Navajo Nation Contract-Based Assumption of BIA Handbooks

The Audit Trap – Chasing After the Clean Audit 

Services directly provided by the BIA to the Navajo Nation are provided under the oversight of a single BIA Navajo Region Director who allocates a single, pre-approved Congressional appropriation internally across its multiple programs, not unlike how Title IV compacts would be managed by a tribe. The same BIA Navajo Region Director oversees and monitors Navajo Nation 638 contracted programs. In order to reach the goal of compacting, the Navajo Nation must pass 3 years of clean audit across all its contracting programs. The Navajo Nation is trying to manage dozens of separate pots of contract money, each tied to external, non-negotiable BIA rules. The tribe’s chase after a clean audit via what has been described as a “crazed labyrinth” is a feature of the Title I contracting model that the Nation must use until it is fiscally stable and prepared to negotiate the greater flexibility and autonomy of Title IV Self-Governance. 

On December 5, 2025, the Navajo Nation Council issued a press release via facebook entitled Budget and Finance Committee hears Fiscal Year 2024 single audit report from KPMG LLP outlining 24 findings across 19 Navajo Nation programs that receive 638 and other federal funding, stating “Eight major programs received qualified audit opinions due to noncompliance with federal requirements. Repeat findings centered on procurement documentation failures, missing cost price analyses, inadequate eligibility tracking, subrecipient monitoring lapses, and incomplete reporting. The audit also noted systemic accounting challenges, including untrue fringe benefit rates, errors in cost allocations, delayed bank reconciliations, and untimely federal reports.” (Note: the Navajo Nation’s “other federal funding” (e.g., FEMA, DOE, ARPA, etc.) adds significantly to the audit burden).

The audit failures are the biggest current obstacle to making that very necessary transition from 638 contracting to Title IV compacts. 

A proposal for permanent accountability-focused reforms currently being shopped by the Office of Navajo Government Development, as well as legislation being discussed by the Navajo Nation Council, accept the current fractured system of siloed contracts and federal oversight, and furthermore seem to further accept a need to centralize oversight of these silos without integrating services or involving the community.

E.g. as described above in “Limitations,” on Dec 29, 2022, the Resource and Development Committee of the Navajo Nation Council enacted  RDCD-43-22 which made extreme amendments to the plan of operations of the Division of Community Development (DCD) effectively removing all project oversight and management powers from chapters and centralizing them in DCD, itself a major 638 program. This was done very quietly, with no statement or explanation of how this legislation impacts the Local Self-Governance Act at Title 26 of the Navajo Nation Code, which promises chapter autonomy. Title 26 is not mentioned in the DCD plan of operations amendments. This raises fundamental questions regarding statutory interpretation and whether an amendment to a plan of operations can implicitly nullify the Nation’s established Local Self-Governance Law.

The current system fundamentally clashes with the Navajo people’s integrated and holistic cultural view of community well-being (K’é and Hózhó). The difficulty in accessing services is a direct consequence of the administrative burdens. The most creative and effective way for the Navajo Nation to consolidate programming and provide genuinely integrated services involves a strategy with three simultaneous tracks: Legal/Structural, Administrative, and Cultural/Chapter. Such tracked solutions need the Diné people to be informed, engaged, and be the primary drivers of solutions that will work for them now and for future generations.

The sole finding for reform cannot be the need to impose measures to obtain 3 years of clean audits. Other findings are necessary for community wellness, including how the 638 contracting method is performing in keeping familial units intact, supporting the Diné Life Way and language, and allowing future generations to live and raise their families on Diné bikeyah. The focus HAS to shift from auditor questions to Diné sovereignty questions. 

Some basic findings need to be made:

1. Do the Diné people understand the workings of their government? 638 contract funds are not included in Navajo Nation budget reports. Do the Diné people understand how broadly dependent Navajo Nation government programs are on 638 contracting and what this means by way of tribal sovereignty? Is the information, and the methods of providing the information sufficiently clear and easily understood, as a whole, to allow the Diné people to participate in informed engagement?
2. What are the Navajo Nation’s goals in chasing the clean audit? Is the aim of the chase after clean audits merely to prevent the BIA from taking back the contracted programs, or is the aim a transition to Title IV self-governance compacts; if so what is the vision of self-governance once Title IV compacting is obtained? 
3. How have 50 years of 638 programs impacted Diné cultural community life? Communities frequently complain that their tribal government behaves as if it serves Washington, not their local communities. Diné cultural and community practices at the local level, including land use, are practiced against numerous federal regulations designed to protect assets, not to help local cultural life thrive. Can the rising social problems, environmental damage, loss of language/culture on the reservation be traced to the reliance on 638 programs? Formalizing knowledge of the impacts is necessary to convert community anecdotes into actionable evidence.
4. What kind of government and services do the Diné people want? At every chapter meeting across the reservation, there is consensus for integration of services and decentralization–local autonomy over local affairs including local land use and land resources, and services that do not need multiple applications and sign-in sheets at siloed programs. This anecdotal consensus is well-known yet never formalized into findings that underpin governmental reform. In its October 18, 2024 approved Diné bi Nahat’á-Diné preferences for Navajo Government report, ONGD stated: “Many individuals walked up to the ONGD canopy to voice their concerns and grievances with the Navajo Nation government . . . ONGD listened, but did not record the conversations with individuals out in the field.” (p. 17). Instead, the individuals were referred to brief survey questions, including 3 check-off choices for chapter reform: empower chapters, combine chapters, no chapters (p.14). 
5. What measures do communities expect from their leaders, including how they want their leaders to manage and supersede the political pressures of the 638 contract system, especially on the service side? If the goal is self-governing compacts, the means of gaining sovereignty (clean audits) cannot merely be achieved through a process (Title I fragmentation) that ultimately undermines genuine sovereignty and community well-being. 
6. Have chapters and communities been allowed to participate? Only through broad community help can the resource-strapped tribal government properly include the people’s participation in creating a government of their choice as mandated by CD-68-89  (Title 2 Amendments). The paternalistic, even defensive, attitude of Navajo Nation government to find a clean audit fix at all costs result in reliance on outside consultants calling for urgent corrective measures at the expense of the required community participation. 
7. What is the vision for 102 years from now, or what is also called the Seventh Generation? The clean audit chase must not be a hamster wheel without a vision. The Seventh Generation Principle is an ancient Iroquois philosophy that requires leaders to consider the impact of their decisions on the next seven generations, a framework for long-term thinking. The Seventh Generation prophecy speaks of a time, roughly seven generations after European contact, when Indigenous peoples would rise to heal the Earth and their cultures, bringing unity and wisdom to a world broken by materialism. Envisioning our families 102 years from now on Diné Bikeyah — the theme of a 2023 forum based on the art of the people — means stepping up and taking responsibility. It means already knowing what is valuable for our families that ought to be in place 102 years from now, which is a Diné lifetime. Resolving the vision is Diné Sovereignty.