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- CONSTRUCTION IN INDIAN COUNTRY:
- Reflections from the 2004 National
Conference
- Roger
Owers Ph.D. P.E. J.D. Peterson Zahand Lupe Carbajal M.A.
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In May of 2004, a two-day national conference—sponsored by the
Del E. Webb School of Construction at Arizona State University—drew nearly 200
leaders from Indian Tribes and the construction industry. The purpose of the
conference was to build trust between Tribes and contractors in order to
improve construction in Indian Country and increase the construction education
and skills of American Indians. In developing trust between Tribes and
constructors, Conference participants identified three categories of issues to
be addressed: relationship issues, technical issues, and legal issues. One of
the relationship issues that must be considered is the contractor’s attitude
toward the Tribe’s land and people. Also, certain aspects of construction in
Indian Country, such as sovereignty and slow or questionable pay, further
strain the relationship between the contractor and Tribe. Moreover, it is
clear from conference presentations that the relationship between the Tribe
and the contractor must be nurtured and established over time. Technical
aspects requiring attention by the Tribe and contractor include the facts that
Tribes need assistance in project management and utilizing alternate project
delivery methods whereas contractors must become aware of the uniqueness of
contracting in Indian Country. Legal issues requiring significant attention
when constructing in Indian Country include identifying the proper owner,
addressing sovereign immunity fairly, and addressing the forum and applicable
law in dispute resolution.
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KEYWORDS: Indian Country,
Sovereign Immunity, Tribe, Relationship, Legal.
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- Introduction
- On May 6th and 7th
of 2004, nearly 200 Tribal and construction representatives met at the Wild
Horse Pass Resort in the Gila River Indian Community outside of Phoenix,
Arizona. They gathered to participate
in a national conference that was the first of its kind: “Construction in
Indian Country.”
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- The Conference was hosted by Arizona State University’s
American Indian Ad Hoc Committee for Quality Management of Construction (“Ad
Hoc Committee”). The idea of the Conference emanated from Ad Hoc Committee
discussions and represented the group’s first major initiative to begin
“building trust for a better tomorrow” in Indian Country. The conference drew
from tribes and the construction industry and included project managers,
contractors, architects, and engineers. This paper summarizes the
presentations at the Conference, identifies issues between Tribes and
contractors, explains lessons learned, and proffers areas for further
discussion and research.
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- Background
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- Recognizing an overall lack of quality
construction in Indian Country, administrators at the Del E. Webb School of
Construction (“DEWSC”) presented the idea of “building trust” between Tribes
and the non-Indian construction industry to Mr. Peterson Zah, former chairman
and past president of the Navajo Nation. Mr. Zah was, and continues to serve
as, the Advisor to the President of Arizona State University for American
Indian Affairs. The idea was fairly straightforward: the DEWSC could bring
together the region’s American Indian Tribes and the construction industry in
order to improve trust between the industry and the Tribes concerning
construction in Indian Country. The DEWSC is a world-class construction
management education resource, the Tribes have a significant need for quality
construction, and the construction industry provides construction services.
The idea also included the proposition that construction skills and
competencies would be transferred to Native constructors, the American Indian
labor force, Tribal administrators, and Tribal leaders.
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- To implement these ideas, the DEWSC and
Mr. Zah formed an Ad Hoc Committee in October 2001. The original Ad Hoc
Committee membership included leaders from six American Indian tribes in
Arizona and New Mexico and executives from some of Arizona’s most prominent
construction industry corporations. The Ad Hoc Committee vision was to build
trust between Indian Tribes and the construction industry in order to ensure
quality construction of Indian housing, schools, hospitals, infrastructure and
commercial development.
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- Over a number of meetings, the Ad Hoc
Committee set a goal to establish an endowment at DEWSC for American Indian
Construction Management Education. In discussing how to fund an endowment,
the Ad Hoc Committee decided to host the national conference. Not only would
the national conference generate revenues that could “seed” the endowment, it
could also serve to bring together the Tribes and the non-Indian construction
industry (along with the DEWSC) to begin to improve the quality of
construction in Indian Country. So over the course of nearly two years,
administrators at the School of
Construction, guided by the Ad Hoc Committee,
planned, organized, marketed, and presented the national conference.
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- The Conference
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- The conference was held over the span of
two days. Two keynote speakers introduced the conference’s seminars and
identified some of the issues between Tribes and contractors. Mr. Kevin Gover,
Arizona State University Law Professor and former U.S. Department of the
Interior’s Assistant Secretary for Indian Affairs, pointed out the issues that
contractors face when considering working in Indian Country and the concerns
that Tribes have over hiring construction contractors. Ms. Mary Thomas,
Lieutenant Governor of the Gila River Indian Community, explained the needs
for quality construction in Indian Country and highlighted some of the recent
successful projects within her community.
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- There were four seminars on day one:
Contractor Relations, Construction Management Certificate Program,
Construction Management, and Managing the Construction Enterprise. (Del E.
Webb
School of Construction, 2004). There were
also four seminars on day two: Housing Construction, Contract Law, Indian
Culture and History, and Managing the Construction Enterprise. (Del E. Webb
School of Construction, 2004). The
capstone event was the “Leadership Forum”—a summit of tribal leaders and
contractor executives who met behind closed doors to more candidly address the
needs and issues facing both groups.
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- The presentations during the seminars and
the discussion at the Leadership Forum offer valuable insight into the state
of construction in Indian Country. They are summarized and discussed below.
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- Discussion of Conference Presentations
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- The bulk of the topics presented during
the eight seminars falls into three categories: Relationship Considerations,
Technical Considerations, and Legal Considerations.
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- Relationship Considerations
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- A significant portion of the conference was designated to
discussing various considerations in the relationship between the Tribe and
the contractor.
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- Guests on Their Land
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- Contractors building in Indian Country
must realize that they have been invited to work on sovereign lands with
unique cultures.
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- Land outside of Indian Country in the
United States
is often viewed as merely a commodity or investment. But to the American
Indian, the location of the construction project is much more than a mere
project site. Though land in Indian Country may have such common restrictions
as easements and environmental considerations, it also has significant
cultural, archaeological, and spiritual significance. Treating Indian lands
with respect is therefore critical. Lieutenant Governor Mary Thomas of the
Gila River Indian Community even “urged builders to remember the rattlesnakes,
scorpions and others who make the desert their home.” (Constructing a new
Indian Country, 2004).
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- Not only must guests respect the land of
their Indian hosts, they must respect the hosts themselves. In the context of
construction contracting, this often means that contractors must comply with
preferences for tribal employees and businesses. (Johnson, 2004; Tierney;
2004). Tribal Employment Relations Offices often govern the contractor’s use
of Indian labor, sometimes requiring certain percentages of the contractor’s
and its subcontractors’ labor forces to be American Indians. (Tierney, 2004).
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- One presenter summarized it this way:
“Always remember that you are a guest on tribal lands and conduct yourself
accordingly.” (Johnston, 2004).
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- The Unique Aspects of Indian Country
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- As sovereign nations, Indian Tribes have,
to a large degree, the right to govern themselves. Unless preempted by
Congress or otherwise modified by the Tribe, sovereignty provides Tribes
immunity from suit (as discussed later), and also enables the Tribe to create
and enforce its own laws. In the context of construction, this sovereignty
can have significant unique effects on the land, project funding, and the
contract.
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- Title to land in Indian Country is
generally either held by the Federal Government in trust for the particular
Indian Tribe or allotted by the Federal Government to a tribal member. It is
therefore commonly referred to as “Tribal trust land” or “allotted land,”
respectively. (Tierney, 2004). Of significance in the context of
construction is the fact that improvements to allotted land may require
approvals in addition to those of the tribal government: time-consuming
approvals by the owners of the allotted land. (Tierney, 2004).
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- Tribes can use a variety of sources to
fund their projects. Like other governmental owners, they can use their own
money, issue bonds, partner with other municipalities, or implement external
(federal or state) grants to fund the project. (Beaty, 2004). But Tribes
tend to rely heavily on the use of external funds, and each source of funds
has unique constraints regarding bidding preferences, reporting requirements,
financial disclosures, and time constraints. (Beaty, 2004; Tierney, 2004).
Not only do these constraints require significant managerial oversight by the
Tribe, they often impact the contractor’s work on the project in the form of
hiring, scheduling, and reporting implications. Additionally, some Tribes may
not have the requisite cash flow at the start of the project but must fund the
project in phases. (Beaty, 2004).
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- That being said, Contractors who build in
Indian Country need assurance that the money will be available to pay them for
their work on the project. (Tierney, 2004); they “’want to be sure at the end
of the day, they will be paid.’” (Constructing a new Indian Country, 2004).
To account for this, one presenter advised that the Tribe “establish an escrow
account in such a manner that the Contractor can draw down on the account to
the extent of non-disputed items.” (Tierney, 2004).
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- Good Relationships are Critical
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- The relationship between the Tribe and the
contractor plays a critical role in Indian Country.
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- Mr. Peter Johnson, Senior V.P. and General
Counsel for Sundt Construction, Inc., states it well: “Just as it is true that
good relationships with individual, corporate and government clients are
crucial to the successful completion of a construction project by a
construction company, it is even more true that good relationship(s) between
Tribal representative(s) and construction company representative(s) are
crucial to the successful completion of a Tribal construction project.”
(Johnson, 2004).
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- In forming this relationship, the wise
contractor is encouraged to understand the Tribe’s culture (Beaty, 2004;
Johnston, 2004), to work within the Tribe’s system (Johnston, 2004), and to
“earn their trust and respect” (Johnston, 2004). Also crucial is support and
input for the project from the community. (Martin, 2004).
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- So the notion of investing in the
Tribe-contractor relationship begins with an attitude of being a guest on the
Tribe’s land, requires an understanding of the significance of the land and
culture, and requires an appreciation for the Tribe’s procedures. Granted,
investing in the relationship between the Tribal owner and the contractor—not
typically emphasized off the reservation—takes time. But investing in the
relationship is critical to successful construction in Indian Country.
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- Technical Considerations
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- In addition to relationship
considerations, several conference panel discussions concerned technical
aspects of building in Indian Country.
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- Managing Construction in Indian Country – The Tribe’s Perspective
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- Recognizing the fact that some buildings
in Indian Country have stood for centuries, Conference speakers stated that
“indigenous peoples in the Americas have long known the art of construction,”
but encourage “new ways of thinking to address the problems of today.”
(Constructing a new Indian Country, 2004). Unfortunately, Tribes often have
funding available for construction but have little to no expertise or formal
training in managing construction projects. Tribes need construction
education and training in order to better manage their construction projects.
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- Mr. Kirk Beaty, Assistant Director of the
Engineering and Construction Services Department for the Salt River
Pima-Maricopa Indian Community, suggests a procedure to assist a Tribe in
managing its construction projects. (Beaty, 2004). He outlines seven steps:
Beginning the Project, Forming the Owner’s Team, Securing Funding, Choosing
the Delivery Method, Selecting the Designer and Contractor, Managing the
Design and Construction process, and Learning from the process. Recognizing
that sometimes in Indian Country “employees without formal project management
training are asked to manage a project,” one speaker maintains that following
such steps will lead to successful completion of construction projects. (DiVito,
2004).
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- Managing Construction in Indian Country – The Contractor’s Perspective
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- Like their Indian counterparts,
contractors who face the prospect of managing a construction project for the
first time in Indian Country must also adopt new ways of thinking to address
the concerns unique to Indian Country.
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- The wise contractor will, at a minimum,
consider nine basic issues: With whom is contractor contracting (Tribe or
Tribal entity), Whether federal regulations or statutes apply, Whether tribal
law applies, The status of the land, Whether the tribe will waive sovereign
immunity or agree to be subject to suit, Forum selection matters, Choice of
law questions, Funding adequacy, and Whether Federal approval of the contract
is required. (Johnson, 2004). These issues are not typically emphasized when
building outside of Indian Country, so the contractor (and the contractor’s
lawyer) should address these issues when considering contracting with an
Indian Tribe.
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- Other practical construction management
tools of use to the contractor in Indian Country include the virtue of
patience (Johnston, 2004), an awareness of funding approvals and constraints (Beaty,
2004), and a willingness to submit to an extensive prequalification procedure
(Johnson, 2004).
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- One conference seminar was devoted
entirely to managing the construction company. Presented by Dr. Tom Schliefer,
Eminent Scholar at the Del E. Webb School of Construction, this seminar
identified the common elements of construction enterprise failures, offered
skills for growing a construction company, explained the business and
financial dynamics of the construction enterprise, and discussed the business
risks of construction and how they are multiplied during phases of substantial
growth. (Schliefer, 2004). Since construction in Indian Country has a unique
and additional set of risks to the contractor, the wise contractor will
consider this construction management advice before contracting in Indian
Country.
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- Taking the education of the contractor and
Tribal project owner one step further, the Del E. Webb School of Construction
presented a seminar that introduced the School’s “Construction Management
Certificate Program.” This 60-hour program provides training to assist those
who are not formally trained in construction yet find themselves “responsible
for construction on Indian land,” whether Indian or non-Indian, owner or
contractor. (Del E. Webb
School of Construction, 2004). The program
topics include construction business, accounting and finance, economics,
blueprint reading, estimating, and project management. (Del E. Webb
School of Construction, 2004).
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- Alternate Project Delivery Methods
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- Unless directed by the funding agency,
Tribes, as sovereign nations, have many options for construction delivery
methods: Design-Bid-Build, Design-Build, Construction Manager at Risk, Job
Order Contracting, and Single Source Negotiation. (Beaty, 2004). Several
conference presenters offered information on project delivery methods and how
they can be implemented in Indian Country. Presenters Crawford, Smiley, and
Tierney and Dworkin explained the methods and discussed their advantages and
disadvantages.
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- The traditional Design-Bid-Build delivery
method is favored by Tribes and often required by funding agencies. However,
a case study involving a wastewater treatment plant on the Fort McDowell
Yavapai Nation showing the success of the Yavapai Nation’s foray into
alternate project delivery methods was presented at the Conference. The
Nation started with the Design-Bid-Build method, but rejected the bids because
they were over the budgeted amount. So the Nation changed direction and hired
a Design-Build team. The Nation required the Design-Build team to start with
the plans and specifications prepared under the design contract, but allowed
them to modify the plans and specifications as needed. The Design-Build team
provided the Nation with a Guaranteed Maximum Price that was within the
Nation’s budget and entered into a contract with the Nation. The project was
built on-time and within the Nation’s budget. (Fort
McDowell Yavapai Nation, 2004).
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- The success of Fort
McDowell when using Design-Build,
presented the proposition that other Tribes and funding sources should perhaps
consider project delivery methods other than Design-Bid-Build.
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- Architecture and Homebuilding
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- Two faculty members from the Del E. Webb
School of Construction presented materials aimed at improving the quality of
construction in Indian Country.
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- Dr. Carlos Martin offered direction for
acquiring architectural services of a higher quality than those typically
experienced in Indian Country. (Martin, 2004). Recommendations include
obtaining support from the end-user of the architecture and from the approving
agency, and monitoring bids and construction in order to achieve a good
product. (Martin, 2004). Dr. Howard Bashford explained the concept of
sustainable homebuilding. (Bashford, 2004). He suggested that using
environment-friendly building materials can “ensure long term durability of
the home while decreasing daily operating costs by lowering energy
consumption.” (Bashford, 2004).
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- Legal Considerations
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- The third category of topics presented
during the conference involves legal considerations when contracting in Indian
Country. Some presentations shared information regarding elements of a
construction contract and change orders, but three areas were heavily
emphasized during the conference: identifying the owner in the contract,
sovereign immunity, and dispute resolution.
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- Identifying the Owner
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- Perhaps the first concern that a
contractor must have when considering contracting in Indian Country is to
identify the party with whom the contractor will enter into contract.
Entities can include the federal government, the Tribe itself, or an entity of
the Tribe. (Johnson, 2004; Tierney and Dworkin, 2004).
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- This is important because the “identity
and authority of the Tribal entity executing the [c]ontract” may affect the
legal rights and duties of the contractor. (Johnson, 2004). A Tribe may
waive sovereign immunity in contracts involving an enterprise of the Tribe but
not in contracts with the Tribe itself. If the entity is the federal
government, then federal rules and regulations will often apply. (Johnson,
2004). If the entity is the Tribe or a Tribal enterprise, then special Tribal
requirements concerning dispute resolution and employment preference may be
included in the contract. (Tierney and Dworkin, 2004).
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- Sovereign Immunity
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- Another major legal concern when
constructing in Indian Country is the doctrine of sovereign immunity. The
general rule is that sovereign immunity protects a Tribe from being sued.
This does not sit well with potential business partners of Tribes.
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- Moreover, allowing this legal defense in
the context of construction can be especially troublesome. Construction
projects tend to produce disputes, some of which end up in arbitration or
court. If the Tribe were to assert sovereign immunity as a defense to being
sued, then there would be no ability to resolve the dispute in arbitration or
in court. Contractors would view such a maneuver negatively and that Tribe
would have difficulty in hiring future contractors. (Tierney and Dworkin,
2004).
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- Nevertheless, Tribes do have the ability
to waive their immunity if they so desire. Indeed, a Tribe “must expressly
and properly waive its sovereign immunity in order to be sued.” (Johnson,
2004). Conference presenters advocate that Tribes provide limited waivers of
their sovereign immunity: that they agree to “waive immunity to a degree
necessary to afford an appropriate remedy to a construction contractor in the
event of a significant dispute.” (Johnson, 2004).
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- Moreover, by agreeing to a limited waiver
of their sovereign immunity, Tribes not only express their sovereignty
(Tierney and Dworkin, 2004), they create a business environment in which
construction contractors commonly and comfortably participate.
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- Dispute Resolution
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- Like sovereign immunity, the resolution of
disputes between the Tribe and the contractor is a “hot topic” in Indian
Country. (Tierney and Dworkin, 2004). Two common issues arise when
negotiating dispute resolution provisions: where the dispute will be resolved
(forum) and what law applies (choice of law). (Tierney and Dworkin, 2004;
Johnson, 2004).
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- Not surprisingly, contractors tend to
favor state courts while Tribes tend to favor Tribal court for the forum in
which the dispute will be resolved. Tierney and Dworkin suggest that
“mediation or arbitration is an acceptable alternative in many situations,”
implying that both the Tribe and the contractor should agree to resolving
their disputes in a neutral forum. (Tierney and Dworkin, 2004). This is not
uncommon in Indian Country. The “gaming compacts negotiated with most of the
Arizona Indian tribes has an arbitration provision and the AIA standard form
construction contracts include an arbitration provision.” (Tierney and
Dworkin, 2004).
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- Tierney and Dworkin advise that the choice
of law provision in “construction contracts entered into by the Tribal
entities is of vital concern.” (Tierney and Dworkin, 2004). They argue that
the contract should contain a clause that clearly states whether state law or
Tribal law governs the contract. (Tierney and Dworkin, 2004). They also
caution that state law may be incorporated into the contract through the laws
of the Tribe. (Tierney and Dworkin, 2004).
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- None of these legal considerations is
insurmountable for the Tribe or the contractor; there have been many
significant successful construction projects in Indian Country. However, by
involving knowledgeable legal counsel to address these issues before the
contract is signed, both parties can save themselves from a lot of problems in
the future. (Johnson, 2004).
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- The Leadership Forum
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- One of the many highlights from the 2004
Construction in Indian Country conference was the Leadership Forum. During
the Leadership Forum, Tribal leaders and construction industry executives met
with the intent of addressing—in more detail and with more candor—some of the
issues identified during the Conference.
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- An overall lack of trust between Tribes
and contractors was identified and discussed in detail.
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- Tribal leaders expressed concern that
contractors did not care to learn about the unique aspects regarding Indian
lands and Indian people. Tribal leaders explained that personal relationships
built on trust with potential business partners are highly important in Indian
Country and suggested that potential contractors invest time in getting to
know the Tribal owners with whom they would be conducting business. Tribal
leaders also expressed the concern that Tribes ensure that Indian peoples
themselves develop construction skills and competencies. The discussions
touched on how contractors could assist in making this a reality by training
and educating Tribal personnel during the course of a construction project.
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- For their part, construction industry
leaders explained that they often hesitate to do business in Indian Country
because of the issues surrounding sovereign immunity and the reputations of
Tribes for slow or questionable pay. They expressed a willingness to work
with Tribes to reach common agreement regarding how to structure business
between them. Contractor leaders also indicated a sincere desire to help
Tribes to “grow their own” competent construction personnel.
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- The consensus of the leaders was that both
the 3-hour Leadership Forum and the conference were successful in establishing
an environment to develop stronger relationships between the Tribe and
contractor. In fact, after running out of the time allotted for the forum, it
was agreed that there be a follow up meeting to the Forum. Similarly, it was
agreed to continue and support the annual Conference with a national scope.
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- Summary and Conclusions: Lessons Learned
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- Although “Construction projects in Indian
Country are similar to projects elsewhere,” there are unique issues that
complicate the construction process in Indian Country. (Beaty, 2004). The
mutual lack of trust demands special relationship, technical, and legal
considerations by both the contractor and the Tribe.
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- One of the relationship issues that must
be considered is the contractor’s attitude toward the Tribe’s land and
people. Meanwhile, certain aspects of construction in Indian Country, such as
sovereignty and slow or questionable pay, further strain the relationship
between the contractor and Tribe. It is clear from conference proceedings
that the relationship between the Tribe and the contractor must be nurtured
and established over time.
-
- Technical aspects of construction in
Indian Country require attention by the Tribe and contractor. Tribes need
assistance in project management and utilizing alternate project delivery
methods whereas contractors must become aware of the uniqueness of contracting
in Indian Country.
-
- Legal issues require significant attention
when constructing in Indian Country. Tribes and non-Indian contractors should
consider identifying the proper owner, addressing sovereign immunity fairly,
and addressing the forum and applicable law in dispute resolution.
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- The conference represented a platform for
identifying the issues between Tribes and contractors. From keynote speakers
and panel presenters, to the Leadership Forum, potential solutions and trust
building permeated the proceedings. The conference also exposed the need for
continuing the discussion about the manifold relationship, technical, and
legal issues involved in constructing in Indian Country. There was a clear
consensus that the conference should be an annual event and that “building
trust for a better tomorrow” continue to be the focus.
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- Recommendations: Areas for Further Discussion and Research
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- The barrier, real or perceived, of the
lack of trust between the Tribe and the contactor must be dealt with honestly
and must be resolved before quality construction in Indian Country can become
commonplace. A continuing dialogue between the Tribes and
contractors—fostered by the School of
Construction and the Ad Hoc
Committee—will go a long way toward building the relationship.
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- Going forward, then, it is clear that
Tribes, contractors, and the School of
Construction have roles and
responsibilities in cooperating to break down the barrier. More specifically,
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