
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 2, 2001]
[Document not affected by Public Laws enacted between
  January 2, 2001 and January 28, 2002]
[CITE: 25USC450j-1]

 
                            TITLE 25--INDIANS
 
                        CHAPTER 14--MISCELLANEOUS
 
    SUBCHAPTER II--INDIAN SELF-DETERMINATION AND EDUCATION ASSISTANCE
 
                    Part A--Indian Self-Determination
 
Sec. 450j-1. 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 subchapter shall 
not be less than the appropriate Secretary would have otherwise provided 
for the operation of the programs or portions thereof for the period 
covered by the contract, without regard to any organizational level 
within the Department of the Interior 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 required by paragraph (1) 
contract support costs which shall consist of an amount for the 
reasonable costs for activities which must be carried on by a tribal 
organization as a contractor to ensure compliance with the terms of the 
contract and prudent management, but which--
        (A) normally are not carried on by the respective 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 eligible costs for the 
purposes of receiving funding under this subchapter shall include the 
costs of reimbursing 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 related to 
    the overhead incurred by the tribal contractor in connection with 
    the operation of the Federal program, function, service, or activity 
    pursuant to the contract,

except that such funding shall not duplicate any funding provided under 
subsection (a)(1) of this section.
    (B) 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 subchapter, the tribe or 
tribal organization shall have the option to negotiate with the 
Secretary the amount of funds that the tribe or tribal organization is 
entitled to receive under such contract pursuant to this paragraph.
    (4) For each fiscal year during which a self-determination contract 
is in effect, any savings attributable to the operation of a Federal 
program, function, service, or activity under a self-determination 
contract by a tribe or tribal organization (including a cost 
reimbursement construction contract) shall--
        (A) be used to provide additional services or benefits under the 
    contract; or
        (B) be expended by the tribe or tribal organization in the 
    succeeding fiscal year, as provided in section 13a of this title.

    (5) Subject to paragraph (6), during the initial year that a self-
determination contract is in effect, the amount required to be paid 
under paragraph (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 operation of the program, 
    function, service, or activity 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 administration by the Secretary;
        (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 function to be contracted;
            (B) a directive in the statement of the managers 
        accompanying a conference report on an appropriation bill or 
        continuing resolution;
            (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, activity, or 
        program;

        (3) shall not be reduced by the Secretary to pay for Federal 
    functions, including, but not limited to, Federal pay costs, Federal 
    employee 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 displaced by a self-determination contract; and
        (5) may, at the request of the tribal organization, be increased 
    by the Secretary if necessary to carry out this subchapter or as 
    provided in section 450j(c) of this title.

Notwithstanding any other provision in this subchapter, the provision of 
funds under this subchapter is subject to the availability of 
appropriations and the Secretary is not required to reduce funding for 
programs, projects, or activities serving a tribe to make funds 
available to another tribe or tribal organization under this subchapter.

(c) Annual reports

    Not later than May 15 of each year, the Secretary shall prepare and 
submit to Congress an annual report on the implementation of this 
subchapter. Such report shall include--
        (1) an accounting of the total amounts of funds provided for 
    each program and the budget activity for direct program costs and 
    contract 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 negotiated 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 
    contracting activities under this subchapter, 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 450j(d) of this title.

(d) Treatment of shortfalls in indirect cost recoveries

    (1) Where a tribal organization's allowable indirect cost recoveries 
are below the level of indirect 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 
shortfall 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 construed 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 fiscal year 1992

    Indian tribes and tribal organizations shall not be held liable for 
amounts of indebtedness attributable to theoretical or actual under-
recoveries or theoretical over-recoveries of indirect 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 disallowances

    Any right of action or other remedy (other than those relating to a 
criminal offense) relating 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 appeals pursuant to section 450m-1 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 476 of this title.

(g) Addition to contract of full amount contractor entitled; adjustment

    Upon the approval of a self-determination contract, 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 administers 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 construction 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 passed on by the tribal organization to 
construction contractors and subcontractors.

(i) Indian Health Service and Bureau of Indian Affairs budget 
        consultations

    On an annual basis, the Secretary shall consult with, and solicit 
the participation of, Indian tribes and tribal organizations in the 
development of the budget for the Indian Health Service and the Bureau 
of Indian Affairs (including participation of Indian tribes and tribal 
organizations 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 participation 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 organization may, without 
the approval of the Secretary, expend funds provided under a self-
determination contract for the following purposes, to the extent that 
the expenditure of the funds is supportive of a contracted program:
        (1) Depreciation and use allowances not otherwise specifically 
    prohibited by law, including the depreciation of facilities owned by 
    the tribe or tribal organization.
        (2) Publication and printing costs.
        (3) Building, realty, and facilities costs, including 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 proceedings by or against the United 
    States.
        (8) Insurance and indemnification, including insurance covering 
    the risk of loss of or damage to property used in connection with 
    the contract without regard to the ownership of such property.
        (9) Costs incurred to raise funds or contributions from non-
    Federal sources for the purpose of furthering the goals and 
    objectives of the self-determination contract.
        (10) Interest expenses paid on capital expenditures such as 
    buildings, building renovation, or acquisition or fabrication of 
    capital equipment, and interest expenses on loans necessitated due 
    to delays by the Secretary in providing funds under a contract.
        (11) Expenses of a governing body of a tribal organization that 
    are attributable to the management or operation of programs under 
    this subchapter.
        (12) Costs associated with the management of pension funds, 
    self-insurance funds, and other funds of the tribal organization 
    that provide for participation by the Federal Government.

(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 contract, if the Secretary determines that 
the tribal 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 approve, and promptly release any funds withheld upon 
subsequent compliance.
    (2) With respect to any hearing or appeal conducted pursuant to this 
subsection, the Secretary shall have the burden of proof to establish 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 organization in the course of 
carrying out a self-determination 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 responsibilities of Secretary; 
        use of savings

    To the extent that programs, functions, services, or activities 
carried out by tribal organizations pursuant to contracts entered into 
under this subchapter 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 
provision of additional services to program beneficiaries, either 
directly or through contractors, in a manner equitable to both direct 
and contracted 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 approved budget of 
the contract, rebudget to meet contract requirements, if such 
rebudgeting would not have an adverse effect on the performance of the 
contract.

(Pub. L. 93-638, title I, Sec. 106, as added Pub. L. 100-472, title II, 
Sec. 205, Oct. 5, 1988, 102 Stat. 2292; amended Pub. L. 101-301, 
Sec. 2(a)(8), (9), May 24, 1990, 104 Stat. 207; Pub. L. 101-644, title 
II, Sec. 203(a), Nov. 29, 1990, 104 Stat. 4666; Pub. L. 103-413, title 
I, Sec. 102(14)-(19), Oct. 25, 1994, 108 Stat. 4257-4259; Pub. L. 105-
362, title VIII, Sec. 801(g), Nov. 10, 1998, 112 Stat. 3288; Pub. L. 
106-260, Sec. 9, Aug. 18, 2000, 114 Stat. 733.)


                            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 450j of this title.


                               Amendments

    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 annual report to Congress on implementation 
of this subchapter.
    1994--Subsec. (a)(1). Pub. L. 103-413, Sec. 102(14)(A), inserted 
before period at end ``, without regard to any organizational level 
within the Department of the Interior 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''.
    Subsec. (a)(2). Pub. L. 103-413, Sec. 102(14)(B), inserted ``an 
amount for'' after ``consist of''.
    Subsec. (a)(3). Pub. L. 103-413, Sec. 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, Sec. 102(14)(C), added pars. 
(4) to (6).
    Subsec. (c). Pub. L. 103-413, Sec. 102(15)(A), substituted ``May 
15'' for ``March 15'' in introductory provisions.
    Subsec. (c)(1), (2). Pub. L. 103-413, Sec. 102(15)(B), substituted 
``contract support costs'' for ``indirect costs''.
    Subsec. (c)(6). Pub. L. 103-413, Sec. 102(15)(C)-(E), added par. 
(6).
    Subsec. (f). Pub. L. 103-413, Sec. 102(16), inserted after second 
sentence ``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.''
    Subsec. (g). Pub. L. 103-413, Sec. 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 organization, 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 subsequent year that the program remains continuously under 
contract.''
    Subsec. (i). Pub. L. 103-413, Sec. 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 Bureau of Indian Affairs which consists of agency 
personnel (area personnel in the Navajo Area and in the case of Indian 
tribes not served by an agency) and tribal representatives for the 
purpose of analyzing the `Indian Priority System' and other aspects of 
the budgeting 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 
tribal decision-making authority over the use of funds appropriated for 
the benefit of the tribes and their members. 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 report.''
    Subsecs. (j) to (o). Pub. L. 103-413, Sec. 102(19), added subsecs. 
(j) to (o).
    1990--Subsec. (e). Pub. L. 101-644 substituted ``1992'' for 
``1988''.
    Subsec. (f). Pub. L. 101-301, Sec. 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 codification was translated as ``prior to October 19, 
1984'', requiring no change in text.
    Subsec. (i). Pub. L. 101-301, Sec. 2(a)(9), substituted ``agency 
personnel (area personnel in the Navajo Area and in the case of Indian 
tribes not served by an agency)'' for ``agency personnel''.

                  Section Referred to in Other Sections

    This section is referred to in sections 13a, 450c, 450f, 450j, 450l, 
458aaa-4, 458aaa-5, 458aaa-7, 458aaa-15, 2508 of this title.
