Gator - Almost certainly the pieces next to it wasn't used to drill the holes, IMO. Looks like stone, not bone or shell. As far as the holes go I'm only aware of two types of drill holes, flint drills and hollow reed drilling, I'm sure there are more but I'm not aware of them. The holes in this pieces don't look conical and I doubt are flint drilled ( I guess the could be if they were drilled from the other side only). I think they're too small for reed drilling nor do have the 'corner' heading into the hole normally seen on a reed drilled piece. I think I would have handled the buddy finding it the same as you, 'Great find, congratulations'. Just from the picture I don't see anything making me think artifact, but the shape is unusual and suspicious enough it very well may be an odd little artifact. As NCFieldHunter said, either way it definitely would have come home with me.
cool find,
Joe