The US Department of Interior (DOI) recently issued the DOI Indian Affairs Manual for 2017, which includes the final revised policy for determining tribes’ contract support costs (CSC) under self-determination contracts and self-governance funding agreements.
A revised policy was proposed in response to the Supreme Court ruling in Salazar v. Ramah Navajo Chapter, which stated “the Government must pay each tribe’s contract support costs in full” and “the Government’s obligation to pay contract support costs should be treated as an ordinary contract promise.” The DOI worked closely with the Bureau of Indian Affairs (BIA) Tribal-Federal CSC Workgroup to review responses received to the draft policy that was issued in March 2016, and an updated policy has now been finalized.
Inside the Policy
The updated policy is intended to further the BIA’s goal of simplifying its approach and will result in some increase in CSCs for tribes, both direct and indirect. The finalized policy includes these provisions:
- States that the purpose of the policy is to provide guidance for the “full payment of CSC” and to ensure it meets 100 percent of the tribe’s CSC need,” which reinforces the principles decided in Salazar v. Ramah Navajo Chapter.
- Updates the calculation of direct CSC to a flat 18 percent of budgeted salaries, which doesn’t include fringe. This is an increase from the previous 15 percent flat rate and confirms that tribes won’t be required to negotiate amounts based on expected actual costs.
- Confirms direct CSCs are part of the direct cost base on which indirect CSCs are calculated.
- Confirms indirect CSCs as the current approved indirect cost rates multiplied by the secretarial 106(a)(1) amount awarded to the tribe, minus exclusions and pass-throughs, as applicable.
- Indicates tribes without a current indirect-cost rate may use the last approved rate as long as the previous rate is less than four years old.
- Provides a process for tribes with no indirect cost rate—or an approved rate that’s more than four years old—to obtain indirect CSC funding under the negotiated lump-sum method. This allows tribes to negotiate a fixed lump-sum amount of indirect CSC, which will be effective for the entire contract year. Subsequent years would require a new approved indirect rate, or a new negotiated lump-sum amount.
- Also provides a process for tribes to receive indirect CSC at a flat 30 percent of the secretarial 106(a)(1) amount awarded to the tribe, minus exclusions and pass-throughs, if they didn’t qualify for a single audit in the preceding year and don’t have an approved indirect cost rate less than four years old.
- Provides that the approved indirect rate in effect at the end of each year will be used to determine if the tribe was over or underpaid indirect CSC for the year. New rates approved after the year-end date won’t be considered in determining over or underpayments.
We're Here to Help
The BIA policy changes presents new opportunities for tribes to maximize CSC reimbursements. If you have questions about how to apply the changes, contact your Moss Adams professional.