Frequently asked questions about SECTION 811

• What is Section 811 of FY2010 National Defense Authorization Act?
• What is problematic about Section 811?
• What is the current status of implementation of Section 811?

What is Section 811 of FY2010 National Defense Authorization Act?

Section 811 of FY2010National Defense Authorization Act (NDAA) requires contracting officers to provide a justification and obtain approval by the “head of agency” before awarding a sole-source contract over $20 million. Based on the manner in which this section was drafted, it only applies to Native 8(a) Enterprises However, because the provision was slipped in during Conference Committee and was not in either the House or Senate versions of the NDAA, no one was able to comment on the provision or provide feedback to members of Congress prior to its adoption.

What is problematic about Section 811?

While on the surface a Justification and Approval (J&A) requirement appears reasonable, we believe this provision will have a chilling effect on contract awards to Native Enterprise. The Section does not specify whether the $20 million is a limit for (a) the base year of the contract; or (b) for the life of the contract. However, nearly all of the Native 8(a) contracts targeted by section 811 are for a base year plus 4 option years (5 years total). While recent conversations with Members of Congress and the Department of Defense indicate that the intent was to require a J&A for a contract over $20 million per year, we believe a statutory amendment will provide the best assurance to enable contracting officers to implement the Section correctly.

To fully understand the potential impact of the Section, it is important to note that for construction contracts, 8(a) businesses owned by an individual can receive sole source awards, with no J&A required, for up to $5.5 million, and up to $3.5 million for service contracts. However, without this clarification, a contracting officer interpreting the $20 million threshold as a life-of-contract number would effectively limit a Native Enterprise, to a lower sole-source contract limit ($4 million for any type of contract) than other individually owned enterprises.

NACA is seeking an amendment that would provide the J&A requirement to only be triggered for a contract that has a base year amount in excess of $20 million. This would clarify that the $20 million threshold in section 811 is not a life-of-contract number.

What is the current status of implementation of Section 811?

The Department of Defense (DOD) drafted a proposed rule implementing the Section. However, as this law and accompanying regulations directly impact Native Enterprises, NACA, and other national Native organizations joined Tribes requesting the DOD engage in formal Tribal Consultations prior to drafting a rule as required by Executive Order 13175. Additionally, NACA requested a meeting with the Office of Information and Regulatory Affairs in the Office of Management and Budget (OMB) to discuss the proposed regulation. DOD withdrew the proposed rule and committed to go through formal Tribal consultation before implementing Section 811. NACA has continued meeting with the DOD about implementation and Tribal consultation coordination and is anticipating a series of Tribal consultations will occur in the various regions over the summer.