More controls placed on ANC contracts

To give an Alaska Native Corporation a sole-source contract, agency officials must first prove a noncompetitive award is, in fact, warranted, according to a new interim rule.

Agency officials must show that the sole-source contract is in the government’s best interest and that the cost will be reasonable. They also must describe the need for the contract’s services and point to the regulation that provides the exception to the competition rule.

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The rule applies to sole-source contracts worth more than $20 million.

Commenters on the proposal have told acquisition officials that the proposal is too broad, according to a notice in the Federal Register. Other objections focused on agencies being allowed to consider other factors in addition to price when making a noncompetitive award.

However, regulators at the Defense Department, the General Services Administration and NASA disagreed. They decided “it made sense to allow agency heads to identify other factors supporting the decision to make a sole-source" small-business award.

“By retaining the wording from the statute, agency heads retain the discretion to consider such factors as Indian economic development or meeting agency small-business contracting goals,” regulators wrote in the notice.

Congress required the justification in the fiscal 2010 National Defense Authorization Act, which President Barack Obama signed into law in 2009.

The justification does not mean that there will be no more large sole-source contracts. But agencies need to keep an explanation for the award on the record, said Dan Gordon, administrator of the Office of Federal Procurement Policy.

The regulation sets “an additional control in place,” Gordon said March 15 during a discussion session at the Interagency Resources Management Conference.

He said this is a challenging area for procurement regulators. The unique allowances for ANCs, such as receiving sole-source contracts with no size limits, hinder possible awards for other small businesses, but the award can help poor tribal communities.

There's another aspect to the dilemma.

“This is an administration that is committed to competition, transparency and openness," he said. "On the other hand, we are committed to carrying out these legislative programs and ensuring that the benefits of the program get to the intended communities."

Even so, lawmakers have offered other solutions. Companion bills in the House and Senate would remove the special considerations for these types of corporations.