Similar to other Departments and agencies, the Interior Department was required to follow Public Contract law and to advertise its procurements for goods and services. Under the Revised Statutes, the Secretary was required to advertise for proposals:
"Sec. 3709. All purchases and contracts for supplies or services, in any of the Departments of the Government, except for personal services, shall be made by advertising a sufficient time previously for proposals respecting the same, when the public exigencies do not require the immediate delivery of the articles, or performance of the service." (46)
In order to noncompetitively purchase the product of Indian labor, it was necessary to find a way to suspend the public advertising requirement.
Buy Indian contracting had its genesis in an appropriation act:
"An act to provide for determining the heirs of deceased Indians, for the disposition and sale of allotments of deceased Indians, for the leasing of allotments, and for other purposes." (47)
One of the "other purposes" was identified in a Proviso that provided "so far as may be practicable Indian labor shall be employed, and purchases of the products of Indian industry may be made in open market under the direction of the Secretary of the Interior." This proviso authorized the Secretary of DOI to procure goods and services that could be produced with Indian labor, in the open market, without having to advertise for proposals.
Congress wanted the Indian Bureau's procurement activities to be brought within the general procurement laws and regulations, but it also wanted to provide an opportunity for Indians to benefit from appropriation-based procurements to the extent that their labor could be employed in the products or services purchased. Congress had sought to rectify the problem of making competitive procurement awards to non-Indians, when the Indians themselves could produce the products or services. The Buy Indian contracting required competition among non-Indian vendors, but permitted noncompetitive awards to Indians.
In order to insure that the Secretary could exempt Indian procurements from the Revised Statutes, Congress subsequently added another Proviso, which repealed earlier language "under the direction of" and substituted the language "in the discretion of" the Secretary. (48) The Buy Indian Act was codified in 25 USC 47 Employment of Indian labor and purchase of products of Indian Industry. Administrative practice has been to waive the advertising requirements, (49) in order to make noncompetitive contract awards. Although noncompetitive awards may be made, these awards are still subject to public contracting laws and regulations. (50)
Using public contracting law and regulations to procure medical and health care services posed problems for the government. First, Indian Tribes were not open market vendors of medical services. Second, even if Tribes subcontracted for medical services, as contractors they generally lacked the financial and management capability as well as the funds to initiate contract performance. Third, writing contract specifications for unknown "redesigned" programs would be difficult under public contracting law. Essentially, Buy Indian Act contracting and public contracting are the same, with the only exception being waiver of the advertising requirement.
The inadequacy of the Buy Indian Act as a vehicle for tribal contracting was cited as one of the reasons for later enacting the Indian Self-Determination and Education Assistance Act (ISDEA). (51) It is noteworthy, however, that subsequent to the original ISDEA, Congress made specific reference to using the Buy Indian Act in Title III of the Indian Health Care Improvement Act. (52) Section 303 stated that the Secretary "may utilize the negotiating authority of" the Buy Indian Act, without advertising, for the construction and renovation of service facilities pursuant to Section 301; and the construction of safe water and sanitary waste disposal facilities pursuant to Section 302. Since the mid-1960's many Tribes had constructed facilities on their reservations by using "force accounts." (53) Therefore, utilizing Buy Indian contracting authority for construction of service, safe water, and sanitary waste disposal facilities was consistent with previous tribal contracting experience. The ISDEA offered a more efficient contracting method for assuming management control over medical and health care services programs. Therefore, it is not surprising that a 1987 study conducted by IHS found that contracts for health care programs under the Buy Indian Act were not extensively used. (54)