations from the previous fiscal year for the program or func- tion to be contracted; (B) a directive in the statement of the managers accompanying a conference report on an appropriation bill or continuing reso- lution; (C) a tribal authorization; (D) a change in the amount of pass- through funds needed under a contract; or (E) completion of a contracted project, ac- tivity, or program; (3) shall not be reduced by the Secretary to pay for Federal functions, including, but not limited to, Federal pay costs, Federal em- ployee retirement benefits, automated data processing, contract technical assistance or contract monitoring; (4) shall not be reduced by the Secretary to pay for the costs of Federal personnel dis- placed by a self-determination contract; and (5) may, at the request of the tribal organi- zation, be increased by the Secretary if nec- essary to carry out this chapter or as provided in section 5324(c) of this title. Notwithstanding any other provision in this chapter, the provision of funds under this chap- ter is subject to the availability of appropria- tions and the Secretary is not required to reduce funding for programs, projects, or activities serving a tribe to make funds available to an- other tribe or tribal organization under this chapter. (c) Annual reports Not later than May 15 of each year, the Sec- retary shall prepare and submit to Congress an annual report on the implementation of this chapter. Such report shall include— (1) an accounting of the total amounts of funds provided for each program and the budg- et activity for direct program costs and con- tract support costs of tribal organizations under self-determination; (2) an accounting of any deficiency in funds needed to provide required contract support costs to all contractors for the fiscal year for which the report is being submitted; (3) the indirect cost rate and type of rate for each tribal organization that has been nego- tiated with the appropriate Secretary; (4) the direct cost base and type of base from which the indirect cost rate is determined for each tribal organization; (5) the indirect cost pool amounts and the types of costs included in the indirect cost pool; and (6) an accounting of any deficiency in funds needed to maintain the preexisting level of services to any Indian tribes affected by con- tracting activities under this chapter, and a statement of the amount of funds needed for transitional purposes to enable contractors to convert from a Federal fiscal year accounting cycle, as authorized by section 5324(d) of this title. (d) Treatment of shortfalls in indirect cost recov- eries (1) Where a tribal organization’s allowable in- direct cost recoveries are below the level of indi- rect costs that the tribal organizations should have received for any given year pursuant to its approved indirect cost rate, and such shortfall is the result of lack of full indirect cost funding by any Federal, State, or other agency, such short- fall in recoveries shall not form the basis for any theoretical over-recovery or other adverse adjustment to any future years’ indirect cost rate or amount for such tribal organization, nor shall any agency seek to collect such shortfall from the tribal organization. (2) Nothing in this subsection shall be con- strued to authorize the Secretary to fund less than the full amount of need for indirect costs associated with a self-determination contract. (e) Liability for indebtedness incurred before fis- cal year 1992 Indian tribes and tribal organizations shall not be held liable for amounts of indebtedness attributable to theoretical or actual under-re- coveries or theoretical over-recoveries of indi- rect costs, as defined in Office of Management and Budget Circular A–87, incurred for fiscal years prior to fiscal year 1992. (f) Limitation on remedies relating to cost dis- allowances Any right of action or other remedy (other than those relating to a criminal offense) relat- ing to any disallowance of costs shall be barred unless the Secretary has given notice of any such disallowance within three hundred and sixty-five days of receiving any required annual single agency audit report or, for any period covered by law or regulation in force prior to October 19, 1984, any other required final audit report. Such notice shall set forth the right of appeal and hearing to the board of contract ap- peals pursuant to section 5331 of this title. For the purpose of determining the 365-day period specified in this paragraph, an audit report shall be deemed to have been received on the date of actual receipt by the Secretary, if, within 60 days after receiving the report, the Secretary does not give notice of a determination by the Secretary to reject the single-agency report as insufficient due to noncompliance with chapter 75 of title 31 or noncompliance with any other applicable law. Nothing in this subsection shall be deemed to enlarge the rights of the Secretary with respect to section 5123 of this title. (g) Addition to contract of full amount con- tractor entitled; adjustment Upon the approval of a self-determination con- tract, the Secretary shall add to the contract the full amount of funds to which the contractor is entitled under subsection (a) of this section, subject to adjustments for each subsequent year that such tribe or tribal organization admin- isters a Federal program, function, service, or activity under such contract. (h) Indirect costs for contracts for construction programs In calculating the indirect costs associated with a self-determination contract for a con- struction program, the Secretary shall take into consideration only those costs associated with the administration of the contract and shall not take into consideration those moneys actually Page 740 TITLE 25—INDIANS § 5325 passed on by the tribal organization to construc- tion contractors and subcontractors. (i) Indian Health Service and Bureau of Indian Affairs budget consultations On an annual basis, the Secretary shall con- sult with, and solicit the participation of, Indian tribes and tribal organizations in the develop- ment of the budget for the Indian Health Service and the Bureau of Indian Affairs (including par- ticipation of Indian tribes and tribal organiza- tions in formulating annual budget requests that the Secretary submits to the President for submission to Congress pursuant to section 1105 of title 31). (j) Use of funds for matching or cost participa- tion requirements Notwithstanding any other provision of law, a tribal organization may use funds provided under a self-determination contract to meet matching or cost participation requirements under other Federal and non-Federal programs. (k) Allowable uses of funds without approval of Secretary Without intending any limitation, a tribal or- ganization may, without the approval of the Secretary, expend funds provided under a self- determination contract for the following pur- poses, to the extent that the expenditure of the funds is supportive of a contracted program: (1) Depreciation and use allowances not oth- erwise specifically prohibited by law, includ- ing the depreciation of facilities owned by the tribe or tribal organization. (2) Publication and printing costs. (3) Building, realty, and facilities costs, in- cluding rental costs or mortgage expenses. (4) Automated data processing and similar equipment or services. (5) Costs for capital assets and repairs. (6) Management studies. (7) Professional services, other than services provided in connection with judicial pro- ceedings by or against the United States. (8) Insurance and indemnification, including insurance covering the risk of loss of or dam- age to property used in connection with the contract without regard to the ownership of such property. (9) Costs incurred to raise funds or contribu- tions from non-Federal sources for the purpose of furthering the goals and objectives of the self-determination contract. (10) Interest expenses paid on capital expend- itures such as buildings, building renovation, or acquisition or fabrication of capital equip- ment, and interest expenses on loans neces- sitated due to delays by the Secretary in pro- viding funds under a contract. (11) Expenses of a governing body of a tribal organization that are attributable to the man- agement or operation of programs under this chapter. (12) Costs associated with the management of pension funds, self-insurance funds, and other funds of the tribal organization that pro- vide for participation by the Federal Govern- ment. (l) Suspension, withholding, or delay in payment of funds (1) The Secretary may only suspend, withhold, or delay the payment of funds for a period of 30 days beginning on the date the Secretary makes a determination under this paragraph to a tribal organization under a self-determination con- tract, if the Secretary determines that the trib- al organization has failed to substantially carry out the contract without good cause. In any such case, the Secretary shall provide the tribal organization with reasonable advance written notice, technical assistance (subject to available resources) to assist the tribal organization, a hearing on the record not later than 10 days after the date of such determination or such later date as the tribal organization shall ap- prove, and promptly release any funds withheld upon subsequent compliance. (2) With respect to any hearing or appeal con- ducted pursuant to this subsection, the Sec- retary shall have the burden of proof to estab- lish by clearly demonstrating the validity of the grounds for suspending, withholding, or delaying payment of funds. (m) Use of program income earned The program income earned by a tribal organi- zation in the course of carrying out a self-deter- mination contract— (1) shall be used by the tribal organization to further the general purposes of the contract; and (2) shall not be a basis for reducing the amount of funds otherwise obligated to the contract. (n) Reduction of administrative or other respon- sibilities of Secretary; use of savings To the extent that programs, functions, serv- ices, or activities carried out by tribal organiza- tions pursuant to contracts entered into under this chapter reduce the administrative or other responsibilities of the Secretary with respect to the operation of Indian programs and result in savings that have not otherwise been included in the amount of contract funds determined under subsection (a) of this section, the Secretary shall make such savings available for the provi- sion of additional services to program bene- ficiaries, either directly or through contractors, in a manner equitable to both direct and con- tracted programs. (o) Rebudgeting by tribal organization Notwithstanding any other provision of law (including any regulation), a tribal organization that carries out a self-determination contract may, with respect to allocations within the ap- proved budget of the contract, rebudget to meet contract requirements, if such rebudgeting would not have an adverse effect on the perform- ance of the contract. (Pub. L. 93–638, title I, § 106, as added Pub. L. 100–472, title II, § 205, Oct. 5, 1988, 102 Stat. 2292; amended Pub. L. 101–301, § 2(a)(8), (9), May 24, 1990, 104 Stat. 207; Pub. L. 101–644, title II, § 203(a), Nov. 29, 1990, 104 Stat. 4666; Pub. L. 103–413, title I, § 102(14)–(19), Oct. 25, 1994, 108 Stat. 4257–4259; Pub. L. 105–362, title VIII, § 801(g), Nov. 10, 1998, 112 Stat. 3288; Pub. L. 106–260, § 9, Aug. 18, 2000, 114 Stat. 733; Pub. L. 116–180, title II, § 204, Oct. 21, 2020, 134 Stat. 880.) Page 741 TITLE 25—INDIANS § 5326 Editorial Notes REFERENCES IN TEXT This chapter, referred to in subsecs. (a)(1), (3), (b), (c), (k)(11), and (n), was in the original ‘‘this Act’’, meaning Pub. L. 93–638, Jan. 4, 1975, 88 Stat. 2203, known as the Indian Self-Determination and Education Assistance Act, which is classified principally to this chapter. For complete classification of this Act to the Code, see Short Title note set out under section 5301 of this title and Tables. CODIFICATION Section was formerly classified to section 450j–1 of this title prior to editorial reclassification and renum- bering as this section. PRIOR PROVISIONS A prior section 106 of Pub. L. 93–638 was renumbered section 105 by Pub. L. 100–472 and is classified to section 5324 of this title. AMENDMENTS 2020—Subsec. (a)(3)(A). Pub. L. 116–180, § 204(1), sub- stituted ‘‘; and’’ for ‘‘, and’’ in cl. (i) and ‘‘expense in- curred by the governing body of the Indian Tribe or Tribal organization and any overhead expense in- curred’’ for ‘‘expense related to the overhead incurred’’ in cl. (ii). Subsec. (a)(3)(B), (C). Pub. L. 116–180, § 204(2), (3), added subpar. (B) and redesignated former subpar. (B) as (C). 2000—Subsecs. (c) to (o). Pub. L. 106–260 added subsec. (c) and redesignated former subsecs. (c) to (n) as (d) to (o), respectively. 1998—Subsecs. (c) to (o). Pub. L. 105–362 redesignated subsecs. (d) to (o) as (c) to (n), respectively, and struck out former subsec. (c) which related to Secretary’s an- nual report to Congress on implementation of this chapter. 1994—Subsec. (a)(1). Pub. L. 103–413, § 102(14)(A), in- serted before period at end ‘‘, without regard to any or- ganizational level within the Department of the Inte- rior or the Department of Health and Human Services, as appropriate, at which the program, function, service, or activity or portion thereof, including supportive ad- ministrative functions that are otherwise contractable, is operated’’. Subsec. (a)(2). Pub. L. 103–413, § 102(14)(B), inserted ‘‘an amount for’’ after ‘‘consist of’’. Subsec. (a)(3). Pub. L. 103–413, § 102(14)(C), added par. (3) and struck out former par. (3) which read as follows: ‘‘Any savings in operation under a self-determination contract shall be utilized to provide additional services or benefits under the contract or be expended in the succeeding fiscal year as provided in section 13a of this title.’’ Subsec. (a)(4) to (6). Pub. L. 103–413, § 102(14)(C), added pars. (4) to (6). Subsec. (c). Pub. L. 103–413, § 102(15)(A), substituted ‘‘May 15’’ for ‘‘March 15’’ in introductory provisions. Subsec. (c)(1), (2). Pub. L. 103–413, § 102(15)(B), sub- stituted ‘‘contract support costs’’ for ‘‘indirect costs’’. Subsec. (c)(6). Pub. L. 103–413, § 102(15)(C)–(E), added par. (6). Subsec. (f). Pub. L. 103–413, § 102(16), inserted after second sentence ‘‘For the purpose of determining the 365-day period specified in this paragraph, an audit re- port shall be deemed to have been received on the date of actual receipt by the Secretary, if, within 60 days after receiving the report, the Secretary does not give notice of a determination by the Secretary to reject the single-agency report as insufficient due to non- compliance with chapter 75 of title 31 or noncompliance with any other applicable law.’’ Subsec. (g). Pub. L. 103–413, § 102(17), added subsec. (g) and struck out former subsec. (g) which read as follows: ‘‘Upon the approval of a self-determination contract and at the request of an Indian tribe or tribal organiza- tion, the Secretary shall add the indirect cost funding amount awarded for a self-determination contract to the amount awarded for direct program funding for the first year and, subject to adjustments in the amount of direct program costs for the contract, for each subse- quent year that the program remains continuously under contract.’’ Subsec. (i). Pub. L. 103–413, § 102(18), added subsec. (i) and struck out former subsec. (i) which read as follows: ‘‘Within one month after October 5, 1988, the Secretary is mandated to establish a team in each area of the Bu- reau of Indian Affairs which consists of agency per- sonnel (area personnel in the Navajo Area and in the case of Indian tribes not served by an agency) and trib- al representatives for the purpose of analyzing the ‘In- dian Priority System’ and other aspects of the budg- eting and funding allocation process of the Bureau of Indian Affairs for the purpose of making a report to Congress with appropriate recommendations for changes and legislative actions to achieve greater trib- al decision-making authority over the use of funds ap- propriated for the benefit of the tribes and their mem- bers. The report along with the analysis, findings and recommendations of the area teams shall be submitted to Congress within six months of October 5, 1988. The Secretary may submit to Congress separate comments on the information and recommendations on the re- port.’’ Subsecs. (j) to (o). Pub. L. 103–413, § 102(19), added sub- secs. (j) to (o). 1990—Subsec. (e). Pub. L. 101–644 substituted ‘‘1992’’ for ‘‘1988’’. Subsec. (f). Pub. L. 101–301, § 2(a)(8), substituted ‘‘prior to enactment of chapter 75 of title 31’’ for ‘‘prior to enactment of the Single Agency Audit Act of 1984 (chapter 75 of title 31)’’, which for purposes of codifica- tion was translated as ‘‘prior to October 19, 1984’’, re- quiring no change in text. Subsec. (i). Pub. L. 101–301, § 2(a)(9), substituted ‘‘agency personnel (area personnel in the Navajo Area and in the case of Indian tribes not served by an agen- cy)’’ for ‘‘agency personnel’’. § 5326. Indian Health Service: availability of funds for Indian self-determination or self- governance contract or grant support costs Before, on, and after October 21, 1998, and not- withstanding any other provision of law, funds available to the Indian Health Service in this Act or any other Act for Indian self-determina- tion or self-governance contract or grant sup- port costs may be expended only for costs di- rectly attributable to contracts, grants and compacts pursuant to the Indian Self-Deter- mination Act [25 U.S.C. 5321 et seq.] and no funds appropriated by this or any other Act shall be available for any contract support costs or indirect costs associated with any contract, grant, cooperative agreement, self-governance compact, or funding agreement entered into be- tween an Indian tribe or tribal organization and any entity other than the Indian Health Service. (Pub. L. 105–277, div. A, § 101(e) [title II], Oct. 21, 1998, 112 Stat. 2681–231, 2681–280.) Editorial Notes REFERENCES IN TEXT The Indian Self-Determination Act, referred to in text, is title I of Pub. L. 93–638, Jan. 4, 1975, 88 Stat. 2206, which is classified principally to this subchapter (§ 5321 et seq.). For complete classification of this Act to the Code, see Short Title note set out under section 5301 of this title and Tables. CODIFICATION Section was enacted as part of the Department of the Interior and Related Agencies Appropriations Act, 1999,