Report: Alaska Natives own largest contractors, give towns little help

Alaska Native Corporations have become some of the largest federal contractors and aren’t helping the impoverished communities in that state, according to a report and testimony given today.

The report from the Senate Homeland Security and Governmental Affairs Committee’s ad hoc Contracting Oversight Subcommittee found ANCs’ share of government contracts has grown six times the rate of overall federal spending since 2000.

Four companies owned by Alaska Natives were among the top 100 recipients of contract awards, and in 2009 six companies made Washington Technology’s Top 100 List of information technology contractors, according to the report titled, “New Information About Contracting Preferences for Alaska Native Corporations (Part II).”

The report is an analysis of detailed information about finances and employees from 19 ANCs, all of which would not be considered small businesses by the Small Business Administration's regulations.

The record shows that ANCs “are multi-million or billion-dollar corporations” and “have taken advantage of their 8(a) contracting preferences,” according to the report.

The corporations say they are supporting their communities back home, but the analysis found only about $615 a year in money, scholarships and other benefits go back to each member of the Alaska Native community, said Sen. Claire McCaskill (D-Mo.), the subcommittee’s chairwoman.

Sarah Lukin, executive director Native American Contractors Association, said 11 large ANCs provided more than $530 million to more than 67,000 shareholders in fiscal 2008 and 2009.

The report also says the ANCs employ relatively small percentage of shareholders and often pass the work through to subcontractors. Specifically, 95 percent of the 19 ANCs employees aren’t ANC shareholders, and in the company offices, ANCs have relied heavily on highly paid, non-Native executives, the report states.

A SBA inspector general report came to the same information and urged the agency to evaluate how the special ANC status has affected other small disadvantaged businesses in the 8(a) program.

ANCs were established in 1971, and in 1986 they were made eligible for a Small Business Administration program that allows firms to be awarded federal contracts non-competitively. SBA’s programs put restrictions on sole-source contracts and company size, but ANCs are exempt. They can enter sole-source contracts of any value.

Between 2000 and 2008, ANCs received $6.6 billion in 8(a) sole-source contracts worth more than $3.5 million each. For example, the largest contract is worth $1.13 billion, which the Defense Department awarded in 2002 to a joint venture of Arctic Slope Regional Corp. and Afognak Native Corp.

As they receive the set-aside award, ANCs can subcontract work to companies that don’t qualify for SBA’s 8(a) small business program and enter into joint ventures and partnerships with non-Native companies for sole-source contracts.

Sen. Mark Begich (D-Alaska), who was born in Anchorage, said the success of the program shows all 12 of Alaska’s in-state regional corporations are profitable, generating about $4 billion in revenues for their Native shareholders.

“Contrary to the spin generated off various government reports, I believe Alaska Native participation in the 8(a) program overall has been one of considerable success,” he said.