Congress passed the Buy Indian Act in 1910, but no presidential administration made those rules official until the Obama administration in July 2013.

Effective July 8, the Interior Department’s Bureau of Indian Affairs must give preference in its acquisitions to businesses that are owned or controlled by Native Americans.

“The Buy Indian Act is a long awaited event for Indian Country,” Kay Bills, executive director of MAGIC (Mid America Government Industry Coalition) in Midwest City, OK, told Set-Aside Alert.

However, based on current baselines, the bureau “has a long way to go” to substantially expand acquisitions in line with the Buy Indian ideals, Bills said.

Under the new rules, the Bureau of Indian Affairs must set aside contracts for Indian economic enterprises (IEEs), which are for-profit businesses that are at least 51% Indian-owned.

The Indian-owned companies may be large or small, but they must be managed and controlled by tribal members. The owners must self-certify that they are members of tribes, with penalties for misrepresentation.

Under the rules, the bureau must give the Indian businesses first preference by seeking contract offers from at least two IEEs and then selecting one of them, so long as it is of a ‘reasonable and fair market price,’ according to Paula Woessner, who wrote about the rules for the Federal Reserve Bank of Minneapolis.

The bureau may break from the rules only in specific circumstances, such as when no offers are received from any IEEs or when only one offer is received and it is not reasonable, Woessner said. At least 50% of subcontracts also must go to IEEs. The rules apply to goods and services, with the exception of construction.

The Indian affairs bureau has supported contracting with Indian-owned vendors informally for decades, but it has not published data on Buy Indian because it was not an official program.

However, Bills’ own research suggests that the bureau has an upward climb to achieve the promise of Buy Indian.

In fiscal 2013, the Indian affairs bureau set aside about 7% of its contracts as “Buy Indian,” totaling about $17.5 million, Bills told Set-Aside Alert.

During the same period, the bureau procured 28% of its contracts with IEEs, totaling about $69 million, based on MAGIC’s research from federal procurement databases.

Bills suggested those percentages could go much higher, now that Buy Indian is mandatory. “They have nowhere to go but up,” Bills said.

Bureau officials did not respond to a request for comment.

Interior, on the whole, reported 56% of its procurements with small businesses (twice the government’s 23% goal) and 23% with small disadvantaged businesses in fiscal 2012.

While Buy Indian currently only applies to the Indian affairs bureau, the Secretary also has gained authority under the law to mandate the rules for more Interior agencies, such as the National Park Service or US Fish and Wildlife Service. That could increase its impact substantially.

Other federal agencies or departments may choose to adopt the rules voluntarily.