Thursday, November 7, 2013

103 Years to Implement: The Buy Indian Act

Here's a write-your-own punchline fact: The Buy Indian Act was signed into law by President William Howard Taft on June 24,  1910. The regulations that allow the law to be implemented and enforced were just completed on July 8, 2013, only 103 years later.

Paula Woessner provides an overview of he situation in "Long-awaited rules require the BIA to "buy Indian," published in the October 2013 issue of Community Dividend, a regular publication of the Federal Reserve Bank of Minneapolis. She writes:

More than a century after its passage, an act of legislation with the potential to transform the federal government’s purchasing practices in Indian Country finally has the force of law. Effective July 8, 2013, the U.S. Department of the Interior adopted final rules that require the Bureau of Indian Affairs (BIA) to give preference to Indian-owned or -controlled businesses in matters of procurement. The rules are the long-awaited last step in implementing the Buy Indian Act, a law signed on June 25, 1910. Although the act has been on the books since then, it was unenforceable until now because there were no rules adopted for implementing it. Rule writing didn’t begin in earnest until 1982 and then proceeded in fits and starts over the ensuing 30 years. It is now, at long last, completed.
It's a little hard here to say what happened, because the whole point is that for a century or so, not very much did happen and contracts did not typically flow firms owned by Native Americans. The key sentence of the 1910 act reads:
So far as may be practicable Indian labor shall be employed, and purchases of the products (including, but not limited to printing, notwithstanding any other law) of Indian industry may be made in open market in the discretion of the Secretary of the Interior.
Apparently the key words of this bill were not the instructions "so far as may be practicable Indian labor shall be employed," but rather the phrase "in the discretion of the Secretary of the Interior." Here's the U.S. Department of the Interior news release about the new rules.

I confess that I'm not a big fan of rules that require the government to purchase goods and services from firms run by people of a particular ethnicity or gender. When government is buying goods and services, it should seek to get the best possible deal for taxpayers. Set-asides always come with the need for a bunch of well-meant rules. As Woessner explains,
The Buy Indian Act rules authorize the Secretary of the Interior to set aside procurement contracts for Indian economic enterprises (IEEs), which are defined as for-profit businesses that are at least 51 percent Indian-owned. The tribes or individual Indians that own the IEEs must manage the contract, receive the majority of earnings from it, and control the business’s daily operations. ... Under the rules, the BIA must give Indian businesses first preference in procurement matters by seeking contract offers from at least two IEEs and then selecting one of them, so long as it is of a “reasonable and fair market price.” ... Subcontracting is permitted, but at least 50 percent of the subcontracted work must go to IEEs.
So to hand out what is estimated to be about $45 million in contracts per year, the government will need to be deciding whether enterprises are truly Indian-owned, or whether the Indian ownership is a front for others. It will need to decide if the bids are a "reasonable and fair market price." It will need to monitor subcontracting. When an agency has taken 103 years to write the implementation rules in the first place, it is reasonable to question how effectively it will carry out these tasks.