Federal Election Commission Main Page
September 17, 1993
CERTIFIED MAIL
RETURN RECEIPT REQUESTED
ADVISORY OPINION 1993-12
Phillip Martin, Chief
Mississippi Band of Choctaw Indians
Tribal Office Building
Post Office Box 6010
Philadelphia, Mississippi 39350
Dear Mr. Martin:
This refers to your June 28, and July 27, 1993, letters
concerning application of the Federal Election Campaign Act
of 1971 ("the Act"), as amended, to a proposed program of
contributions which the Mississippi Band of Choctaw Indians
wishes to undertake.
You state that you are the elected Chief of the
Mississippi Band of Choctaw Indians (the "Tribe"). The Tribe
is a non-corporate entity organized in accordance with a
constitution approved by the Secretary of the Interior
pursuant to 25 U.S.C. §476. You state the Tribe wishes to
pursue an active program of making contributions to Federal
candidates. However, you are aware that 2 U.S.C. §441c
prevents Federal contractors from making contributions for
Federal elections. Because the Tribe has entered into
various agreements with the Federal Government, you are
concerned that this prohibition may apply to the Tribe. You
describe three separate circumstances that give rise to your
concerns.
First, you state that pursuant to the Indian
Self-Determination and Education Assistance Act (the "Self-
Determination Act") found at 25 U.S.C. §450 et seq., the
Tribe has entered into various "self-determination contracts"
with the Department of the Interior. You describe these
contracts as providing Federal funds to the Tribe and
authorizing the Tribe to plan, conduct, and administer
programs that would otherwise be provided by an agency of the
Federal Government for the benefit of the Tribe. You state
that these contracts are not procurement contracts and, as
provided in 25 U.S.C. §450j(a), are specifically exempted
from the Federal Acquisition Regulations contained in Title
41 of the Code of Federal Regulations.
Second, you state that the Tribe administers
discretionary grants from various Federal agencies (for
example, Job Training Partnership Act funds from the
Department of Labor, a Vocational Education grant from the
U.S. Department of Education, and the like) made available,
not under the auspices of the Self-Determination Act, but
because of the Tribe's status as a government entity.
Finally, you state that the Tribe has chartered several
unincorporated commercial ventures that operate as
subordinate economic enterprises of the Tribe. You state
that some of these Tribal economic enterprise have, in the
past, and may, in the future, enter into contracts with a
department or agency of the United States for the provision
to the United States of goods or services.1/
You state that funds from self-determination contracts
and Federal grants are not commingled with other Tribal
funds.2/ Further, funds from the Tribal economic enterprises
are also separately maintained for each enterprise, and each
enterprise is required to have an annual independent audit
conducted and to present the Tribal Courts with a full report
of its operations and financial records. You state that in
situations in which an enterprise has surplus funds that are
not needed for operation or expansion of the commercial
business of the enterprise, the enterprise is expected to
transfer such funds to the Tribe. However, if necessary, you
state that the Tribe could establish policies and procedures
to ensure that no enterprise funds received as a result of a
Federal contract are ever transferred to the general
unrestricted Tribal funds from which political
contributions would be made.
Under 2 U.S.C. §441c, it is unlawful for a Federal
contractor "directly or indirectly to make any contribution
of money or other things of value or to promise expressly or
impliedly to make any such contribution to any political
party, committee or candidate for public office..."
Commission regulations indicate that the prohibition bans
contributions to Federal candidates and Federal political
committees, but does not prohibit contributions in state and
local elections. See 11 CFR 115.2. This prohibition extends
from the commencement of the contract negotiations until the
completion of the contract performance or the termination of
negotiations. Id. Commission regulations at 11 CFR 115.1(a)
define the term `Federal contractor', in part, to mean a
person who:
(1) Enters into any contract with the United States
or any department or agency thereof either for-
(i) The rendition of personal services; or
(ii) Furnishing any material, supplies, or
equipment; or
(iii) Selling any land or buildings;
(2) If the payment for the performance of the
contract or payment for the material, supplies,
equipment, land, or building is to be made in whole
or in part from funds appropriated by the Congress.
Under 11 CFR 115.2(c) of the regulations, the term "contract"
includes:
(1) A sole source, negotiated, or advertised
procurement conducted by the United States or any
of its agencies;
(2) A written (except as otherwise authorized)
contract, between any person and the United States
or any of its departments or agencies, for the
furnishing of personal property, real property, or
personal services; and
(3) Any modification of a contract.
In past advisory opinions and enforcement cases, the
Commission has determined that an unincorporated tribal
entity can be considered a "person" under the Act and thus
subject to the various contribution prohibitions and
limitations. See Advisory Opinion 1978-51 and Matters Under
Review 2465 and 2302. The Tribe is therefore subject to the
provisions of 2 U.S.C §441c and would be prohibited from
making contributions if any of the three types of agreements
presented in your request are found to fall within the
definition of contract, as presented in Commission
regulations. Each type of agreement is examined in turn,
dealing first with the grant agreement between the Tribe and
the Federal Government.
Federal Grants to the Tribe
The prohibitions of section 441c explicitly refer to
Federal contractors entering into contracts with the Federal
Government. While grant agreements, including the example
provided in your request, create obligations of a
quasi-contractual nature, there are distinctions between
grants and contracts, particularly procurement contracts,
recognized in other provisions of the U.S. Code.3/ These
distinctions are based on the public purpose of the agreement
and whether the U.S. Government directly benefits from the
agreement itself. See 31 U.S.C. §6303 et seq.4/
The grant agreement included in your request typifies
the public purpose activity which is the usual subject of
grant agreements. It concerns the operation of a Tribal
Child Welfare program and is authorized by the Indian Child
Welfare Act of 1978. The Commission concludes that such a
grant agreement does not fall within the definition of
contract as presented in section 115.1.
Self-determination Contracts
The request correctly notes that self-determination
contracts are not procurement contracts because of their
exemption from the Federal Acquisition Regulations of Title
41.5/ Therefore, section 115.2(c)(1) relating to procurement
contracts would not apply.
However, section 115.2(c)(2) expands the meaning of
contract for purposes of section 441c beyond only procurement
contracts. The fact that parts of Title 41 do not apply to
these agreements, does not change the fact that the
agreements are in the form of contracts. This holds true for
the two examples provided in the request, one a self-
determination contract for the administration of law
enforcement programs, the other a similar agreement for the
operation of an agricultural program.6/ These agreements
are styled as contracts.
Use of the term "contract" on the form used to implement
the Self-Determination Act does not necessarily decide the
issue. Instead, the form must be reviewed with regard to the
substance of the agreement. The Commission notes that the
content of the agreement is a public purpose no different
than the previously examined grant agreement.7/ Further, as
the request notes, these agreements concern the providing of
Governmental services which the Bureau of Indian Affairs is
ordinarily under an obligation to provide itself but now is
under a statutory obligation to delegate to the Tribe.8/
Additionally, these agreements in a sense do not actually
involve the "furnishing of personal property, real property,
or personal services" by the Tribe to "the United States or
any of its departments or agencies." Services are being
delivered to the Tribe or Tribal members. See 11 CFR
115.1(c)(2).9/
The Commission believes these agreements, statutory
creations unique to Indian Tribes, were not contemplated as
subject to the prohibitions of section 441c. Accordingly, as
with the grant agreements, the Commission concludes that,
notwithstanding the contractual elements of the agreements,
self-determination contracts of the same type as presented in
the request do not fall within the regulatory description of
a contract for purposes of 2 U.S.C. §441c.
Procurement Contract with the Federal Government
The final class of agreements described in your request,
unlike the first two, falls squarely within definition of
contract in section 115.1 and the prohibitions of section
441c. The example you have provided in your request, an
agreement to sell posters and prints to the Bureau of Indian
Affairs, is a standard or typical procurement contract as
described in 11 CFR 115.2(c)(1). Accordingly, section 441c
prohibits the Tribe, as a Federal contractor, from making
contributions to a Federal candidate during the term of the
agreement.10/ The Commission notes that the Act and
Commission regulations do not permit Federal contractors to
segregate the proceeds of their Federal contracts from other
funds as a means to avoid the prohibitions of section 441c.
The Commission further notes, however, that 11 CFR 115.6
permits the employees, officers, or individual members of an
unincorporated association, or other group or organization
which is a Federal contractor, to make otherwise lawful
contributions from their own personal assets,11/ or to form a
nonconnected political committee.12/ See Advisory Opinions
1985-23, 1984-10, and 1984-12.
This response constitutes an advisory opinion concerning
application of the Act, or regulations prescribed by the
Commission, to the specific transaction or activity set forth
in your request. See 2 U.S.C. §437f.
Sincerely,
(signed)
Scott E. Thomas
Chairman
Enclosures (AOs 1985-23, 1984-12, 1984-10 and 1978-51)
ENDNOTES
1/ In your July 27, 1993 supplement you provide four
contracts and agreements that illustrate the three separate
categories of agreements described in your request.
Your request includes two contracts that were entered
into pursuant to the Self-Determination Act. These are
agreements with the Bureau of Indian Affairs which allow the
Tribe to administer a "Law Enforcement Program" to maintain a
police force on Tribal territories and to administer an
"Agriculture (Soil & Moisture) Program" for the benefit of
the Tribe.
A third agreement, a Federal grant agreement for the
operation of a Tribal Children Services Program, is part of
the Indian Child Welfare Act of 1978. See 25 U.S.C. §1901.
It could be seen as illustrative of the type of grant
agreements entered into by the Tribe.
Finally, the July supplement includes a procurement
contract between the Bureau of Indian Affairs and First
American Printing & Direct Mail, an unincorporated economic
enterprise of the Tribe. The contract is for the production
and supply to the Bureau of Indian Affairs of several types
of posters and prints.
2/ Your request also states that the Tribe is required to
provide the appropriate Federal department, on an annual
basis, with a full accounting of Federal funds expended
pursuant to self-determination contracts and Federal grants.
3/ Especially in the remedies available to the parties in a
grant agreement, the law of Federal assistance is grounded in
contract law. See M. Callaghan, Federal Grants and
Cooperative Agreements: Law Policy, and Practice 30 (1980).
However, for the reasons established below, the Commission
views grants as distinct from contracts for the purpose of
section 441c.
4/ Under Title 31, grant agreements are designed for use in
situations where the Federal Government seeks to "carry out a
public purpose of support or stimulation authorized by a law
of the United States instead of acquiring (by purchase, lease
or barter) property or services for the direct benefit or use
of the United States Government." 31 U.S.C. §§6304 and
6304. Situations of acquisition for direct benefit, by
contrast, require the use of procurement contracts. 31
U.S.C. §6301.
5/ According to 25 U.S.C. §450j, except for construction
contracts, "the Office of Federal Procurement Policy Act (88
Stat. 796; 41 U.S.C. §401 et seq.) and Federal acquisition
regulations promulgated thereunder shall not apply to
self-determination contracts."
Some general provisions of Title 41 that relate to
public contracts do, however, still apply to
self-determination contracts. See 26 U.S.C. §§450e and
450m-1 (relating to contract dispute resolution and labor
standards) and 41 U.S.C §50(the Anti-Kickback Act of 1986.)
6/ See footnote one above.
7/ Under 45 U.S.C. §450e-1, the Department of the Interior
may ignore the provisions of Chapter 63 of Title 31 when
entering into self-determination contracts and may choose
whatever form of agreement it wishes when acting under the
Self-Determination Act. However, Title 31 still provides a
means to portray the substantive distinctions between grant
agreements and contracts.
8/ Under 25 U.S.C. §450f, the Department of the Interior
may reject in only limited circumstances a self-determination
contract proposed by a Tribe. The burden is on the Federal
Government to justify the denial and its decision may be
appealed. Furthermore, if a particular contract is rejected,
the Department of the Interior must assist the tribe in
overcoming whatever situations led to the rejection. See 25
U.S.C. §450f and 25 CFR 271.15.
9/ Once again one can look at Title 31 for illustrative
purposes. A difference between grant agreements and
procurement contracts is whether the government is acquiring
services or property for direct benefit of the Federal
Government. See footnote four.
10/ The Commission assumes for purposes of this opinion that
the funds to carry out all the contracts described in your
request will come from funds appropriated by the Congress.
11/ The Tribe may not, however, give funds to individual
Tribal members for the purpose of making such contributions
since this would violate 2 U.S.C. §441f. See Matters Under
Review 2465 and 2302.
12/ In the current circumstances you have described
involving unincorporated Tribal enterprises with government
contracts, the Tribe does not have the option of forming a
political committee. However, Tribal members acting in their
individual capacity could form their own political committee
unconnected to the Tribe itself or its enterprises. Such a
committee, however, would have to be independent of the Tribe
and receive no support, direct or indirect, from Tribal
resources or funds. See 11 CFR 100.6.