Indian Incentive Program

Overview of the DoD Indian Incentive Program (IIP)

The Department of Defense (DoD) offers a financial incentive to prime contractors that partner with Native American-owned businesses. Under FAR clause 52.226-1, prime contractors are eligible for a 5% rebate on the total amount paid to Indian Organizations or Indian-owned Economic Enterprises.

This program is specifically funded by the Office of the Secretary of Defense (OSD), meaning the rebate does not deplete the budget of the individual contracting agency. Currently, the Appropriations Act allocates $8 million annually for these payments, which are available to prime contractors and small businesses that utilize Indian-owned subcontractors at any tier.

Key Eligibility & Definitions

  • The 5% Rebate: Calculated based on the total amount paid to the Indian-owned firm during the contract’s execution.
  • Adding the Clause: If the incentive clause isn’t already in your contract, it can be added via modification at any time during performance.
  • Sub-tier Eligibility: For contracts established after September 13, 2001, sub-tier contractors can also trigger this incentive for the Prime if the DFARS Clause 252.226-7001 is included.
  • Ownership Requirements: To qualify as an “Indian-Owned Economic Enterprise,” the business must be a for-profit entity with at least 51% ownership by a Native American individual or group, as verified by the Secretary of the Interior.

How to Secure the 5% Incentive

To claim the rebate, prime contractors must submit a formal request referencing the applicable FAR/DFARS clauses. The submission packet must include:

  1. Proof of Payment: Copies of all relevant invoices and a summary of expenditures.
  2. Total Value: A clear statement of the total amount paid to the subcontractor.
  3. The Calculation: A breakdown showing the 5% incentive total being requested.
  4. Proof of Status: Documentation confirming the subcontractor’s status as a Native American-owned business.

Once the DoD reviews and approves the documentation, the rebate funds are disbursed directly to the prime contractor.

Learn More

For official guidelines and further details, visit the DoD Office of Small Business Programs website at: www.acq.osd.mil/osbp/sb/programs/iip/.