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updated 11/18/2004 11:17:06 AM ET 2004-11-18T16:17:06

The U.S. Supreme Court heard oral arguments Nov. 9 in a tribal lawsuit against the federal government for reimbursement of contract support costs, a case that has earned widespread attention in Indian country and from contractors that do business with the government.

Tribes contend the government owes them millions of dollars in contract support costs the government has never reimbursed, causing the tribes to divert money from the basic health services Congress intended to fund. The government argues that its obligation to provide contract support costs is not ultimately binding because tribal self-determination contracts are unique, or at least not the same as other contracts.

Tribes join suit
Amicus or ''friend of the court'' briefs in support of the Cherokee Nation and Duck Valley Shoshone-Paiute Tribes have been filed not only by several tribal organizations, as might have been anticipated, but also by the U.S. Chamber of Commerce, the National Defense Industrial Association, and the Aerospace Industries Association.

The Cherokee and Shoshone-Paiute seek reimbursement for the cost of administering federal health programs, in fiscal years 1996 and 1997, under self-determination contracts with the federal government. In the Indian Self-Determination and Education Assistance Act of 1975, Congress has directed the Department of Health and Human Services to pay for the contract support costs of tribes, ''subject to the availability of appropriations.'' But the tribes were denied this funding in those years, the department contends, because lack of available funds in its appropriation from Congress meant other tribal programs would have suffered if the Cherokee and Shoshone-Paiute had been reimbursed for the full cost of administering their contract services.

Attorneys for the tribe, led by Lloyd B. Miller, argue the funding was available within the department at large and should have been paid to the tribes once DHHS agreed to reprogram other funding for that purpose, even if that meant returning to Congress for additional appropriations. Lack of contract support funding meant tribes had to divert funding from the direct service provision intended by Congress. That violated contractual obligations because no statutory limit had been placed on contract support costs, and the department had many methods in place for reprogramming appropriated funds to make good on the obligation.

Court-issued preview
The department's government attorneys, led by Sri Srinivasan with the Justice Department, have argued that tribal government self-determination contracts are unique, unlike federal contracts with non-tribal contractors, and that the underlying inter-governmental agreements include language to the effect that funding levels are subject to both available appropriations - and to reductions, if full contract support funding for some tribes would come at the expense of other tribes in a limited budget.

A court-issued preview summarized the significance of the case: ''... Indian tribal contractors ... want to know whether their governmental nature somehow makes their contracts with the United States less enforceable than federal contracts with non-tribal contractors. Similarly, non-tribal contractors are concerned that the Supreme Court's resolution of the matter could announce a sudden shift ... that allows [federal government] agencies to avoid their contractual obligations by taking after-the-fact discretionary steps to make appropriations 'unavailable' ... especially for contractors who perform their obligations under cost reimbursement contracts.''

A district court and two federal circuit courts have backed the government. But the Cherokee Nation pressed a claim for contract support funding from 1994 - 1996 to the Interior Board of Contract Appeals, in keeping with a provision of the Indian Self-Determination and Education Assistance Act of 1975. The board ruled for the tribe, leading the federal government to appeal to the Federal Circuit, which upheld the board. The Supreme Court must resolve the inconsistencies between the three circuit courts.

One rule of thumb about the Supreme Court never changes: Predicting its decisions is no way to make a living. But that said, on several occasions during oral argument several justices seemed to be leaning toward the tribal camp. In particular, Justice Stephen G. Breyer constructed hypothetical situations for both attorneys in an attempt to find out whether or not the tribal contracts are unique compared with other federal contracts. ''There must be a simple yes or no answer to that.''

But none was forthcoming, and in the end Breyer said he may be inclined to uphold the Interior Board of Contract Appeals, which ruled against the government. ''They're supposed to know about contracts.''

‘Contractual problem illusory’
Srinivasan argued twice that core agency functions are inherently federal and cannot be farmed out to tribes as a funded activity, leading Justice John Paul Stevens to state that a firm distinction between funded federal activities and inherent functions that don't have to be funded ''makes the contractual problem illusory'' - presumably meaning that under such a reading, no contract could prevent federal departments from defining funded activities strategically in view of appropriations. ''It seems to me you can interpret what you're saying to mean the government didn't leave enough room in the budget.'' Stevens seemed to be steering toward the view that straightforward contractual obligations mean agencies should turn to Congress, rather than short-changing contractors on support costs, when their budgets come up short.

Justice David Souter seemed to second Stevens on that point. ''We're going to treat these contracts as contracts ... I don't see why that doesn't trump committee reports'' of Congress to the contrary that lack the force of law.

Justice Ruth Bader Ginsburg pointed out that in argumentation before lower courts, the department has not responded to the question of what programs for other tribes would have been harmed if the Cherokee and Shoshone-Paiute had received their full contract support payments. But she also raised concerns that the tribal position could institutionalize a ''first come-to-court, first served'' attitude toward the budgets of Indian-specific federal agencies.

Justice Antonin Scalia too dwelt on costs. ''These are strange contracts,'' he said, elsewhere asserting that the agency turnover of governmental tasks to tribes indeed makes tribal self-determination contracts unique. For under self-determination contracts, agencies must encourage the takeover of their functions by tribes, but cannot control the associated budget. ''That seems to be a strange way to run a railroad.''

The Supreme Court does not schedule a date for its decisions.

© 2013 Indian Country Today. All rights reserved.

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