Senate hearing set on Alaska Native Corp. contracting

Alaska Native Corporations, a special class of small businesses given preferential treatment in federal contracting, have received more than their share of federal contracting dollars, according to Sen. Claire McCaskill (D-Mo.) — so much more that she plans to hold a hearing next month.

Federal agencies awarded such companies $5.2 billion in contracts in 2008, compared to $508.4 million in 2000, according to a preliminary analysis of publicly available data released by McCaskill's office. On average, ANC contracting has increased 33.6 percent each year, which is more growth than in any other category of federal contract awards, the analysis states.

Of the contract dollars ANCs won in 2008, 74 percent were awarded through the Small Business Administration's 8(a) program, the senator's analysis shows.

The Defense Department is by far the largest user of ANC contracts. It spent $16.9 billion on such companies from 2000 to 2008, which accounts for more than 70 percent of ANC spending overall, according to the analysis.

Companies owned by Alaska natives have an edge in federal contracting under SBA rules. Most notably, they are eligible to be awarded contracts of any size without competition, while SBA's other set-aside programs put limits on contract size. Also, ANCs can enter into sole-source contracts of any value. And they can subcontract work to companies that don’t qualify for SBA’s 8(a) program and enter into joint ventures and partnerships with non-native companies for sole-source contracts.

McCaskill, chairwoman of the Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee, said the information shows that ANCs have also received a disproportionate share of small-business loans.

However, Sarah Lukin, executive director of the Native American Contractors Association, said small-business set-aside policies don’t overly favor ANCs. In the case of most 8(a) companies, a set-aside program benefits one owner or family, she said. In the case of ANCs, whole tribes often have a stake in a business. “Alaska Native Corporations serve hundreds and oftentimes thousands of disadvantaged individuals in perpetuity.”

Lukin offer a different perspective on McCaskill’s numbers. In 2008, awards to ANCs constituted 19 percent of 8(a) prime-contract awards, benefiting 130,000 disadvantaged people. In contrast, all other 8(a) companies combined received 81 percent of prime-contract awards and served about 10,000 disadvantaged individuals.

The senator’s subcommittee is investigating ANCs and will hold a hearing July 16 to discuss the issues.

McCaskill based her analysis on information Eagle Eye Publishers, a government contracting research company, compiled from the Federal Procurement Data System.

The subcommittee is also studying information provided by ANCs. In May, McCaskill sent letters to executives at 20 companies, asking for their total revenue and operating expenses, salaries, and how much money they had received from federal contracts and subcontracts in each of the past eight years.

In the federal information technology market, six ANCs ranked on Washington Technology’s 2009 Top 100 list of IT contractors, with one being in the top 50. NANA Regional Corp., at No. 47, nearly doubled its contracting dollars, from $214.8 million in 2007 to $427.6 million in 2008. Also on the list:

• Arctic Slope Regional Corp. was No. 58, with $319.1 million in 2008.
  
• Chenega Corp. was No. 61, with $305.5 million.
  
• Eyak Technology LLC was No. 65, with $281.5 million.
  
• Chugach Alaska Corp. was No. 74, with $218.6 million.
  
• Alutiiq LLC was No. 91, with $171.1 million.