Alaska Native Corporations prepare for day of reckoning

You know you’re ready for a political fight when a group of competitors form an association to burnish their image.

That’s what several Alaska Native Corporations and American Indian tribes have done. Pressure is building to reform the contracting rules that govern companies that tribes and ANCs own. The Senate Homeland Security and Governmental Affairs Committee’s ad hoc Contracting Oversight Subcommittee has scheduled a hearing for July 16 to examine potential abuses in awarding and managing those contracts.

Currently, such companies are considered small businesses and can participate in the 8(a) contract set-aside program, but they also receive extra benefits that other small businesses do not.

Those benefits include no limits on the size of contracts that can be awarded to them without competition. For other small businesses, the ceiling is $3 million for services contracts and $5 million for services.

Other advantages include in essence never graduating from the 8(a) program because ANCs and American Indian tribes can own multiple 8(a) companies.

Previous coverage:
The rise of the ANCs
Dollars keep growing for Alaska Native Corporations
Time to reform ANCs
Winners and one possible loser

Other businesses are quick to complain about those advantages, especially in light of the explosive growth such companies have experienced since 2000. As we’ve reported, contract obligations went from $265 million in 2000 to $1.1 billion in 2004. Several ANCs are now on Washington Technology's Top 100 list.

ANCs and tribes are smart to form the Native 8(a) Works organization. The goal is to show the value of the services the companies deliver to the government and the benefits that flow back to the people in the ANCs and tribes.

That’s the big catch with this program: It isn’t as though an individual or a small group of individuals is reaping all the monetary awards.

Profits from those companies go to building schools, health care facilities, scholarships and other worthwhile programs.

But having said that, I have to come down on the side of the reformers. Those companies have grown large and are too strong competitively to be swimming in the same pool as other 8(a) companies.

My suggestion is to put them in their own category, but let’s not call them small businesses.

Congress should set a goal for the companies that is separate from the 23 percent small-business goal. That 23 percent is cut up enough with the various small-business categories that exist today.

Any reforms should strive to protect the benefits that flow back to the ANCs and tribes while creating a more level playing field that delivers value to the government.