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Part 5 - Management Services

Chapter 2 - Memorandum Of Agreement


Title Section
Introduction 5-2.1
    Purpose 5-2.1A
    Background 5-2.1B
    Scope 5-2.1C
    Authority 5-2.1D
    Policy 5-2.1E
Memorandum of Agreement 5-2.2
    Memorandum of Agreement 5-2.2A
    Drafting the MOA 5-2.2B
    Memorandum of Agreement Participants 5-2.2C
    Non-Specific MOA 5-2.2D
    Memorandum of Agreements for Pre-Project Planning 5-2.2E
    Memorandum of Agreement Review and Approval 5-2.2F
    Prohibited MOA Uses 5-2.2G
    Administrative Provisions 5-2.2H
    Indian Self-Determination 5-2.2I
    Waivers 5-2.2J
Project Development 5-2.3
    Direct Provision by the IHS 5-2.3A
    Direct Provision by the Tribe 5-2.3B
    Direct Provision by a Third-Party 5-2.3C
    Profit 5-2.3D
    Risk 5-2.3E
    Choice of Work Instrument 5-2.3F
Memorandum of Agreement Structure and Procedures 5-2.4
    Required MOA Format 5-2.4A
    Required MOA Provisions 5-2.4B
    Provisions for Tribal Procurement 5-2.4C
    Memorandum of Agreement Procedures 5-2.4D
    Non-Specific MOA 5-2.4E
    Memorandum of Agreement Amendments 5-2.4F
    Letter Amendments 5-2.4G
    Standard MOA Termination Procedure 5-2.4H
    Memorandum of Agreement Disputes 5-2.4I
    Inquiries 5-2.4J
    Appeals Process 5-2.4K
    Memorandum of Agreement Completion 5-2.4L
Administrative Requirements 5-2.5
    Accountability 5-2.5A
    Standards of Internal Control 5-2.5B
    Review Procedures 5-2.5C
    Prohibited Practices 5-2.5D
Indian Health Service Personnel Roles 5-2.6
    Role of the Area Director 5-2.6A
    Role of the Area Office, OEH&E Director 5-2.6B
    Role of the IHS Area SFC Program Director 5-2.6C
    Role of the District Engineer 5-2.6D
    Role of the IHS Project Engineer 5-2.6E
    Role of the Headquarters SFC Program Director 5-2.6F
Ethical Standards 5-2.7
Direct Provision by the IHS 5-2.8
    Government Contracting 5-2.8A
    Open Market Contracts 5-2.8B
    Public Law 93-638 Contracts 5-2.8C
    Public Law 93-638 Title V 5-2.8D
    Government Force Account 5-2.8E
Direct Provision by Tribes 5-2.9
    Tribal Force Account 5-2.9A
    Tribal Procurement 5-2.9B
    Procedures Common to Tribal Force Accounts and Procurement 5-2.9C
    Tribal Records and Property Management 5-2.9D
Third-Party MOA 5-2.10
    Additional Required Provisions in Third-Party MOA 5-2.10A
    Eligible Third-Party Participants 5-2.10B
    Administration by a Third-Party 5-2.10C
    Transferring Facilities to a Third-Party 5-2.10D
    Administrative Policy and Procedures 5-2.10E


5-2.1  INTRODUCTION

  1. Purpose.  The purpose of this chapter is to establish the Memorandum of Agreement (MOA) as the primary means by which the Indian Health Service (IHS) obligates appropriations for sanitation facilities construction.  The MOA provides the IHS with a unique instrument for providing essential sanitation facilities to Tribes.  The Government Accountability Office (GAO) has stated that IHS’ use of the MOA as an obligating document is legal.  (See the GAO report, “Unexpended Fund Balance in the Indian Health Service Water and Sanitation Facility Construction Program,” (HRD-80-124) dated September 30, 1980.)

  2. Background.  Under the authority of Public Law (P.L.) 86-121, the IHS implemented a program to provide essential sanitation facilities to eligible American Indians and Alaska Natives (AI/AN).  The IHS health delivery system provides essential sanitation facilities including domestic water supply; wastewater disposal; solid waste disposal facilities; operation and maintenance equipment and training; and related services such as engineering studies, testing, and housing site evaluations.  The Sanitation Facilities Construction (SFC) Program is considered a fundamental element of the IHS preventive health effort.  Congress reaffirmed the primary responsibility and authority of the IHS to provide the necessary sanitation facilities and services authorized by P.L. 86-121 in Section 302(b) of the Indian Health Care Improvement Act, P.L. 94-437, as amended.

    Most of the projects that provide sanitation facilities projects and related services benefitting AI/AN people are funded using an MOA signed by the Tribe and other project participants.  The document, “Criteria for the Sanitation Facilities Construction Program,” (hereafter “Criteria” document) outlines the methodology for allocating IHS appropriated funds for sanitation facilities in support of housing projects and sanitation facilities for regular projects.

  3. Scope.  This chapter provides consistent and orderly instructions for utilizing the MOA to provide sanitation facilities to the AI/AN people.  The current MOA guidelines (“MOA Guidelines for the Public Law 86-121 Sanitation Facilities Construction Program”) will provide additional guidance on the implementation of this chapter.  Any issues, circumstances, or questions that cannot be resolved should be referred to the SFC Program Director at the IHS Area Office, who will consult with SFC Program Director at IHS Headquarters, as appropriate.

  4. Authority.  The specific authority for the MOA is set forth in Section 7(a)(3) of P.L. 86-121, Title 42 United States Code (U.S.C.) 2004(a)(3), which authorizes the Surgeon General:

    “...to make such arrangements and agreements with appropriate public authorities and nonprofit organizations or agencies and with the Indians to be served by such sanitation facilities (and any other person so served) regarding contributions toward the construction, improvement, extension and provision thereof, and responsibilities for maintenance thereof, as in his judgment are equitable and will best assure the future maintenance of facilities in an effective and operating condition.”

    Section 7(a)(3) gave broad discretionary powers to the Surgeon General to carry out the mandates of P.L. 86-121.  Most IHS sanitation facilities projects are executed using an MOA, because it provides more flexibility to make arrangements for contributions from non-Federal sources and accomplish required sanitation improvements than traditional contracting methods.  The authority vested in the Surgeon General by P.L. 86-121 was transferred to the Secretary, Health, Education, and Welfare (HEW) by the Reorganization Plan No. 3 of 1966.  The Secretary of HEW was redesignated as the Secretary of Health and Human Services by Section 509(b) of P.L. 96-88 in 1979.  The authority was delegated to the Director, IHS, by the Reorganization Order of January 4, 1988, 52 Federal Register (FR) 47053, which elevated the IHS to a Public Health Service (PHS) Agency.  The authority was further delegated to IHS Area Directors on April 25, 2006.  (See Program Delegation of Authority No. 8 in the Indian Health Manual (IHM).)

    When the SFC Program began, guidance was provided by the IHS Circular No. 62-15, “Method of Conduct, Indian Sanitation Facilities Construction Activity,” dated August 1962.  Further guidance was made available in “Criteria for Sanitation Facilities Construction,” dated February 6, 1984, which was replaced by the “Criteria for the Sanitation Facilities Construction Program” (“Criteria” document) in June 1999 and revised March 2003.  This chapter supersedes IHS Circular No. 62-15, “Method of Conduct, Indian Sanitation Facilities Construction Activity,” dated August 1, 1962.

  5. Policy.  The MOA is a legal instrument entered into by the IHS and Tribes to create, obligate funds for, and sometimes construct, sanitation facilities projects authorized by P.L. 86-121.  Other entities may be parties to the MOA, usually because they contribute funds to the IHS project; however, the MOA is the controlling legal instrument for the project because it is the only document that includes agreed upon commitments between the IHS and the Tribe, and commitments made by other parties toward the sanitation facilities construction project.

5-2.2  MEMORANDUM OF AGREEMENT

  1. Memorandum of Agreement.  The MOA establishes a cooperative relationship among the committed parties in accomplishing work authorized under P.L. 86-121.  Project work can be funded using the MOA as the instrument to obligate sanitation facilities funds (GAO report HRD-80-124, B-197343, dated 09/30/1980), or through other instruments, such as contracts which are executed subsequent to the MOA.  In addition to identifying project funding arrangements, the purposes of the MOA include:

    1. Identifying the parties participating in a project and describing their responsibilities when performing the work described in the Project Summary which is an integral part of the MOA.

    2. Specifying rules and procedures that govern the conduct of the parties in performing the work to complete the project.

    3. Designating the ownership of the completed sanitation facilities and designating the responsible party for operation and maintenance of the completed sanitation facilities.

  2. Drafting the MOA.  When drafting the MOA, IHS Area SFC Programs must ensure that the conditions written in the MOA are appropriate under IHS’s authorizing statutes and that any programs, functions, services, and activities (PFSA) assigned to the IHS are authorized under those statutes.

    Most IHS sanitation facilities projects funded under authority of P.L. 86-121 have an MOA executed between the IHS and the party receiving the facilities or services, regardless of the source of the funds.  If P.L. 86-121 is the authority for funding the sanitation facility project, an MOA must be executed, whether funds used for the project are appropriated, transferred, or contributed to the IHS. One exception could be projects undertaken by Tribes with Self-Determination Agreements.

    During the drafting of the MOA, the parties must agree on the method of accomplishing the work, because the method of accomplishing the work determines the provisions and conditions that are written into the MOA.  A variety of methods are described in this chapter with respect to the use of an MOA.  Some methods, like force account construction, are covered in detail, while others with established regulations, such as Federal contracting, have not been included.

    The MOA is used in the SFC Program to provide considerable interaction and substantial involvement by SFC Program staff with the recipient American Indian Tribe and Alaska Native entity during the performance of the project.  The interaction between the IHS SFC Program and the Tribe occurs when the IHS provides directly or participates in some or all of the following:  planning, or designing facilities; contracting or supervising construction of facilities; assisting in contractor selection; coordinating or participating in the collection and analysis of data; providing training; reviewing and approving project activities; plan review and inspection; and providing technical management assistance.

    In addition to sanitation facilities construction, the MOA may also be used to provide technical assistance and/or professional services from Federal employees or others, if they are related to the provision of sanitation facilities.

  3. Memorandum of Agreement Participants.  An MOA can be executed with:

    1. Any Federally Recognized Indian Tribe or Alaska Native Village, Indian band, group, or community, subject to IHS regulations on health care eligibility requirements;

    2. appropriate public authorities;

    3. nonprofit organizations, and

    4. other agencies and units of the Federal government.

    Groups (2), (3), and (4) are considered “third-parties."  Memorandum of Agreements with public authorities and nonprofit organizations must be for the health benefit of eligible AI/AN and related to the provision of sanitation facilities and/or related technical services.  Individual agreements with individual homeowners may be required in addition to the MOA.

    The IHS must be consistent in the use of its legal obligating document, the MOA.

    The IHS must be consistent in its relationships with other agencies and it must be consistent in its use of the MOA across IHS Areas.  Consistent implementation is essential to ensuring continued use of the MOA by the IHS.  The MOA is the obligating document between IHS and the Tribe, and the MOA may not enforce another agency’s requirements.  The IHS is not authorized to enforce another agency’s requirements; the other agency must do so in a separate agreement with the Tribe.  Public Law 86-121 provides the authority to the IHS to enter into an MOA with the Tribe and other participants.  Other agencies have their own authorities for entering into agreements with Tribes; therefore, the other agency’s requirements must be completely separate from the MOA.

    The IHS is not a grant or loan recipient and the IHS needs to completely separate itself from the other agency’s loan or grant provisions.  The other agency’s loan or grant requirements should be in a separate grant or loan with the Tribe.

    Including another agency’s requirements in an MOA gives the appearance that the IHS will enforce those provisions.  The IHS will work with the Tribe to ensure that the Tribe’s contract and other documents meet the conditions of their grant or loan.  The other funding agency is responsible for enforcing its grant or loan conditions whether or not it signs the MOA.

    The MOA is an agreement between the IHS and the Tribe; sometimes a contributing agency may sign the MOA.  Under those circumstances, the grant or loan requirements are between the Tribe and the contributing agency.  The instruments for contributing funds, include the IHS MOA, other agency grants or loans, and Inter-Agency Agreements (IAA).  Each of those instruments has a different purpose and is executed under different authorities.  Each of those instruments, the MOA, Agency grant or loan, or IAA, must be treated as a separate agreement to meet the requirements of each agency's separate authorities.

  4. Non-Specific MOA.  Some Tribes, communities, and other organizations participate in several P.L. 86-121 projects during a fiscal year (FY) or within a 3- or 4- FY period.  The participation of these entities and the agreement provisions covering their participation are often identical for all projects.  Some examples of these recurring activities include:  power-line extensions, archeological services, Tribal procurement procedures, and multi-project MOAs for Tribes using Subpart J construction contracts.  Use of non-specific MOAs to define the scope/activities/relationships of the respective parties may increase efficiency and reduce paperwork for numerous specific projects which may follow.  A non-specific MOA cannot obligate any IHS funds or resources.  Further explanation is provided in Section 5-2.4, “Memorandum of Agreement Structure and Procedures.”

  5. Memorandum of Agreements for Pre-Project Planning.  The use of project funds to purchase materials or services for planning or developing future construction projects does not always require prior execution of an MOA.  Examples would include procurement of materials in large quantities used for several projects, or aerial photography services.  However, an MOA is always required if the following apply:

    1. funds or resources are contributed from one governmental entity to another;

    2. there is Tribal participation; or

    3. the IHS or an IHS designee utilizes Tribal lands, facilities, or equipment; e.g., soil boring on Tribal land.

  6. Memorandum of Agreement Review and Approval.  All MOAs are approved and executed at the IHS Area level by the IHS Area Director.  Upon request, copies of the MOA for projects exceeding $1 million (total of all IHS and contributed funds) must be sent to the Director, SFC Program, Headquarters, IHS, for oversight purposes.  It is recommended that any unusual or complicated MOA and an MOA for unusual projects be forwarded to IHS Headquarters for review prior to approval by the Area Director.  All original signed MOAs must be retained at the IHS Area level.

  7. Prohibited MOA Uses.  The MOA, authorized by P.L. 86-121, may only be used to provide items (including services) related to sanitation facilities serving AI/ANs.  The MOA may not be used to allow a Tribe or other MOA party to procure goods or services that will benefit the Federal Government, even if the procured goods or services are used to assist Indian people through the SFC Program.  Federal contracts and purchase orders must be used if the goods or services are procured for the direct benefit or use of the Federal Government, as specified in the Federal Acquisition Regulations (FAR).  For example, an IHS office may not use an MOA to have a Tribe procure or rent office equipment (e.g., computers or copiers) for use by Federal employees even if that equipment is used for administration of SFC projects.  An MOA with a Tribe may not be used to purchase meeting space for a meeting of only Federal employees or any meeting not required to provide sanitation facilities or technical assistance as described in the MOA.

    An MOA may not be used to hire Tribal or other non-Federal employees as secretaries, clerk typists, draftsmen, engineering aides, engineering technicians, and other personnel to work in Government offices or otherwise provide personal services to the Federal Government.  Any individual who represents the IHS, (such as, an inspector) retains control or responsibility of any work on behalf of the Government, must be a Government employee or its agent; the individual cannot be a Tribal employee paid under an MOA.

  8. Administrative Provisions.

    1. Contributions.  Most MOAs contain provisions listing project contributions that each MOA party has agreed to fulfill.  These contributions may be in the form of funds, paid labor, voluntary labor, equipment, land, interests in land (such as easements and rights-of-way), and materials.

      While P.L. 86-121 does not require contributions from the Tribe or other non-Federal party to the MOA, the legislative history clearly indicates the intention of the Congress that the Federal Government seek contributions from the beneficiary or beneficiaries of the sanitation facilities project and other parties.

      The IHS Area Director will determine the type and extent of the contribution that is appropriate under the circumstances and will ensure the best use of IHS resources and the future operation and maintenance of the facilities.

    2. Indian Preference.  The IHS must comply with the Buy Indian requirements in P.L. 93-638, Section 7 (25 U.S.C. 450e(b)) with regard to Indian preference provisions in contracts and in the awarding of subcontracts.  Specific provisions are listed in the HHS Acquisition Regulations at 48 CFR Chapter 3.

      When IHS funds are pooled with funds from a non-Federal, non-Tribal Government, Indian preference shall be applied to the greatest extent feasible, except as prohibited by applicable law or regulation.  If the non-Federal, non-Tribal Government retains control of the funds, its Indian preference policy applies.  In the absence of legal authority by that Government to promote Indians preference, it is considered “infeasible” to require the non-Federal, non-Tribal Government entities to mandate Indian preference.

    3. Minimum Construction Standards.  Minimum standards for construction, materials, and equipment will be established by agreement between the IHS and the MOA parties.  In the absence of specified minimum standards for a project, the standards required for other IHS SFC projects within the IHS Area shall be used.  For all SFC projects, plans and specifications, or at a minimum, a scope of work, is required to identify exact technical requirements.

    4. Project Performance Monitoring.  Indian Health Service personnel must maintain communication and provide close project monitoring due to the cooperative nature of the P.L. 86-121 MOA method of accomplishing work.  The approach used for monitoring for each project will depend on the degree of participation by each party and the methods of accomplishing the work in accordance with the terms of the MOA.  Monitoring of a project by the IHS shall continue until the IHS transfers the project and its interest to the Tribe or other MOA party or parties.

  9. Indian Self-Determination.

    1. Self-Determination.  A Tribe may request to participate in a sanitation facilities construction project using a contract authorized under Title I of P.L. 93-638.  Most P.L. 93-638 Title I construction contracts for SFC projects are executed subsequent to an MOA with the Tribe.  Title I construction contracts are discussed in greater detail in the current IHS “Public Law 93-638 Construction Technical Assistance Guide.”

    2. Self-Governance.  There are three ways to make funds available to Self-Governance Tribes (Title V, P.L. 93-638) who will implement new sanitation facilities construction projects (authority is in parentheses):

      1. Title I Construction Contract (Title I, P.L. 93-638)

      2. Funding Agreement Addendum or Amendment (P.L. 86-121)

      3. Title V Construction Project Agreement (Title V, P.L. 93-638)

      Additional guidance may be found in the IHS “Public Law 93-638 Construction Technical Assistance Guide” and in the Title V regulations at 42 CFR Part 137, specifically, Subpart N, “Construction.”

    3. Contributions from Other Parties.  An MOA is required for a project, if funds from other parties are contributed to the project and these funds are administered by the IHS.  The MOA is the instrument for obligating those funds to the project and for designating the responsibilities of each party.

      The IHS may enter into a P.L. 93-638, Title I, Subpart J, or Title V, Subpart N agreement for funds appropriated to other agencies but administered by the IHS, provided that those contributed funds meet two statutory criteria:

      1. the funding program must be either administered for the benefit of AI/ANs or be a program of which AI/ANs are the primary or significant beneficiaries; and

      2. the funds must also be administered by the Secretary, Department of Health and Human Services (HHS).

    Funds that another agency has already awarded or allocated to Tribes, but then passed to the IHS to give to the Tribe are not considered to be “administered by the Secretary.”  The MOA is the only instrument that may be used to transfer funds to the Tribe, if the IHS accepts this type of contribution which is not administered by the Secretary.

  10. Waivers.  This chapter is based on Federal laws and regulations.  Any waiver from the requirements specified in this chapter shall not be made without the written consent of the Director, Office of Environmental Health and Engineering (OEHE), IHS, who will consult with the appropriate knowledgeable individuals within the HHS.

5-2.3  PROJECT DEVELOPMENT

The purpose of an SFC project is to provide sanitation facilities in the form of projects to provide either services, facilities, or both to the AI/AN people and AI/AN communities.  The MOA establishes the project obligation and relationship between the Federal Government and the Tribe.  The Federal Government may do the work with Federal procurement contracts for materials and services and by force account construction using Federal employees for labor.  The Tribe or a third-party could do the work with their own force account labor and procurement practices.  The SFC Program uses all those methods.  The MOA for every IHS SFC project describes the cooperative relationship among all parties and describes how the work will be accomplished.  The choices or methods for accomplishing the work are as follows:

  1. Direct Provision by the IHS.  This method of accomplishing work includes Federal contracts with Tribes or other responsible entities and force account construction where the work is done by Federal workers.  The products of contracts (goods and services) are transferred to the AI/AN community or other responsible non-Federal entity.

    1. Direct Federal Procurement.  Federal contracts are used when the Federal Government plans to acquire property, services, resources, or studies for its own use or direct benefit, and those contracts are regulated by the FAR.  The sanitation facilities procured by the IHS with a contract belong to the Federal Government and will be transferred to an AI/AN community or other responsible non-Federal entity upon project completion.

      1. Direct Federal Contract.  In a fixed-price contract, the contractor assumes the risk for non-performance and may make a profit; however, the Government may require bonds or other assurances of performance.  A contract may be restricted to a class of contractor, such as a small business enterprise.

      2. Public Law 93-638 Title I Construction Contracts.  Public Law 93-638 Title I construction contracts for construction of sanitation facilities are executed on a project-by-project basis.  Most P.L. 93-638 construction contracts for SFC projects are executed subsequent to an MOA with the Tribe.  The IHS “Public Law 93-638 Construction Technical Assistance Guide” and 25 CFR 900 Subpart J, contain P.L. 93-638 construction contract requirements.

    2. Government Force Account.  In general, force account construction refers to work done without prior contractual agreement, and the cost of labor, materials, equipment, insurance, and miscellaneous support costs are charged to the project account.  In the SFC Program, Government force account work is performed by Federal Government employees under the direction of an IHS construction supervisor.  Under an MOA, the IHS may elect to use Federal employees to construct all or part of the project.  The IHS schedules the work, assures quality control, and may provide procurement, equipment, and arrange transportation.  The Tribe may provide skilled or unskilled workers to work with Federal employees on the job site; however, there are restrictions on IHS supervision of Tribal employees.

  2. Direct Provision by a Tribe.  Under this method of accomplishing work, funds are obligated by the MOA.  Then, as agreed upon in the MOA and in accordance with a payment schedule and upon request from the Tribe, the obligated funds are contributed to the Tribe; and the Tribe constructs or procures the sanitation facilities.

    1. Tribal Force Account.  In a Tribal force account construction project, the Tribe accomplishes the work with Tribal employees directed by a Tribal construction supervisor who has control of the project at the construction site.  Typically, the Tribe manages the project funds and provides the equipment, materials, and support.  The IHS role may include providing technical assistance and inspection for quality control during construction.  Job-site technical guidance (but not supervision or control) may be provided by a Federal Government employee, if the Tribe and the IHS decide to utilize this approach to construction.  The ownership of the facilities, materials, and supplies purchased by the Tribe with MOA funds vests with the Tribe upon the acquisition of materials and installation of the facilities.

    2. Tribal Procurement.  Where sanitation facilities are procured by the Tribe (i.e., the Tribe contracts with another entity to construct the sanitation facilities), ownership vests with the Tribe upon final acceptance of completed construction from its contractors.  The Tribe may transfer individual facilities to homeowners.

  3. Direct Provision by a Third-Party.  For various reasons, a third-party may be permitted to participate in the sanitation facilities project.  Third-parties can be States, counties, municipalities, housing authorities, rural water districts, non-IHS Indian health clinics, or other non-profit organizations.  If a third-party procures the sanitation facilities, ownership vests with the third-party upon final acceptance of the completed construction from its contractor.  In accordance with the MOA, the third-party may own and operate the facilities or transfer the facilities to the Tribe or to individual Indians.

    1. Third-Party Force Account.  If the third-party has the capability to construct the sanitation facilities with its own employees, the MOA parties may choose to allow the third-party to perform all or a portion of the project with IHS funds.  The IHS role could include providing technical assistance and inspection to assure quality control during construction.  In a third-party force account situation, ownership of the facilities vests with the third-party upon acquisition of materials and installation of the facilities.  In the MOA, the third-party may agree to transfer the facilities to the Tribe or individual Indians.

    2. Third-Party Procurement.  A third-party to an MOA may use IHS funds to procure the goods and services authorized under P.L. 86-121 to benefit the AI/AN people.

  4. Profit.  Profit is not permitted under an MOA.  When the IHS contributes funds to an MOA party, that party may not earn a profit from those funds even if that party is a Tribe.  Any MOA funds remaining after the project is complete must be returned to the IHS or the contributors unless those remaining funds are applied towards a mutually amended scope of work as described in an amended MOA approved by all affected parties.

  5. Risk.  The MOA parties share the risks of the construction project.  The extent of the risk depends on the type and extent of participation by each party, and some types of risk may not always be apparent or applicable.  The types of risk are described below:

    1. Reduced Project Scope or Incomplete Project.  An MOA establishes a cooperative relationship for accomplishing the project.  The risk assumed by the MOA parties who contributed to the project described in the Project Summary is limited under the cooperative MOA relationship.  All MOA parties share the risk that the project will not be completed as intended, and the full benefits of the proposed project may not be realized.  For example, if the project costs more than available or obligated funds, the Tribe may have to accept a reduced scope of work or a cancellation of the project.

    2. Loss of Contribution.  This type of risk borne by the MOA parties is limited to complete loss of that party’s fund contribution toward the project, as outlined in the MOA.  If the Tribe also made an in-kind contribution toward a project that was later cancelled, the Tribe would not be reimbursed for its in-kind work.

    3. Liability for Damages.  The liability assumed by each MOA party depends on the functions each performs under the MOA.  Each MOA party is responsible for damages due to its own negligence.  For example, when a Tribe wants to construct a project using its own employees (Tribal force construction account); the Tribe assumes a significant liability (risk) for damages to public facilities and injuries to bystanders and workers.  The Tribe must carry applicable liability insurance and workmen’s compensation coverage (and should be required to carry such coverage in the MOA).

  6. Choice of Work Instrument.  On most IHS SFC construction projects, the MOA establishes the relationship among the participating parties, is the comprehensive agreement among all involved parties, and establishes the method of accomplishing the work.  Indian Health Service policy on choosing the method of accomplishing the work requires a determination by the IHS and the Tribe of the best approach and the relative capacities of all participants to perform the required project tasks.  The key factors in the decision are:

    1. the requirements of the prospective MOA parties,

    2. the number and type of funding sources,

    3. the business management practices and capabilities of the MOA parties,

    4. the time available to accomplish the work, and

    5. past project performance history of the MOA parties.

    The objective of minimizing IHS involvement in the procurement actions of the Tribe or other entities should also be a consideration in this decision.  For each project, the ultimate decision to use any of the instruments cited, direct provision by IHS, the Tribe, or a third-party, is made by each individual IHS Area Director in accordance with this chapter and in consultation with the IHS Area SFC Program.

    The flexibility of the MOA allows the Tribes to participate to the fullest extent possible in the project to provide their sanitation facilities.  The MOA allows the IHS to pursue the guiding principles of its management strategy that include the Tribes in planning, procuring, construction, and evaluation.  Using the MOA for Tribal procurement allows Tribes to be involved in procuring needed materials and services for their people.  The Federal Government benefits by encouraging Tribal self-governance while increasing Tribal administrative capability which is an express Federal policy.

5-2.4  MEMORANDUM OF AGREEMENT STRUCTURE AND PROCEDURES

  1. Required MOA Format.  At a minimum, each MOA will contain five basic sections:  heading, preamble, agreement provisions, signature block, and project summary.  The following is a brief description of each section.  Required sections include:

    1. Heading.  Sets forth the title of the document and identifies all organizations or agencies that are party to the agreement.

    2. Preamble.  Where appropriate, the preamble will also include the legal authority of other participants. The preamble:

      1. identifies the authorized representative who are executing the agreement on behalf of the parties,

      2. cites the legal authority (P.L. 86-121) under which the IHS will execute the agreement,

      3. incorporates the Project Summary by reference with exact title and date, and

      4. describes the background and purpose of the agreement.

    3. Agreement Provisions.  Identify the specified and authorized responsibilities of all parties to the agreement and the extent of participation of all parties to the agreement.

    4. Signature Blocks.  Provides for the signature and date of all parties to the agreement and, where appropriate, cites the authorization permitting the person to sign on behalf of their respective organization or agency (unless cited in the preamble).

    5. Project Summary.  The Project Summary outlines a plan of action, alternatives considered, and the engineering cost estimate to provide the sanitation facilities and technical assistance referenced by the MOA and includes a review and evaluation of potential environmental and cultural preservation requirements and issues that must considered.  The Criteria document contains more specific instructions on the Project Summary content.  The important point to keep in mind is that an MOA that is executed in connection with a P.L. 86-121 project is based on a plan of action outlined in an approved Project Summary.  Without the Project Summary, many of the provisions of an MOA would be meaningless.  For that reason, the Project Summary is incorporated by reference into the MOA and is an integral part of it.  It follows that the two documents should be consistent with one another and as complete as circumstances allow.  When drafting and amending the MOA, the contents of the Project Summary must be thoroughly reviewed.  If the Project Summary does not truly reflect the intentions of the parties, a revised Project Summary is required.

  2. Required MOA Provisions.  The required provisions are listed below.  Additional provisions may be required depending upon the party controlling the funds and the method of accomplishing the work.  An MOA for pre-construction planning activities need only contain the applicable provisions:

    1. permission to enter upon Tribal lands;

    2. designation of party(s) responsible for rights-of-way;

    3. environmental and cultural requirements and responsibilities;

    4. each party’s contributions and commitments (monetary and non-monetary), including any project technical support amounts (See the “Allowable Program and Project Expenses” section in the “Managing Project Funds” chapter in the Criteria for the Sanitation Facilities Construction Program);

    5. fund control/expenditure provisions/cost principles;

    6. method(s) of accomplishing the work;

    7. authorized representatives for each MOA party;

    8. degree of involvement/control by each party;

    9. minimum construction standards, if Tribe or third-party doing the work;

    10. the IHS role in construction inspection;

    11. ownership and transfer of facilities/services/Federal interest;

    12. responsibility for operation and maintenance;

    13. development and enforcement of operation and maintenance ordinances;

    14. specific performance periods, project schedule;

    15. termination for inactivity;

    16. standard termination procedure; and

    17. the IHS MOA dispute resolution procedures.

  3. Provisions for Tribal Procurement.

    1. Technical Assistance.  The MOA is the authorizing document for providing technical assistance, technical services, and identifying IHS oversight procedures.  The exact methods of work, degree of involvement by each party, and IHS responsibilities for technical assistance and technical supervision must be adequately detailed in the MOA to minimize Agency liability and eliminate the possibility of individual employee liability.  Do not include work items in the MOA that the IHS is not authorized to provide.  Do not use “as necessary” in combination with statements about the method of work or that the IHS may or will provide technical assistance as necessary.

    2. Separate Responsibilities.  An explicit statement should be included in the MOA and a similar statement should be included in the Tribe’s construction contract:  “Indian Health Service employees cannot represent the Tribe and Tribal employees cannot represent the Indian Health Service.”

    3. No Contractual Relationship.  Technical assistance, technical services, or oversight responsibilities outlined in the MOA and provided by IHS staff cannot create or appear to create a contractual relationship with the Tribal contractor, supplier, or other entity who is not a party to the MOA.

    4. Memorandum of Agreement Provisions on IHS Inspection.  The MOA must clearly identify the IHS’s role in construction inspection and require that Tribal procurement documents also include the right of IHS employees to inspect all work.  References to IHS responsibilities and rights should not identify specific individuals by either job title or name.

  4. Memorandum of Agreement Procedures.

    1. Document Disposition.  The Area IHS is the repository for all original project documents.  Signed copies will be provided to all parties of the executed MOA.

    2. Memorandum of Agreement Initiation.  Projects are usually initiated by a request from an American Indian Tribe or Alaska Native Community eligible to receive assistance from the IHS under current eligibility criteria.  The project request or proposal for needed sanitation facilities is submitted in writing to the appropriate IHS Area Director.  The primary purpose of the project proposal is to document the request for IHS sanitation facilities.  The project proposal should include sufficient information for the Area Director to determine location, beneficiaries, and extent of the requested sanitation facilities.  All such proposals must be acknowledged by the IHS Area and a notice of receipt sent back to the initiator.

      The project proposal is the basis for preparing project documents.  The IHS Area may use Tribal documents and letter requests as the basis for preparing project documents, when accepted by the appropriate IHS Area official as an official request.  When acknowledging receipt of the project proposal document, the response should be signed by the appropriate IHS official as designated by Area IHS policy.

      If the IHS decides to fund or otherwise participate in a project using project priority policies, the IHS will initiate consultations with the prospective MOA parties and prepare the draft MOA for review.  (Note:  P.L. 86-121 projects are not grants; they are not an entitlement and they are not competitive.)  Attached to the MOA and incorporated into the MOA by reference is the Project Summary document which specifies the recommended project scope and estimated cost.

    3. Signatures.  One original signature copy of the MOA, each with an attached copy of the Project Summary, will be circulated by the IHS to all parties to the agreement for signature approval.  The authorized representative of each party will sign each MOA copy signifying approval of the recommended project and committing that party to the terms of the MOA.  The IHS will distribute copies of the fully executed MOA and Project Summary to each party to the MOA.

      1. Last Signatory.  When IHS-appropriated funds are committed to a sanitation facilities construction project, the last signatory to the MOA document shall routinely be the IHS Area Director.  Exceptions include:  On letter amendments for minor modifications, the IHS Area Director may sign the letter amendments prior to receiving concurrence and signature from other parties.  The letter amendments should include this or a similar statement:  “It is understood by all parties that this agreement is contingent upon the approval and the execution of this agreement by all parties.”

      2. Project Approval.  All parties to the MOA except the IHS may sign the MOA before the IHS Area Director approves the project (by signing the Project Approval form) under the following conditions:

        1. The Project Summary has been reviewed and approved by the Director, Division of Sanitation Facilities Construction (DSFC) of the IHS Area and is available for review by the authorized representative signing the MOA.

        2. The MOA includes this or a similar statement:  “It is understood by all parties that this agreement is contingent upon approval of this project by the IHS Area Director or his designee, and execution of this agreement by all parties.”

        3. The objective is to allow Areas to submit the Project Approval form and the MOA to the IHS Area Director for signature as one package.  In addition, it may reduce the number of field visits by IHS staff to various organizations to discuss Project Summaries and MOAs and to obtain signatures on project documents.

    4. Memorandum of Agreement Contributions and Obligations.  The sources of funding for sanitation facilities construction projects include congressionally appropriated funds, contributed funds from other Federal agencies, contributed funds from Tribes, and contributed funds from other non-Federal entities.  The MOA sets forth the respective contributions to be made by the MOA parties toward construction of a particular sanitation facilities project and is the instrument for obligating those contributed and appropriated project funds.

      Depending upon the source of funds, the IHS SFC Program must use the appropriate method of accomplishing work.  (Note that Direct Federal procurement is always an option.)  The methods of accomplishing work under an MOA include:

      1. the traditional SFC project or direct service approach;

      2. the SFC project funded fully or partially, with or without the addition of IHS funding, by direct contributions from other Federal agencies; e.g., the Department of Housing and Urban Development’s (HUD) Indian Housing Block Grant program and the Environmental Protection Agency’s (EPA) Indian Set-Aside programs.  Only funds from HUD are specifically authorized by law to be administered by the IHS; and

      3. In situations where another Federal agency provides a grant or loan directly to a Tribe and, subsequently, the Tribe contributes the funds to an IHS SFC project, P.L. 86-121 is the only authorized method of accomplishing the work.

      Since the MOA is the instrument that obligates sanitation facilities construction project funds, the total dollar amount of project funding from all sources must be explicitly stated in the MOA including design, support account, and construction amounts.

      If a portion or all of the funding for any project is obtained from IHS appropriations, the maximum amount of the IHS funds as stated in the MOA (not to exceed the funds available) shall be obligated with the MOA upon project approval and IHS funding.  Funds transferred to the IHS from other Federal and non-Federal entities as project contributions shall be obligated when received; the IHS Area Financial Management office should be advised of the funds amount committed.

      Normally, that maximum contribution amount must be recorded as an obligation; however, the contribution of funds can be conditional in the MOA (e.g., conditional upon the IHS receiving a specific amount from a specific agency).  Depending on the project’s specific circumstances and the conditional statements, some or all of the intended contribution may constitute a commitment upon approval of the project.  For example, the Rural Development (RD) program may provide a loan to the Tribe for a sanitation facility if the IHS supports the Tribe’s efforts.  In the MOA, the Tribe agrees to contribute a specific dollar amount to the IHS for the cost of project support and inspection services.  Since the fund transfer did not take place at the time the MOA was signed, those funds cannot be obligated; however, the signatures of the parties commit them to providing the goods and services described in the Project Summary and the MOA.

    5. Requests for Funds.  If the executed MOA contains provisions for a fund contribution from the IHS to another party, the party that will receive and administer the funds must request the funds in writing in accordance with the provisions of the MOA and this chapter.  The total of all fund contributions cannot exceed the amount stated in the MOA.  The MOA must specify the maximum amount of funds as a specific dollar amount that may be contributed by the IHS to the Tribe, community, or other organization for the purposes specified in the MOA.

      1. Requests for funds identified in the MOA should be sent to the appropriate IHS Area field office and forwarded to the IHS Area SFC Program Director with appropriate documentation and approval recommendations as required by the IHS Area policies.

      2. The MOA contribution requests may be processed only after the Area SFC Program Director signs the appropriate document for the disbursement.  The Tribe or other MOA party will be given copies of the current version of Office of Management and Budget (OMB) Circular A-87, “Cost Principles for State, Local, and Indian Tribal Governments,” when funds are transferred to them.

  5. Non-specific MOA.  A non-specific MOA does not obligate any IHS project or other funds or resources.  A non-specific MOA must include provisions which clearly indicate the following:

    1. All actions and/or fund obligations must be activated by clauses in an MOA executed for implementation of a specific project.

    2. The non-specific MOA will be renewed at intervals which do not exceed 5 years.

    3. The project MOA which implements actions and/or fund obligations must reference the applicable non-specific MOA.

  6. Memorandum of Agreement Amendments.  If there is a change in the scope of the project, both the MOA and the Project Summary must be amended.  Whenever field conditions or changed circumstances make necessary a change in plans or in the agreed upon conduct of the project, modifications to the basic MOA shall be executed.  Amendments to the MOA can be initiated as necessary.  All affected parties to the original MOA must approve and sign any subsequent amendments; all other parties should be notified.  An MOA must be amended if any of the following conditions apply:

    1. the scope of the project as described in the Project Summary changes significantly;

    2. additional funds in excess of the amounts stated in the MOA are required to complete the project;

    3. the method of accomplishing the work changes significantly; and

    4. any other MOA provisions are modified.

  7. Letter Amendments.  Where the changes affect only the commitments of the parties, only a modification of the basic MOA is necessary.  In most instances, minor modifications can be executed by an MOA letter amendment or combined Project Summary and Memorandum of Agreement (PS/MOA) letter amendment, as appropriate, and signed by all affected parties.  The PS/MOA letter amendments should include the applicable and appropriate changes to the information listed in the “Criteria” document under Methods of Program and Project Implementation, Direct Service.  Copies of the signed amendments should be attached to the original copies of the MOA to prevent later misunderstandings.

  8. Standard MOA Termination Procedure.  The standard MOA termination procedure is as follows:

    1. An MOA party may terminate its relationship with the other MOA parties prior to project completion upon 30 days advance notice in writing to all other parties.

    2. If the MOA is terminated by all parties prior to completion of the project, all unexpended funds will be returned to the contributors in a prorated manner and in accordance with the transfer provisions specified in the MOA.

    3. The IHS will return unused IHS funds to the appropriate IHS Area bulk accounts for commitment to other sanitation facilities construction projects.

    4. All in-place sanitation facilities will be transferred to the Tribe or other party as designated in the MOA.  The IHS may elect to transfer or retain any or all unused materials and equipment purchased with IHS funds and may request the Tribe transfer to the IHS materials purchased by the Tribe with IHS funds.

  9. Memorandum of Agreement Disputes.  Any disputes among the parties to an MOA regarding its provisions or the fulfillment of responsibilities under the MOA are expected to be resolved by the parties at the IHS Area level.  Indian Health Service Area Offices must have policies and mechanisms in place for settling disputes.  There are a number of options for alternative dispute resolution, such as, mediation and dispute review boards.  If a dispute cannot be resolved at the IHS Area level, then any party to the MOA can request a review by the Director, OEHE, Headquarters, IHS.  The Director, OEHE, will appoint an MOA review board (the Board) to conduct the review.  The Board will be composed of:

    1. the Director, OEHE, Headquarters, IHS;

    2. an IHS Area Director from an IHS Area not involved in the dispute;

    3. a Director, SFC Program, from an IHS Area not involved in the dispute; and

    4. other experts that may be deemed appropriate.

  10. Inquiry.  The Board will conduct an inquiry into MOA disputes.  The Board will invite each party to the dispute to submit relevant information supporting its position.  The Board may conduct a portion of its inquiry onsite, as appropriate.  Such inquiry and any deliberation necessary shall be completed within a maximum of 60 days after receipt by the Director, OEHE, IHS, of the request for review.

    Upon completion of its inquiry and deliberation, the Board will issue its decision to resolve the dispute, along with the complete factual information record compiled on the dispute.  The Board’s decision will be binding on the IHS and may not be appealed by the IHS Area involved.

  11. Appeal Process.  The Tribe or third-party may appeal the decision to the Director, IHS.  If such appeal is made, the Director, IHS, will render a final decision for the Agency within 60 days of receipt of the appeal.  The complete informational record compiled by the Board will be the only factual information about the case considered by the Director, IHS, in evaluating the merits of the appeal.

  12. Memorandum of Agreement Completion.  The project is completed when all the MOA provisions are met, which may be some time after the scope of work (e.g., construction) is completed.  Some MOA provisions that refer to all or part of the constructed sanitation facilities transferred to the Tribe or that are vested in the Tribe may continue to apply indefinitely; e.g., Operation and Maintenance (O&M) responsibility.  The IHS will return unused IHS funds to the appropriate bulk accounts at the IHS Area for commitment to other sanitation projects.

5-2.5  ADMINISTRATIVE REQUIREMENTS

  1. Accountability.  All IHS employees are responsible and accountable for the management and monitoring of Federal funds and other Federal resources.  The Federal interest in a project is best served when adequate internal controls are instituted and the roles of all the Federal participants are well defined.  Any IHS employee who is in a position of responsibility (e.g., inspectors, project engineers) must know the applicable Federal resource management requirements and must provide the necessary documentation for expending those resources.  Financial transactions must comply with applicable procurement and acquisition requirements including:

    1. approvals of resource commitment and expenditures obtained from the appropriate person;

    2. timely and accurate filing of project reports;

    3. the project must comply with all applicable laws and regulations;

    4. project resources must be used efficiently; and

    5. project objectives should be achieved effectively.

  2. Standards of Internal Control.  Internal controls are methods and measures used to ensure accountability, as described above.

    1. Documentation.  All resource transactions must be clearly documented including fund transfers and contributions from Federal and non-Federal entities, equipment purchases, contracts, and payments.  The documentation must be readily available.

    2. Recording and Execution of Transactions.  Resource transactions must be recorded when executed by persons acting within the scope of their authority.

    3. Separation of Duties.  To minimize the risk of loss to the Government, key duties must be assigned to separate individuals including authorizing, approving, and recording resource transactions; issuing or receiving assets; making payments, and reviewing/auditing transactions or programs.

    4. Supervision.  Qualified and continuous supervision must be provided to assure approved procedures are followed.  Lines of personal responsibility and accountability within each IHS Area must be clear.

  3. Review Procedures.  Review and approval procedures to control the expenditure of Federal resources must be established.  The authority for the MOA comes from P.L. 86-121.  The administrative controls on the use of the MOA were refined and strengthened since 1959 by issuance of program administration policies and periodic internal program management reviews.  The MOA is not a field level agreement that is executed by project engineers.  The MOA and MOA contribution must be reviewed and approved at the IHS Area level by senior SFC Program managers and approved by the IHS Area Director.  The approval process provides a checks and balances system and eliminates potential conflict of interest.  The approval process is dependent on the roles of various Federal employees involved in an SFC project.

  4. Prohibited Practices.  With the exception of those on an Inter-governmental Personnel Act (IPA) or MOA detail to a Tribe, IHS employees are prohibited from making financial or other obligations on behalf of a Tribe (or any other MOA party), including issuing directives to the Tribe’s employees or Tribe’s contractors.  Verbal and written contact between IHS employees and a Tribe’s contractors shall be prefaced with the statement that, “...the IHS is providing technical assistance only and is not an agent of the Tribe.”  In order to maintain internal checks at all times, IHS Area SFC Program Directors and OEHE Directors, acting in their respective capacities, may not sign MOAs or provide final IHS Area approval for fund obligations; only the IHS Area Director has that authority.

    1. All IHS employees are prohibited from signing (or co-signing) any Tribal checks or having signatory authority on bank accounts, or signing Tribal contract documents including purchase orders, requests for quotation, etc.

    2. Checks, either from the Federal Government or the Tribe, shall not include an individual Federal employee’s name.

    3. Federal Government letterhead paper and envelopes may not be used by a Tribe or Federal employees on behalf of a Tribe.

    4. Original Tribal contract documents, including bids, shall be kept and processed at Tribal offices, not at IHS offices.

5-2.6  INDIAN HEALTH SERVICE PERSONNEL ROLES

The major roles of IHS personnel are described below.  These roles are not all inclusive, because additional specific duties may be required depending on the method used to accomplish the work.  For example, SFC personnel may have additional roles if the method of work is Tribal procurement.  In addition, other Federal responsibilities may be described in regulations governing personnel, contracting, property, and other matters.

  1. Role of the IHS Area Director.  The IHS Area Director is delegated the authority from the Director, IHS, to enter into an MOA.  The IHS Area Director relies on the IHS Area OEHE program officers and the IHS Area financial management staff for funds accountability.  As authorized by P.L. 86-121, the MOA is used by IHS Area finance officers as documentary evidence for obligating funds for sanitation facilities project construction.  The IHS Area Director and the IHS Area Finance Officer provide external oversight to the SFC Program.  The IHS Area Director approves, monitors, and enforces the SFC Program guidance with respect to MOA approvals and internal fund controls.

  2. Role of the IHS Area, OEHE Director.  The IHS Area, OEHE Director, shall review and recommend that the IHS Area Director approve internal controls for MOA approvals and MOA resource transactions in the IHS Area SFC Program.  The OEHE Director is responsible for ensuring that those controls are followed.  The OEHE Director shall be considered external oversight for the SFC Program.

  3. Role of the IHS Area SFC Program Director.  The SFC Program Director is responsible for establishing IHS Area-specific MOA policies (in accordance with this chapter) and related internal controls, for negotiating agreements among the MOA parties, and for reviewing the language of the MOA provisions.  The SFC Program Director makes recommendations for project funding to the IHS Area Director through the OEHE Director.  The SFC Program Director does not have the authority to execute an MOA, but ensures that the terms of the MOA are carried out.  The SFC Program Director has the following additional MOA related responsibilities:

    1. Makes recommendations to the OEHE Director and the IHS Area Director regarding MOA approvals, MOA amendments, transfer agreements, and notices of completion, suspension, or termination of the MOA.

    2. Provides review and programmatic approval of all IHS MOA fund contributions consistent with the MOA and all internal controls.

    3. Ensures that MOA and contract responsibilities and conditions are authorized by Federal laws and regulations and IHS authorities.

    4. Reviews Tribal unit prices and Tribal procurement payments.

    5. Ensures that the method(s) of accomplishing the work are appropriate and in accordance with applicable laws, regulations, and policies.

    6. Reviews the Tribal capacity to administer the project as outlined in the MOA.

    7. Ensures that MOA time constraints and cash flow schedules are met and that IHS responsibilities and obligations are carried out in a timely manner; e.g., fund transfers and payments.

    8. Ensures that proper documentation is in the official project files and that other internal control procedures are being followed.

    9. If appropriate, initiates a final project audit for all projects exceeding $25,000 and ensures the project is closed out in accordance with MOA requirements.

    10. Conducts annual service unit or district level reviews of field activities to ensure proper implementation of the MOA.

    11. Assists the Headquarters IHS in periodic IHS Area reviews which include review of MOA practices.

    12. Maintains familiarity with this chapter and related policies, including OMB Circular A-87, "Cost Principles for State, Local, and Indian Tribal Governments," and other documents applicable to the MOA.

  4. Role of the District Engineer.  The primary role of the District Engineer is the supervision of the project engineers.  In that role, the District Engineer is responsible for insuring that the project engineer is carrying out all of his responsibilities as project manager.  When Tribes have contracted for environmental health program positions under P.L. 93-638, role and responsibilities of the IHS project engineer are shared between the Tribe’s engineer and IHS personnel.  The District Engineer may be the Government’s representative on sanitation facilities projects funded under P.L. 86-121.  Those duties include assuring technical adequacy of the facilities installed, reviewing management of the project funds, certifying fund releases, providing final Government approval of completed facilities, closing out the project, and other non-contractible portions of the program.  Additionally, the District Engineer has the following MOA related responsibilities:

    1. Provide information and recommendations to the SFC Program Director and other IHS Area officials, especially regarding fund obligations.

    2. Ensure that the provisions of the MOA are carried out.

    3. Recommend approval or disapproval for all MOA contribution payments to the SFC Program Director.

    4. Notify the IHS Area that construction progress and expenditures are as projected or advise if the construction progress and expenditures are not as projected.

  5. Role of the IHS Project Engineer.  The IHS project engineer is the first level of responsibility for the project.  Activities of the project engineer typically involve project planning, design, and construction management.  However, within the context of the MOA, the project engineer has another important function, that of the “project manager.”  Depending on the specific method chosen to perform the work under the MOA arrangement, the project engineer may have other additional functions such as being the Federal Contracting Officer’s Representative where the facilities are provided by IHS.  The primary responsibilities of the project engineer with respect to the MOA, in addition to his/her technical role, include:

    1. The project engineer is the official point of contact for routine matters and correspondence among all the MOA parties.  The project engineer is responsible for coordination with all MOA parties and with other Federal officials.  Upon request and as appropriate, the project engineer will:

      1. provide technical assistance in the development of Project Proposals;

      2. provide explanations of programmatic requirements, regulations, policies, and funding criteria;

      3. provide direct consultation and assistance to MOA parties concerning programmatic or technical matters;

      4. visit the project site to substantiate progress and compliance with MOA provisions, fund control/expenditure requirements, and all other applicable laws, regulations, and policies, depending upon the availability of resources and as necessary;

      5. identify potential or existing problems and share with the appropriate staff information and/or findings concerning those problems.  As appropriate, the project engineer participates with other staff to resolve those problems; and

      6. maintain field level documentation pertinent to the MOA.

    2. Project engineers will not make final decisions on funding issues, except for SF-44 or International Merchant Purchase Authorization Card (I.M.P.A.C.) cards, but will provide advice and recommendations to supervisors in a timely fashion.  The project engineer has the responsibility to exercise judgment and prudent stewardship over Federal funds in accordance with the highest standards of professional and ethical conduct.  The project engineer is responsible for monitoring expenditures and construction progress and reporting this information to the District Engineer on a routine basis.

    3. When an engineer is assigned to a Tribal program under a P.L. 93-638 contract, the project engineer responsibilities described above are split between the Tribal engineer and the IHS District Engineer or other designated IHS employee.  The relationship is one of shared project responsibility between the Tribe and the Federal Government.  The Tribe’s project engineer will perform the traditional project engineer functions having to do with project development, execution, and completion.  However, the government responsibilities for assurance of the technical and administrative aspects of the project, in deciding compliance with the MOA provisions, fund release approvals, etc., shall be retained by the IHS District Engineer or other designated IHS employee.

  6. Role of the IHS Headquarters SFC Program Director.  The SFC Program Director in IHS Headquarters develops and recommends to the IHS Director that the national MOA policies specified in this chapter are consistent with OMB, HHS, and IHS regulations.  He or she is also responsible for ensuring the consistent application of MOA policies amongst all IHS Area SFC Programs.  This is accomplished by periodic reviews of all IHS Area practices and IHS Area-specific internal control policies and by periodic review of MOAs for inclusion of required provisions.  The Director, SFC Program, Headquarters, is responsible for implementing the basic internal control framework for the SFC Program, which is the basis for IHS Area internal control.

5-2.7  ETHICAL STANDARDS

When assisting the Tribe or other MOA party to construct or procure facilities or services under an MOA, IHS employees shall observe all ethical and legal standards required of them as Federal employees.  If they observe any practices by the Tribe, its contractors, a third-party, or Federal employee that appear to fall below those standards, they shall report their observations immediately to the IHS Area SFC Program Director for appropriate action.

5-2.8  DIRECT PROVISION BY THE IHS

This section discusses construction of sanitation facilities using a Federal Government contract or using IHS employed construction workers.  A contractor in a Federal contract may be the Tribe that signed the MOA, making it appear that the Tribe is providing the facilities when that is not the case.  When the Tribe contracts with the Federal Government directly or after the MOA is signed by all parties, the Tribe is a Federal contractor providing the facilities for the Federal Government.  Facilities constructed by the Tribe for the IHS under a Federal contract must be transferred to the Tribe or other entity to own, operate, and maintain.  An MOA for construction of sanitation facilities using IHS employed construction workers or force account has most of the required MOA provisions previously described section 5-2.4.

  1. Federal Government Contracting.  A contract is a legal document that has several functions, including communicating to the contractor what the other parties to the contract want to build, where to build, what type of materials to use, and when the facility is to be completed.  Contract administration rules are specified in the FAR system and P.L. 93-638 Title I contracting regulations.  All contract administration is done with the assistance of a contract specialist, project officer, and when applicable, the contracting officer.  Additional information on contract administration may be found in the FAR System.

    There are several laws regulating wages and hours of workers employed on Federal contracts for public works or construction.  The laws are:

    1. The “standard work week laws” limit the employment of laborers and mechanics on such projects to 40 hours per week and permit their employment in excess of that limit only upon condition that compensation at a rate not less than one and one-half times the basic-wage rate is paid for the excess hours.

    2. The Davis-Bacon Act provides that the minimum rates of pay for laborers and mechanics on certain Federal public-works contracts shall be those prevailing for the corresponding classes of workers in the locality as determined by the Secretary of Labor.  The Department of Labor states that, if a construction project is funded or assisted under more than one Federal statute, the Davis-Bacon prevailing wage provisions may apply to the project if any of the applicable statutes requires payment of Davis-Bacon wage rates (e.g., P.L. 86-121, P.L. 93-638).

    3. The Copeland Anti-Kickback Act prohibits the extraction of rebates or kick-backs from workers employed on the construction of Federal public works or works financed by the Federal Government and authorizes the Secretary of Labor to make regulations for contractors engaged on such projects.

    In addition to the above statutes, there are several acts, including the National Housing Act, the Housing Act of 1949, the Federal Airport Act, and the Hospital Survey and Construction Act of 1946, that require the payment of prevailing-wage rates, as determined by the Secretary of Labor, to laborers and mechanics employed on construction financed in whole or in part by loans or grants from the Federal Government or by mortgages guaranteed by the Federal Government.

  2. Open Market Contracts.  When the Federal Government acquires goods or services that are not available from mandatory sources, they are procured on the “open market.”  Acquisitions from the open market sources generally are fully competitive but can be restricted to a class of contractor, such as small business enterprises.  Justification is required for a sole-source contract; a “Justification for Non-competitive Acquisition” report shall be prepared.  For unrestricted contracts, bidders can be non-Indians, Indian-owned firms, Tribes, Tribal-owned entities, or any other combination of private enterprises or entities.

    The Buy Indian Act (25 U.S.C. Section 47) is a “set-aside” authority.  Under the HHS acquisition regulations (HHSAR) at 48 CFR Subpart 370.5, set-aside acquisitions are negotiated acquisitions but should be conducted as if they were formally advertised acquisitions where appropriate.  Contracts awarded under the Buy Indian Act are subject to competition among Indians or Indian concerns to the maximum extent that the Contracting Officer determines is practicable.  [48 CFR Section 370.504].

    The Buy Indian Act is applicable to the IHS because of the Transfer Act (42 U.S.C. Section 2001).

  3. Public Law 93-638 Contracts.  Tribes may elect to provide sanitation facilities under Title I of P.L. 93-638, as amended or, as it is commonly known, a “638 contract.” Regulations for P.L. 93-638 construction contracts are found at 25 CFR Part 900 Subpart J.  The P.L. 93-638 contracts used in the SFC Program are generally of two types:

    1. The P.L. 93-638 administration contract is used for activities related to construction program administration and management.

    2. The P.L. 93-638 construction contract is a fixed-price or cost-reimbursement self-determination contract for a construction project.  A construction contract may include planning services and construction management services.

    A Title I Construction Contract is a non-procurement contract, and under a Title I Construction Contract, the Tribe owns the constructed facility unless the Tribe requested otherwise.  As authorized by P.L. 93-638, the FAR regulations apply only to the extent that they are necessary to ensure that the contract is carried out in a satisfactory manner and are directly related to the construction activity (25 U.S.C. Section 450j).  Upon receiving an indication that a Tribe is interested in pursuing either type of P.L. 93-638 contract, IHS personnel shall advise the Tribe to make their request known in writing to the IHS Area Director and the IHS Area SFC Program Director shall be notified immediately.  If a Tribe or Tribal consortium obtains a P.L. 93-638 contract that includes the local administration of the SFC Program, an MOA may be used between the IHS and the Tribe to obligate funds to a sanitation facilities construction project.

    Funds that another agency has already awarded or allocated to a Tribe, but then passed to the IHS to give to the Tribe are not considered to be “administered by the Secretary,” and may not be included in a P.L. 93-638 contract.  If the IHS accepts this type of contribution, which is not administered by the Secretary, then the MOA is the only instrument that may be used to transfer funds to the Tribe.

  4. Public Law 93-638 Title V.  Participating Self-Governance Tribes may agree to undertake construction projects under Section 509 of P.L. 93-638, as amended; the implementing regulations are at 42 CFR Part 137, Subpart N.  Construction projects are separately defined in Title V and are subject to a separate proposal and review process.  Self-Governance Tribes may enter into and administer Self-Governance construction project agreements for construction projects.

    Self-Governance Tribes performing construction under Section 509 are required to assume the IHS Federal responsibilities for compliance with the National Environmental Policy Act and the National Historic Preservation Act, and related environmental laws.  Self-Governance Tribes that undertake construction projects under Section 509 have the responsibility to complete construction project agreements and provide day-to-day management and administration for construction projects, within available funding.

  5. Federal Government Force Account.  During the project planning phase, it may be determined by the Tribe and the IHS that all or part of the proposed cooperative project should be built by Government force account method.  Under the Government force account method, the IHS oversees the execution of the project, schedules and directs the day-to-day operations at the job site through a project manager or foreman, and controls project expenditures.  The materials used on the project may be purchased either by the Tribe (Tribal Procurement) or by the IHS in accordance with the FAR.  The workers on the project could be Federal employees, Tribal employees, or a mix of both.  The IHS could procure materials, furnish construction equipment, arrange transportation, schedule work, and assure quality control for all or part of the project.  The Tribe could provide skilled or unskilled workers paid with MOA contributed funds to work along with Federal employees on the project.

    1. Background.  The Government force account method, with some labor provided by the Indian Tribes, was the predominant method of accomplishing the work during the first 10 years of the SFC Program.  In recent years, as Tribes developed more capability to manage their own projects, other methods of constructing sanitation facilities were created.  Nevertheless, the intent remains that both the Federal Government and the Tribes will continue to work together to improve the health of the AI/AN people.

    2. Government Force Account Policies.  Policies governing Federal Government employees doing construction work are established by the Office of Personnel Management and are not described in this chapter; consult the IHS Area personnel office for applicable policies.  If the parties to the MOA choose to proceed with a project in the manner described above (Government and Tribal employees working together at a job site) as Government Force Account, the MOA parties need to understand the roles and limits of supervision.  These roles must be understood by the parties and documented in the MOA.

    3. Roles and Limits of Employee Supervision.  Employee supervision is a broad activity consisting of several significant authorities and responsibilities towards employees, including hiring, directing, assigning, promoting, rewarding, suspending, disciplining, and removing employees.  In the cooperative relationship established under the MOA to construct a sanitation project using a Federal Government foreman and local Tribal employees, the authorities and responsibilities are shared between the two parties.

      1. Foreman.  The role of the foreman is to be responsible for the technical direction of the local project workers in assigning, directing, and reviewing work and reporting on performance on a routine basis.  If a problem develops regarding performance, attendance, or conduct on the project, the foreman will convey this information to the Tribal project administrator for appropriate action.  The workers are generally residents in the community, who are hired as short-term employees for the duration of the construction project.  The working relationship between the foreman and Tribal workers provides a way to train the Tribal workers on proper construction techniques while insuring quality construction.  Often, the project workers are employed later by the local government for future O&M activities.  The knowledge gained during construction is valuable in ensuring proper system O&M.

      2. Tribal Project Administrator.  The Tribal project administrator is responsible for all other aspects of employing local project workers.  These functions include hiring, evaluation of performance, suspending, rewarding, promoting, disciplining, and removing employees.  Local workers must be hired in accordance with prevailing local, State, and Federal labor laws and regulations and sound business practices.  This requires processing all necessary paperwork with special emphasis on workman’s compensation insurance, tax documents, time records, pay schedules, and payroll processing records.  If assistance is needed in guiding the local government, professional services are suggested to accomplish the required tasks; this assistance usually is an allowable project cost.

      3. Wages.  The project wages for local workers are set by mutual agreement between the local government and the IHS.  Federal wage requirements (i.e., Davis-Bacon) do not apply to local governments performing force account work, because they are in a position similar to municipal, State, or Federal employers for whom the Federal requirements do not apply.  The waiver does not apply if the contractor is a private business corporation (whether or not owned by the Tribe or members of the Tribe) or is an individual Indian contractor.

      4. Hiring Workers.  A list of needed technical skills, number of workers, and work schedules is developed during the project planning process by the project engineer, project foreman, and local officials including the Tribal project administrator who will handle local worker hiring and administration.  Using this planning data, the required number of workers is hired by the local government from available residents.  If additional workers are needed or existing workers need to be released for poor performance, the project foreman communicates these needs to the appropriate Tribal official, and the required actions are handled by the local government.

      5. Safety.  Liability and construction safety are other considerations and are discussed briefly in the following sections as they apply to direct provision by Tribes and by third-parties.  A more detailed discussion is found in the Criteria for the Sanitation Facilities Construction Program document under “Technical Requirements.”

5-2.9  DIRECT PROVISION BY TRIBES

This section discusses the MOA method used to contribute funds to a Tribe or Tribal organization, when the Tribe or Tribal organization provides the sanitation facilities and services.  The Tribe may provide the sanitation facilities either by Tribal force account or by Tribal procurement.  This section discusses additional clauses that must be included in the MOA when a Tribe provides the sanitation facilities.  This section does not apply when Tribes contract with the IHS to provide sanitation facilities after the MOA is signed.

  1. Tribal Force Account.  This section discusses projects in which all or some funds are contributed to a Tribe to provide sanitation facilities through Tribal force account.  Tribal force account normally refers to the method of construction where the Tribe has control of construction and uses Tribal employees to do construction work.  Typically, construction management is coordinated with the IHS, but remains a responsibility of the Tribe.  The requirements and roles of the Tribe, IHS field staff, and others under Tribal force account are described in this section.  The Tribe may have to procure materials and specialized technical services, unless the materials and technical services are provided by the IHS.

    The Tribe and the IHS shall comply with all the provisions of subsections (1) through subsections (10), below, for all projects in which the Tribe performs some of the work or constructs facilities using Tribal force account, including determining Tribal administrative capability, arranging for construction management by the Tribe, project planning, technical review, and cost estimating.

    1. Construction Management and Supervision.  In a typical MOA relationship, the Tribe, and the IHS agree to work together to accomplish a common goal, the construction of sanitation facilities.  If the Tribe is constructing the sanitation facilities by force account, the Tribe is responsible for providing qualified construction supervision.  Since the IHS and the Tribe work cooperatively to accomplish the project construction, the IHS must ensure that the construction management and supervision provided by the Tribe is adequate.  If the Tribe does not have a person with technical expertise to supervise job site construction, an alternative is for the Tribe to contract with or hire someone with the expertise.  Also, if agreed, the project construction may be guided at the site by an IHS employee working with and training a Tribal construction supervisor.  However, if an IHS employee effectively is the construction supervisor, this is considered to be Government Force Account work, and the principles in Section 5-2.8, “Direct Provision by the IHS” of this chapter must be implemented.

      1. Risk Sharing.  The parties to the MOA share in some risk as in most cooperative relationships.  Since funds for projects are limited, one risk is that the project cost may exceed available project funds and some or all of the proposed sanitation facilities may not be provided.  The amount of financial risk (other than tort claims) assumed by each MOA party is proportional to the amount of funds contributed by that party.  Each MOA party is responsible for resolving any tort claims filed against it.  When cost overruns are discovered only at the end of the construction period, the Tribe assumes a risk that it will not be reimbursed by the IHS because of lack of funds.  Similarly, the IHS could determine that certain expenditures are not allowable under OMB Circular A-87 and not reimburse the Tribe.  For Tribal force account, profit is not allowed as it would be under a typical construction contract.

      2. Tribal Administrative Capability.  If the Tribe is to perform the work by force account, it must meet minimal standards for financial, procurement, and technical management to demonstrate its administrative capability.  The extent of the controls and capabilities required will depend on the size, complexity, and duration of the project.

        1. Financial Management.  The Tribe must have procedures and policies for payroll, accounting, budget control, and record-keeping commensurate with the project scope.  If the Tribe does not have staff to provide financial control, it must retain a Certified Public Accountant (CPA) or other similarly qualified individual for the project who can meet those requirements.

        2. Procurement Management.  If the Tribe is to procure materials, it must have an acceptable contract administration system commensurate with the project scope.  If the Tribe does not have the contract administration capability, it must obtain that function by retaining a CPA or another qualified agent, or it must obtain procurement services through another non-Federal MOA party.

        3. Technical Management.  Because the Tribe has control over construction at the project site, the Tribal employee in charge must have demonstrated experience in supervising similar types of construction successfully.  The selection of and change of the onsite construction project manager is subject to the concurrence of the IHS.

        4. Job Skills.  The Tribe is responsible for providing the Tribal construction supervisor and the Tribal employees with the necessary skills for the job and that are mutually acceptable to the Tribe and the IHS.

      3. Quality Assurance Oversight.  The IHS is responsible for assuring that the facilities are constructed by the Tribe in accordance with the plans, specifications, and the MOA.  The IHS oversight of quality assurance at the job site may require providing some technical assistance to the Tribal construction supervisor for solving problems in a cooperative manner.  If an IHS employee observes a problem with productivity or quality control at the job site, the IHS employee will advise the Tribal construction supervisor or others, as appropriate, and work with the supervisor to resolve the problem.

      4. Supervision.  Indian Health Service staff may not function as supervisors of Tribal force account workers.  An IHS employee may provide technical assistance to Tribal construction supervisors on skills improvement or construction techniques; however, this is not to be construed as supervision.

      5. Limits to IHS on-site Project Authority.  When the work is performed by Tribal employees under the direction of a Tribal construction supervisor, the responsibility of IHS personnel at the job-site are generally limited to quality assurance and technical assistance.

    2. Project Planning and Cost Estimating.  Preconstruction planning is a vital part of force account construction.  Although the Project Summary is part of the MOA and contains the preliminary cost estimate by the IHS for the total cost of the project, the Tribe that will be using force account construction methods must plan for how it will accomplish the work and develop its own cost estimate for the work.  This step is necessary for the Tribe to ensure that it has the ability to perform the work cost-effectively and within the total project budget.  If the Tribe cannot do the work cost-effectively with its own employees, then the Tribe may contract with someone else to construct the facilities or request the IHS to construct them.

      1. Technical Review.  The IHS will work with the Tribe to analyze detailed project plans to determine the proper use of labor, equipment, materials, and services to complete the project tasks.  This type of planning is necessary to:

        1. provide clarification of project design and identify incomplete plans;

        2. establish equipment needs;

        3. estimate project administrative support costs;

        4. anticipate payroll, insurance, and other cash flow needs during construction, and

        5. provide a basis for a cost control system for comparison of actual and anticipated costs during construction.

      2. Cost Estimating Basis.  All tribally administered projects must use the cost principles established in OMB Circular A-87, which specifies the allowable project costs.  Tribal cost estimates for allowable force account costs are divided into labor costs, equipment costs, material purchases (procurement), service contracts, and project administrative support costs.  When those Tribal cost estimates are converted to unit costs, they can be compared to unit costs for similar work performed on previous contract jobs.  This comparison is helpful in supporting an IHS determination that Tribal force account is a viable method of constructing sanitation facilities projects.  Unit costs should not be used to "bid" on work under Tribal force account; the unit cost must be adjusted for the specific project under construction.

      3. Labor Costs.  Labor cost is a major component of construction expenses.  A careful review of the scope of a project will help the Tribe to estimate the anticipated labor needs and required skill levels.  Meticulous project planning by the Tribe can establish the method of hiring, the definition of duties, the method to evaluate labor efficiencies, and the procedure for dismissal of unneeded or ineffective workers.

        The wage rates for all workers who are employees of the Tribal group being served will be based on the local wage rates for similar work as established by the Tribe and the IHS.  Under these conditions, the Federal Davis-Bacon wage rates do not apply as they would if the Tribe engages a contractor to provide the facilities.  The relationship between the funding source, method of construction, employer, and required wage rates shall be carefully reviewed during the project planning to make sure the proper rates apply.  For force account construction, time cards and required review/certification of time cards are important for proper record-keeping and project audits.

        The Tribe may pay its employees an incentive fee based on performance and/or cost containment provided that the Tribe has a formally adopted incentive program established before the project award and approved by the IHS.  Incentive pay is an allowable costs under OMB Circular A-87.  The pay must be reasonable as compared to similar work in the vicinity and total wages plus incentive pay must not exceed prevailing wage rates.

      4. Equipment Costs.  Another major construction cost is equipment, which may be owned by the Tribe, the IHS, or a third-party.  Proper project planning involves matching the project needs with the available equipment.  The cost of equipment should be allocated at a rate which pays for ownership, maintenance, repair, fuel, oil, and depreciation.  Other factors affecting cost, such as transportation, age, overhead, storage, use conditions, and disposal should be reviewed in establishing an equitable rate for each item used.  There are standard construction industry reference manuals that provide assistance in establishing rates; e.g., R.S. Means Company, Inc., which publishes construction cost information on several sectors of the construction industry.  If a certain piece of equipment needs a major overhaul before it can be used, an equitable method of allocating the appropriate share of this cost to the project shall be determined.  If a piece of equipment is to be used without charge or as part of an in-kind contribution, the terms of the use agreement should be documented to avoid later disputes.  It is important to develop a method to document the use of each piece of equipment.  This document should state the time allocated to the project and be certified by the IHS on-site representative.  Failure to follow this policy can result in disputes and incomplete data for audits.

        Costs for equipment rented from independent contractors for Tribal use may be allowable to the extent that the rates are reasonable after considering factors including rental costs of comparable equipment, market conditions in the vicinity, alternatives available, or the type, life expectancy, condition, and value of the property.

        Policies and procedures regarding equipment rates, minimal usage periods, downtime, equipment reserve accounts, and equipment transportation are to be developed by each IHS Area in accordance with applicable cost principles.

      5. Materials and Services Costs.  Materials and services may constitute another major component of construction costs.  Procurement of materials and services are discussed in Section 5-2.9B, “Tribal Procurement.”

      6. Indirect Costs and Project Administrative Support Fees.  Indirect costs and project administrative support fees are discussed in Section 5-2.9C, “Procedures Common to Tribal Force Account and Procurement.”

    3. Insurance and Liability for Damage.  For Tribal force account work, the Tribe must obtain and maintain current insurance policies throughout the project construction including, general public liability and property damage, and workman’s compensation coverage in accordance with applicable requirements.  The Tribe and its insurance carrier are liable for damages or injuries to third-parties or Tribal workers.

    4. Construction Safety.  Safety at the Tribal force account project site is the responsibility of the Tribal construction supervisor.  The Tribal construction supervisor is responsible for complying with all applicable construction safety regulations.  This should be explicitly stated in the MOA and in subsequent project documents.  The onsite authorities and responsibilities shall be discussed during the project planning phase and well defined in the MOA.  The IHS may review Tribal construction safety measures and advise the Tribe of any significant safety issues, in order that the Tribe may take appropriate action; however, such advice will not relieve the Tribe of its liability if accidents occur.

    5. Construction Inspection.  The MOA must clearly identify the IHS role in construction inspection and require that Tribal procurement documents also include the right of IHS employees to inspect the work.  References to IHS rights and responsibilities should not identify specific individuals by either job title or name.  The IHS is responsible for necessary project construction inspection for all force account work unless specific agreements to delegate or contract this responsibility are made.  This responsibility includes assurance of compliance with plans, specifications, applicable shop drawings, materials approval, testing verification, and final acceptance.  Indian Health Service employees can inspect the construction and advise the Tribe and/or the Tribal contractor whether the construction meets the design intent and minimum applicable standards; however, all direction to the contractor must come from the Tribe.  If daily inspection responsibility is delegated, the IHS shall remain in an oversight role to resolve major problem situations.

    6. Warranties.  Warranties of one-year duration should be obtained from vendors on all purchased equipment, materials, and supplies.  For Tribal force account work, the IHS and other project participants (funding or in-kind contributors) warrant workmanship in proportion to their original contribution or for the work for which they were responsible (subject to availability of funds) unless the Tribe agrees to warrant the work in the MOA or other arrangements are made.  The warranty period for workmanship shall be for a period of one year from the date of transfer or one year from the date on which the Tribe obtains beneficial use of the facilities, whichever occurs first.

    7. Cost Control.  In addition to 5-2.9A(1) through 5-2.9A(6) above, cost control is an important part of the Tribal force account method of providing sanitation facilities.  Significant increases in actual costs over estimated costs could force a major reduction in the scope of facilities provided or place Tribal and IHS resources at undue risk.  The Tribe and the IHS must adopt procedures that provide adequate protection to both parties without creating high costs or undue burden for either party.  A properly used cost control system provides the greatest protection to the Tribe.  Before receiving its final contribution from the IHS for facilities constructed or services provided, the Tribe must certify that the total fund contributions they received from the IHS were expended for allowable costs as prescribed by OMB Circular A-87 and that the Tribe did not make a profit.

      1. Abbreviated Cost Control System.  The Abbreviated Cost Control System is for Tribal force account projects where the estimated total cost of construction in the Project Summary is less than the cost control ceiling set by the IHS Area SFC Program.  That ceiling may be set by the IHS Area based on local practice and experience up to a maximum of $400,000 (over 75 percent of sanitation facilities construction program's Project Data System (known as PDS) were at or below this value for fiscal year (FY) 1995 through FY 2000).  For force account work estimated to cost less than the ceiling established by the IHS Area (IHS Area ceiling not to exceed the upper limit stated above), the Tribe may follow the procedures described in this section.  The abbreviated cost control system does not relieve the Tribe from using sound project management practices.

        1. Requirements When Tribal Force Account Project Amount is Below Cost Ceiling.  The Tribe will prepare a detailed cost estimate for the proposed work including the estimated amounts for labor, equipment, materials, and services.  The total amount of those estimates may be converted to unit costs for the work to be performed.  Those estimated unit costs are compared to unit costs for similar work completed previously by the Tribe or by contractors of the Tribe or of the IHS.  In making that comparison, the Tribe and the IHS determine if Tribal force account is a viable method to construct the proposed facilities

          When the determination is made to use the Tribal force account method, the Tribe can propose those unit costs as anticipated allowable costs to construct facilities under the project.  By carefully reviewing the unit costs with the Tribe in the planning stage, the IHS can confirm that the unit costs are not expected to result in any measurable profit or loss and that the unit costs are reasonable and allowable.  The unit costs are subject to the approval of the IHS Area SFC Program Director.

          Once the Tribe proposes the unit costs and the IHS approves them, those costs will be the basis for contributions of Federal project funds to the Tribe.  Actual contributions from the IHS will be determined by multiplying the number of units actually constructed by the approved unit costs, adjusted by the project administrative support fee, which is discussed later in this section.

          During project construction and execution, if the Tribe encounters conditions where the approved unit costs are not valid for some or all of the remaining work, the Tribe should contact the IHS to discuss the possibility of revising the unit costs.  Since the revised unit costs will apply to future work, the Tribe must notify the IHS immediately upon discovery of the significant condition that justifies a change in unit costs.  In such cases, the IHS shall promptly evaluate the condition and determine what adjustment in unit cost, if any, is appropriate, subject to the approval of the SFC Program Director.  Conditions that may require revising the unit costs include differing site conditions and changes in personnel, material, and equipment costs.  Changes in unit costs may also require adjusting the scope of the project, which may require an amendment to the MOA.

          Under this system, cost control is achieved by thorough analysis of project plans and specifications; planning, estimating, developing and comparing unit costs against other similar construction costs; and then applying the agreed upon unit costs as allowable costs.

      2. Comprehensive Cost Control System.  A cost control system to track project costs and financial status during construction shall be agreed upon by the IHS and the Tribe before each project starts.  The purpose of the cost control system is to prevent cost overruns.  Cost control measures consist of project status reviews, record audits, and coordination of all SFC project activities with the designated IHS Area SFC Program contact.

        Once the project construction starts, the Tribe must maintain current cost records for use in comparing expenses with previously developed budget and cash flow estimates.  When cost overruns are not discovered until the end of the construction period, the Tribe is at a risk that it will not be fully reimbursed by the IHS, because its costs are considered unallowable or have exceeded the maximum funding amount specified in the MOA.

      3. Budget Development.  The Tribe will develop a Tribal project budget for force account work for each of the cost categories with IHS assistance.  This mutually agreed upon budget is a non-contractual agreement; therefore, fixed price bids are not allowed because it may imply a contractual arrangement.  Once established, this budget becomes the basis for controlling project costs during construction.  The reasons for developing the budget are:

        1. to let all parties know the total amount of funds available for the designated portion of work to be accomplished by the Tribe;

        2. to establish financial targets for reasonable costs for units of work to be performed;

        3. to develop a working capital advance, as necessary; and

        4. to establish cash flow and reimbursement schedule.

    8. Roles of Project Personnel in Cost Control.  The Tribe and the IHS must identify people who will perform various essential roles during the project for the purposes of keeping records and providing approvals.

      1. Tribal Construction Supervisor.  The Tribal construction supervisor is the construction site manager for Tribal force account.  The Tribal construction supervisor is responsible for supervising Tribal employees, for tracking the project status, for equipment and personnel usage, for site safety, and for insuring that the information is recorded on a routine basis (i.e., production reports, time cards, equipment time sheets).  Adjustments to construction techniques, equipment utilization, and crew management required to improve efficiency are the Tribal construction supervisor’s responsibility.

      2. Indian Health Service Project Engineer.  The IHS project engineer represents the Federal Government’s interest in the cooperative project.  The IHS project engineer or his/her designated representative (inspector) is responsible for reviewing cost data for labor, equipment, and materials on a regular basis on behalf of the IHS.  The IHS project engineer shall keep a log of all construction activities (through inspections, oversight visits, and communications) and ensure receipt from the Tribe of all required reports.  The IHS project engineer is responsible for comparing the work accomplished against the approved project budget and for certifying work accomplished and costs incurred.

      3. Project Accounting Office.  The Tribe’s project accounting office or its designated accounting firm is responsible for filing the time sheets, making the charges against the correct charge codes, and preparing the necessary reports for cost control reviews and requests for funds from the IHS.

    9. Cost Control Review and Reporting Requirements.  Prior to the start of construction, a project review and reporting schedule shall be established for each project.  On a regular basis, the Tribal project administrator or designated accounting firm shall provide to the IHS an up-to-date accounting of all charges for labor, administrative support costs, equipment, materials, and procured services, and an up-to-date accounting of all cash flow transactions including payroll.  These reports shall be prepared in an agreed format, so that they can be compared with the project budget and current project production status.

    10. Cost Overruns/Corrective Action.  Prior to starting each project, the IHS and the Tribe will review the Area’s policies and procedures regarding cost overruns or exceeding the project budget.  Should the monitoring information indicate that the project will exceed the budget or otherwise is in financial distress, the IHS project engineer shall first verify that the information is reasonably accurate and then shall notify the District Engineer.  The Tribe is to be notified to make corrective actions for solutions to minor problems.  This plan is to be documented and communicated to the District Engineer and the IHS Area SFC Program Director.

      The SFC Program Director will initiate more extensive reviews for major cost overruns.  The SFC Program Director will take appropriate action, involving the Area Director, if necessary.  The IHS project engineer shall followup to verify that the approved actions are taken and closely monitor the Tribe until such time as the problem is resolved.  Appropriate actions may include:

      1. initiating major changes through the Tribe in the utilization of labor, equipment, and materials to improve efficiency;

      2. assistance in identifying additional funding;

      3. changes to the payment methods;

      4. revising the scope of work;

      5. Federal Government takeover of the project subject to approval by the IHS Area Director; and

      6. suspending the project and/or terminating the project.

  2. Tribal Procurement.  This section covers projects in which the Tribe decides to provide the required sanitation facilities and services for its direct benefit using its own internal procurement system.  The IHS provides technical assistance and contributes funds to the Tribe for the approved cost of the sanitation facilities and services.  The IHS and the Tribe will mutually decide and spell out in the MOA whether construction (and design, as appropriate) is accomplished through Tribal procurement.  Factors relevant to such a decision include previous experience in doing Tribal procurement, existence of an established procurement system, financial stability, and administrative capability.

    The parties to an MOA are required to comply with administrative procurement standards stated in this section.  Most of the common standards governing payments, allowable costs, changes, real property, equipment, competitive procurement, and records are discussed in this chapter.  Each IHS Area must have a set of policies that are consistent with this chapter and that explain the contract review procedures for project engineers who are responsible for Tribal contract projects.

    The SFC Program has assisted Tribes in administrative capacity building by allowing Tribes to procure sanitation facilities construction themselves with IHS SFC Program involvement, as necessary, thereby promoting Self-Determination.  An alternative to this method is the P.L. 93-638 Indian Self-Determination contract, which was described in Section 5-2.8, “Direct Provision by the IHS.”  The P.L. 93-638 construction contract is another method available to provide, sanitation facilities which does not alter the Tribe’s option to procure materials and services with funds contributed under an MOA.  The advantage of the MOA method is that it tends to be a faster process.

    1. Procurement Standards.  The Tribe must use a system of contract administration that ensures performance by its contractors in accordance with the terms and conditions of the contract.  The Tribe is responsible for the settlement of all contractual and administrative issues arising from their procurement action, in accordance with good administrative practice and sound business judgment.  Those issues include but are not limited to source evaluation, protests, disputes, and claims.

      No employee, officer, or agent of the Tribe can participate in the selection, or in the award or administration of a contract supported by Federal funds if a conflict of interest, real or apparent, would be involved.  A conflict of interest would arise when any of the following individuals or organizations has a financial or other interest in the firm selected for the award:  a Tribal employee, officer, or agent; any immediate family of or partner of that Tribal employee, officer, or agent; or any organization which employs or is about to employ any of the previously mentioned individuals.

      A Tribe cannot contract with a tribally owned enterprise if the Tribe administers the procurement.  There cannot be Tribal preference, nor special advantages or privileged information provided to Tribal members or businesses.  The Tribal officers, employees, or agents can neither solicit nor accept gratuities, favors, or anything of monetary value from contractors or potential contractors.

    2. Competition Requirements.  All procurement transactions will be conducted to provide full and open competition unless justification is made for restrictive or sole source procurement.  These types of justifications, such as exigency (urgent need), critical schedule, and equipment compatibility, will be reviewed and approved by the IHS SFC Program Director.  Tribes will conduct the procurement in a manner that prohibits the use of local geographical preferences in the evaluation of bids or proposals.

      1. Indian Preference.  If a Tribe has enacted an Indian preference ordinance of general applicability and agrees to apply the terms of that ordinance, the Indian preference requirements of that ordinance may apply in lieu of IHS requirements as long as the effect is similar to that of IHS requirements.

        In the absence of a formally adopted Indian preference policy by a Tribe, preference shall be given in the award of construction and services contracts to those firms (or joint ventures) whose levels of ownership and control by enrolled Indians (or Alaska Natives) each equal at least 51 percent of the total on a continuing basis for the duration of the contract (see P.L. 93-638, as amended, Section 7(b)).  Firms (or joint ventures) that satisfactorily document such ownership and control at the time of bid or quotation shall have a prescribed amount of their total bid price deducted from the bid price when compared with other bids.  The amount shall be set at a reasonable rate (normally between 5 percent and 10 percent) by the Tribe and the IHS, once the deduction is made for a qualified Indian firm (or joint ventures), the award will be made by the Tribe to the responsive, responsible bidder with the lowest resulting comparative bid price.  However, the actual amount of the contract shall be the original bid price prior to Indian preference adjustment.

      2. Solicitations.  Except as allowed for an exigency under Section 5-2.9B(2) “Competition Requirements” above, all procurement shall be based on firm fixed price and shall be competitive.  The following requirements apply:

        1. Architect/Engineer Services.  The Tribe shall solicit competitive proposals from potentially interested professional firms.  The Tribe shall establish objective selection criteria before soliciting proposals.  Using those criteria, a three-member board will decide which firm is most qualified to perform the work.  If the IHS project funds are involved, at least one IHS Registered Professional Engineer shall serve on the Board.  The Tribe shall attempt to negotiate with this firm to set fair and reasonable compensation.  If negotiations with one firm are not successful, the Tribe may proceed to negotiate with the next most qualified firm.  This process may continue until agreement is reached.

        2. Materials, Construction, and Non-Architectural and Engineering (Non A/E) Services Estimated at Less than $2,000.  The Tribe shall solicit verbal or written quotes from one or more sources qualified to do the work.  The Tribe shall award a purchase order to the qualified source with the lowest quote.

        3. Materials, Construction, and Non A/E Services Estimated at More than $2,000 and Less than $25,000.  The Tribe shall solicit a written quote from a minimum of three (3) sources qualified to do the work and likely to submit a quote.  The Tribe shall award a purchase order to the responsive, responsible source with the lowest quote.

        4. Materials, Construction, and Non A/E Services Estimated at $25,000 or More.  Upon approval by the IHS, the Tribe shall advertise formally for a minimum of 15 calendar days for sealed bids to be opened publicly at a specified time, date, and place.  The Tribe shall award a contract to the responsive, responsible source which has submitted the lowest bid price.

      3. Required Notices to Prospective Bidders.  Tribes shall notify the vendors and contract bidders of the following:

        1. Indian preference policy for contracts and subcontracts.

        2. Minimum percentage of the work that must be performed by the prime contractor.

        3. Responsibility of the Tribe for compliance with and enforcement of the contract (i.e., the contract is not a Federal contract).

        4. Restrictions on liens (State lien laws may not apply).

        5. The remedy for disputes.

        6. The role of the IHS; e.g., as technical advisor, in construction inspection, and for approvals.

    3. Wage Rates.  At minimum, Davis-Bacon wage rates are required for all construction contracts over $2,000 executed by a Tribe and funded by Federal agencies, except where the Federal funding is specifically exempt from Davis-Bacon requirements.  A determination published by the Department of Labor’s Employment Standards Administration, Wage and Hour Division, includes the statement that, if a construction project is funded or assisted under more than one Federal statute, the Davis-Bacon prevailing wage provisions may apply to the project if any of the applicable statutes requires payment of Davis-Bacon wage rates.  The Tribe is responsible for reviewing payroll information submitted by the contractor for compliance with Davis-Bacon requirements.

    4. Bond Requirements.  A contractor bond is required for construction contracts exceeding $100,000.  The IHS may accept the bonds policy and requirements of the Tribe, provided the IHS determines that its interests are adequately protected; for their own benefit, the Tribe may require bonds on lower amounts.  In lieu of such a determination, the minimum requirements shall be as follows:

      1. a bid guarantee from each bidder equivalent to 5 percent of the bid price;

      2. a performance bond on the part of the contractor for 100 percent of the contract price;

      3. a payment bond on the part of the contractor for 100 percent of the contract price; and

      4. bonds may be required for contracts valued at less than $100,000 if local conditions such as the potential for liens on non-trust land or other circumstances warrant.

    5. Subcontract Amount.  Prime contractors will be required to perform at least 33 1/3 percent of the total amount of the work in the contract using their employees and equipment.  Copies of subcontract agreements may be required by the IHS to verify the amount of work performed.  The purpose of this requirement is to prevent all of the work from being brokered and to ensure that the contractor is available to perform warranty work.

    6. Specific Contract Provisions.

      1. General Provisions.  The General Conditions listed in the MOA Guidelines under the Appendix for General Provisions for Tribal Contracts, shall be included in their entirety in the Tribal solicitation and contract, unless the IHS Area SFC Program Director determines that the Tribal procurement system includes equivalent provisions.  The IHS Area SFC Program Director may add provisions to address project requirements.

      2. Administrative Provisions.  A Tribe’s contract must contain the following provisions:

        1. Administrative, contractual, or legal remedies for instances where contractors violate or breach contract terms, and provide for such sanctions and penalties as may be appropriate (except for small purchases).

        2. Termination for cause and for convenience of the Tribe including the manner by which it will be executed and the basis for settlement.  (Contracts exceeding $10,000).

        3. Compliance with the Executive Order 11246 as amended, Equal Opportunity in Federal Employment.  (Contracts and subcontracts exceeding $10,000).

        4. Compliance with the Copeland Anti-Kickback Act.

        5. Compliance with the Davis-Bacon Act.  (Contracts exceeding $2,000).

        6. Compliance with Sections 103 and 107 of the Contract Work Hours and Safety Standards Act.  (Construction contracts in excess of $2,000).

        7. Indian Health Service requirements for reporting.

        8. Indian Health Service or Tribal Indian preference requirements:

          1. Contact the Tribal Employment Rights Office (TERO) of the Tribe.

          2. The TERO may impose certain requirements via taxes, fees, wage rates, employment policies, or ordinances that may affect the contractor.

          3. The contractor is required to comply with all lawful Tribal requirements in the performance of the work.

        9. Access by the Federal Government and the Tribe to any books, documents, papers, and records of the contractor, which are directly pertinent to the specific contract for the purpose of making an audit or examination of excerpts and transactions.

        10. Retention of all required records for 3 years after the Tribe makes final payment and all other pending matters are closed.

        11. Compliance with all applicable environmental laws and EPA regulations including Executive Order 11738.  (Contracts exceeding $100,000).

        12. An explicit statement that IHS employees cannot represent the Tribe and Tribal employees cannot represent the IHS.

        13. The right of IHS employees to inspect the work of the Tribal contractor or subcontractors.

    7. Indian Health Service Technical Assistance.  The IHS may provide technical assistance and technical services to the Tribe or another party to the MOA that utilizes their own procurement system for a number of different purposes related to the provision of sanitation facilities authorized by P.L. 86-121.  Examples of such technical assistance activities include assisting with contract administration, construction staking plan, preparation of plans and specifications.  Technical services, technical assistance, or oversight responsibilities outlined in the MOA and provided by IHS staff cannot create, or appear to create, a contractual relationship with the Tribal contractor, supplier, or other entity, who is not a party to the MOA.  Examples of inappropriate activities include acting as the Tribal contracting officer’s representative, performing procurement functions (obtaining quotes), acting as receiving agent, or performing any activity which may be interpreted as the IHS acting as an Agent of the Tribe or other party.

      Indian Health Service staff providing technical assistance or technical services shall have training and experience comparable to that required of Federal Government employees who are authorized to act for the Federal Government on similar matters; e.g., engineers should not be charged to provide technical assistance on contract administration without adequate training.

    8. Indian Health Service Oversight Inspection Responsibility.  The IHS has the responsibility to ensure that Tribal procurement procedures are adequate to protect the Federal Government’s interests and ensure that the purposes of the MOA and Project Summary are accomplished.  Indian Health Service inspection of facilities constructed through Tribal procurement is part of this oversight responsibility; IHS employees or contracted representatives must complete an appropriate level of inspection on each project.

      1. Inspection of Tribal Contractor’s Work.  Indian Health Service employees can inspect the construction and advise the Tribe whether the construction meets the minimum standards stated in the contract.  This does not necessarily imply compliance with the Tribe’s contract, but the Tribe’s contract should be such that the contract’s minimum standards are met or exceeded.  The IHS can advise the Tribe (not the contractor) whether the construction meets the IHS interpretation of the contract requirements.  The IHS cannot be the Tribe’s construction inspector for these reasons:

        1. Doing so could create, or appear to create, a contractual relationship between the contractor and the IHS.

        2. Construction inspection activities by IHS employees “could create explicit or implicit obligations” on behalf of the Tribe.

        3. Federal Government employees would be working beyond the scope of their duties and would be jeopardizing those protections extended to Federal employees working within the scope of their employment.

      2. Communication Between the IHS and Tribal Contractors.  In order to minimize the possibility of creating or appearing to create a contractual relationship or the possibility of IHS employees representing the Tribe, the following guidance is provided:

        1. If directed by the Tribe, contractors may submit copies (originals sent to the Tribe) of information such as submittals, progress payments, change order requests, etc., directly to the appropriate IHS Office when technical assistance is required or requested by the Tribe.

        2. All direction to the contractor shall come from the Tribe.  The IHS should submit any and all recommendations to the Tribe for its decision.

        3. All discussions about the contract with the Tribe’s contractor that includes IHS employees shall be conducted by and with direct participation of Tribal employees.

        4. The IHS may not make commitments or give direction to the Tribe’s contractor.

        5. The IHS should not communicate in writing to the Tribe’s contractor.

    9. Indian Health Service Approvals.  The IHS should review and approve Tribal solicitation and contract documents in accordance with the terms and provisions of the project MOA and as described below.  All IHS Area procedures should be such that any recommendation to a Tribe by an IHS official is adequately reviewed; e.g., evaluating change order requests.  Certain activities are not appropriate when they create or appear to create a contractual relationship with the Tribe’s contractor.  An example of an inappropriate IHS activity is the approval of a payment from the Tribe to its contractor.

      1. Approval of Contract Documents and Unit Costs.  The MOA shall require that the IHS Area-level representative designated in the MOA must approve the Tribe’s proposed contract documents and costs before the Tribe advertises contracts, awards contracts, makes contract changes, or obligates itself in other transactions.  The MOA shall prescribe the methods by which unit costs and work authorizations will be approved.  The parties must recognize that any increase in previously agreed upon unit costs may result in a reduced scope of work (e.g., fewer houses served), unless additional funds are made available.

      2. Final Tribal Inspection.  The Tribe must conduct a final inspection of the facilities provided under the contract and include the contractor, IHS representatives, and other interested parties.  The Tribe must be advised that final acceptance and payment for the work by the Tribe should not occur:

        1. until the contractor has corrected all deficiencies identified during the final inspection and

        2. until the work is in full compliance with the plans, specifications, and other contract requirements.

      3. Final IHS Approval of Construction.  The inspections by the IHS ensure that the completed work complies with all Federal Government requirements.

      4. Final IHS Contribution.  The final IHS contribution for the project will not be released to the Tribe until the IHS has participated in a final inspection and determined that the work complies with all Federal Government requirements.

    10. Legal Review.  The Tribe may request that an attorney review the proposed procurement documents for the project.  If legal review is included as an MOA provision, the IHS may contribute funds for the reasonable cost of contract review by a local attorney.

  3. Procedures Common to Tribal Force Account and Procurement.

    1. Tribal Financial Management Standards.  The Tribe must provide the following controls in its financial management system if it receives Federal funds for a sanitation facilities project.

      1. Financial Reporting.  An accurate, current, and complete disclosure of project financial transactions must be made in accordance with the financial reporting requirements of the MOA and in accordance with this chapter.

      2. Accounting Records.  The Tribe must maintain records which adequately identify the source of the Federal funds and how those funds were expended.

      3. Internal Controls.  Effective control and accountability must be maintained for all cash, real and personal property, and other assets acquired by the Tribe.

      4. Budget Analysis.  Actual expenditures must be compared with budgeted amounts for each project.

      5. Allowable Costs.  Applicable OMB cost principles (OMB Circular A-87) and the terms of the MOA will determine if project expenditures are reasonable, allowable, and allocable.

      6. Source Documentation.  Accounting records must be supported by source documents including canceled checks, paid bills, payrolls, time and attendance records, and contract documents.

    2. Memorandum of Agreement Contribution Payments.

      1. Contributions.  Proposed contributions to the Tribe from the IHS and other sources shall be as provided for in the MOA.  Total amounts contributed will be for work accomplished; e.g., for approved Tribal contract amounts plus appropriate administrative support fees.  The purpose, timing, maximum amount, and method of requesting contributions will be clearly stated in the MOA.

      2. Financial Account.  The Tribe must maintain a separate financial (bookkeeping) account for each project that it is administering, not necessarily a separate bank account.

      3. Cash Flow Schedule.  The Tribe must submit a project cash flow schedule.  The Tribe and the IHS must minimize the time elapsed between fund transfer from the IHS to the Tribe and disbursement by the Tribe.

      4. Advances.  The IHS may provide a contribution to the Tribe in advance of construction to purchase or rent equipment and materials to prepare for construction.

        1. This initial advance should be kept to the minimum necessary and shall not exceed 25 percent of the Tribal project budget.

        2. Upon initiation of construction, the Tribe may request additional funds consistent with the approved project budget, work accomplished, and cash flow schedule.

        3. Advances proposed in the cash flow schedule must be tied to anticipated expenditures in the next time interval and must minimize the time between transfer of funds and disbursement by the Tribe, Tribal Organization, or contractor.

        4. Before issuing subsequent advances, the IHS will compare previous advances versus actual expenditures by the Tribe.  Based on this information, adjustments may be made in the cash flow schedule.

        5. Interest in excess of $100 per year earned on advances must be returned to the project account.

    3. Allowable Costs.  The criteria in OMB Circular A-87 and those costs agreed upon in the MOA will determine all allowable costs under the project including special requirements for non-Federal funds.  Some examples of expenses that may not be charged to the project include bad debts, some consultant fees, fees for some types of legal work, bonus payments to contractors, damages from lawsuits, fund-raising expenses, entertainment, interest, fines, and penalties. Consult OMB Circular A-87 for additional information.

    4. Indirect Costs.  Indirect Cost (IDC) Negotiation Agreements are established between many Tribes and the Federal Government in accordance with OMB Circular A-87.  Indirect Cost Negotiation Agreements establish standard rates for the indirect costs incurred by Tribes that administer their programs.  During the drafting of the project summary and the development of the cost estimate, the Tribe and the IHS decide whether the IDC Negotiation Agreement rates or the project administrative support fees, described below, will be used for the project.  Federal funds passed through the Tribe to construction contractors and subcontractors are typically not included in IDC Negotiation Agreements, although a few IDC Negotiation Agreements may allow the rate to apply to pass-through funds.

    5. Project Administrative Support Fees.  Project Administrative Support Fees (ASF) may be paid to the Tribe for program administration when the Tribe does not have an IDC Negotiation Agreement.  The ASF is intended to cover the cost of that portion of the salaries and benefits of those Tribal employees associated with project administration as well as all other allowable costs not specifically allocated to the project.  Such fees shall be established jointly by the Tribe and IHS to reflect anticipated costs under a given MOA, but cannot exceed the amounts stated in Exhibit 5-2-A (below) for Tribal procurement and Tribal force account.  In the absence of data to support different fees, Exhibit 5-2-A shall be used for Tribal construction and supply contracts.

      Exhibit 5-2-A.  Tribal Procurement Administration Support Fees

      Cumulative Dollar Amount Administration Fee (Not to Exceed)
      $0 to $25,000.00 4% of the contract amount
      $25,000.00 to $200,000.00 $1,000 plus 3% of the contract amount in excess of $25,000
      Above $200,000.00 $6,250 plus 2% of the contract amount in excess of $200,000

      An example of how to calculate Tribal Procurement Administration Support Fees is shown in Exhibit 5-2-B.

      Exhibit 5-2-B.  Example calculation of ASF, assuming contract amount is $250,000

      Cumulative Dollar Amount
      (1st column Exhibit 5-2-A above)
      Administration Fee (Not to Exceed)
      $0 to $25,000.00 = $25,000 X 4.00% = $1,000
      ($200,000 - $25,000) = $175,000 X 3.00% = $5,250
      ($250,000 - $200,000) = $50,000 X 2.00% = $1,000
      Total calculated ASF = $7,250

      For force account work performed by the Tribe, the administrative fee shall be paid to the Tribe in proportion to Tribal disbursements for force account labor.  For the force account portion of the project, the maximum amount for the ASF shall be 10 percent of the labor disbursement amount.

      This amount shall be reduced proportionately on projects where the IHS or other party performs the planning and administrative functions, or where economies of scale call for a reduction in the ASF.  Each IHS Area should develop additional policies on the proper fees for these project services specific to the Area.

    6. Unexpended Funds.  The Tribe shall return unexpended funds within a mutually agreed upon time between 30 days to no longer than 90 days after the completion of the project construction phase.

    7. Project Audits.  The MOA must include a provision that the IHS shall have access to all Tribal project records and that the IHS may request a project audit by the Tribe at any time.  If appropriate, compensation for the audit may be provided to the Tribe.

    8. Budget Changes.  Any changes by the Tribe in the project scope and/or project budget must be reviewed and approved by IHS as stated in the MOA.

    9. Prohibited Practices.

      1. Funds for construction projects under an MOA may not be loaned or intentionally invested.

      2. Funds from one IHS funded construction project cannot be used for cash flow or other unauthorized purposes for another IHS funded construction project.

    10. Financial Reporting.  If financial reports are required by the IHS, the frequency will not exceed once per quarter.  The financial reports should contain sufficient information to allow tracing project expenditures to ensure that Federal funds were not used in violation of any restrictions or prohibitions.  Financial reports are separate from the cost accounting and progress reports for project construction which may be required monthly or weekly, depending on the size of the project.

    11. Project Closeout Requirements.  The IHS will close out the project in accordance with IHS Area policies and the Criteria document when it determines that all applicable administrative actions and all required project work are complete.  A closeout report from the MOA participants may be required by the IHS after completion of the project and the return of all unused funds.

  4. Tribal Records and Property Management.

    1. Retention and Access Requirements for Records.  Except as provided below, project records must be retained for 3 years from the project completion date.  These records shall include all financial records, supporting documents, and procurement documents including but not limited to time sheets, canceled checks, invoices, purchase orders, and contracts.  The Tribe must make these records available upon request by the IHS, the U.S. Comptroller General, or their designated representatives.

      If any litigation, claim, negotiation, audit, or other action involving the records begins before the expiration of the 3-year period, the records must be retained until completion of the action and resolution of all issues which arise from the action, or until the end of the 3-year period, whichever is later.

    2. Equipment.  Title to equipment acquired by the Tribe for its exclusive use under a project vests with the Tribe upon acquisition.  The Tribe must maintain property records for that acquired equipment.  The MOA will describe equipment use and designate ownership.

      If the IHS provides Federally-owned equipment to the Tribe for use on the project, the title will remain with the Federal Government unless otherwise officially transferred.  The Tribe must maintain and manage the equipment in accordance with IHS policy and any applicable use permit or agreement.

    3. Real Property.  Title to real property acquired by the Tribe under the project vests in the Tribe upon acquisition.  In the case of sanitation facilities or related improvements to real property on Tribal lands, ownership vests with the Tribe.

    4. Supplies.  Ownership of construction materials and supplies properly acquired by the Tribe under the project vests in the Tribe upon acquisition.  If, after construction is completed, more than $5,000 of unused tribally procured supplies and materials remains, the IHS and the Tribe must work out an agreement for the disposition of those items.

5-2.10  THIRD-PARTY MOA

Other Federal agencies or non-Federal third-parties may express an interest in participating in a sanitation facilities project; participation may consist of contributing funds, doing the work themselves, procurement, or a combination of the former.  Third-party participation may be advantageous if the third-party has the construction expertise or the administrative capability to provide the sanitation facilities.  For some projects, the circumstances will dictate whether the actual construction and project administration must or should be carried out by a third-party; e.g., when the non-Tribal third-party owns the existing sanitation facilities.

  1. Additional Required Provisions in Third-Party MOA.  In addition to the required provisions in the Memorandum of Agreement Structure and Procedures section, include provisions for:

    1. Contributions

    2. Transfer Ownership

    3. Lead Agency

  2. Eligible Third-Party Participants.  Third-parties are parties to the MOA other than the IHS and the Tribe receiving the Federal assistance.  The third-parties can be entities created within State and local governments, regional or rural water/sewer districts, water associations, housing authorities, and private corporations which perform a regulated public function; e.g., a private water company.  Third-parties could include Federal-State regional commissions, private foundations, and community groups.  Third-parties can also include other Federal agencies, Indian housing authorities, non-IHS Indian health clinics, or other non-profit organizations.

    Although almost any eligible organization can contribute resources to a project, there are limitations with respect to who can actually accomplish the work.  A third-party may accomplish the work under an MOA if it has an interest in the facilities or services and if the MOA calls for substantial involvement by the IHS in carrying out the project for the benefit of eligible AI/ANs.  A procurement contract must be used if the Federal Government’s principal purpose is to “acquire” an intermediary’s services and the intermediary has no interest in Indian health; e.g., contracting with a well drilling company.

  3. Administration by a Third-Party.  On some P.L. 86-121 projects, the IHS project funds and other contributions are transferred to the third-party to administer the project and perform the actual construction using IHS requirements.  The third-party receiving the funds may be responsible for the overall project including the preliminary activities, design, bidding, construction, and closeout stages. Although such projects are usually completed by competitive bid contracts, the projects may be completed by force account construction, or by a combination of force account and contract procedures.

    1. Third-Party Force Account.  If approved by the IHS, the third-party performing the work may elect to construct the project by force account.

    2. Third-Party Procurement.  If approved by the IHS, the third-party performing the work may elect to construct facilities using its own procurement procedures.

    3. Procedures Common to Third-Party Force Account and Procurement.  The matching provisions in Section 5-2.9, “Direct Provision by Tribes,” shall apply (substituting the “third-party” for “Tribe”) for projects where a third-party performs the work using either force account or procurement.

  4. Transferring Facilities to a Third-Party.  Where community facilities are owned (upon acquisition) or transferred to a non-Indian third-party, the MOA shall provide for equitable user fees for AI/AN residents, taking into account the value of any capital improvements made or funded by the IHS.

  5. Administrative Policies and Procedures.

    1. If there are two or more organizations or governmental entities as parties to the MOA, the Tribe may have to comply with each party’s regulations and requirements.  To the extent practicable, to alleviate any regulatory burden on the Tribe, the participating agencies should reach an agreement as to which agency’s regulations and requirements will govern the execution of the project.

    2. When another agency enters into an inter-agency agreement to transfer project funds and responsibilities to the IHS, the IHS administrative policies and procedures will generally apply (e.g., procurement, environmental review, and audit procedures) subject to any specific mutually agreed upon provisions in an inter-agency agreement.

    3. The SFC Program performs an environmental review and determination on IHS-funded sanitation facilities construction projects except P.L. 93-638 Title V construction projects.  The environmental review (including NHPA review) ensures that the IHS considers the environmental consequences of its proposed actions, applicable permits are obtained, and appropriate procedures are implemented.

      1. The IHS is responsible for the NEPA environmental determination of an IHS funded project or for its portion of the work on a project when another authorized entity is designated as the responsible agency in the MOA or in a separate lead agency agreement.  The IHS responsibility on multi-agency projects is dependent on several conditions including the degree of IHS involvement, funding, and the type of project.

      2. On P.L. 93-638 Title V construction projects, the Tribe assumes all the Federal environmental and historic preservation responsibilities as mandated in Section 509 of that Act.

      3. If the IHS references another agency’s environmental document in its environmental determination, the IHS must have a copy of the other agency’s environmental statement in the project file.

      4. On projects where contributed funds are not transferred directly to the IHS (i.e., another Federal agency is responsible for the environmental and historic preservation requirements of the project), before the IHS participates in the project to provide sanitation facilities, the IHS shall make its own environmental determination.  The IHS may review the other agency’s environmental document and supplement that environmental document to meet IHS needs.

        1. On Native American Housing Assistance and Self-Determination Act/HUD projects and Community Development Block Grant projects, the Tribe assumes the Federal responsibility for the NEPA and the NHPA, or HUD is responsible for the NEPA environmental determination, for the entire housing project including any sanitation facilities for the project.  The responsibility of the Tribe or HUD does not change even if funds are contributed to the IHS for construction of the sanitation facilities.  (Rationale: If the Tribe or HUD did not fund the construction of the houses, the IHS would not be participating in the project.)  Nevertheless, IHS must make its own environmental review and determination.

        2. Agencies that provide grants or loans are responsible for performing the NEPA environmental determination prior to award; e.g., EPA Clean Water Act and Safe Drinking Water Act, Indian Set-Aside programs and Rural Utilities Service/Rural Development grants or loans.  Nevertheless, the IHS will make its own environmental review and determination if it participates in a project funded by those other agencies.

        3. If funds are transferred from the IHS to another Federal agency, prior to executing the transfer of funds, the agencies should decide which party will perform the environmental review and determination and the agencies should document that decision in writing.

    4. Although the MOA could designate the lead agency, the preferred method is to use a separate agreement designating a lead agency among the participating Federal agencies and the Tribe.  A separate agreement would prevent the MOA execution from being delayed because of disagreements over the lead agency responsibilities or over which agency is the lead agency.


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