Alaska natives defend set-aside program before Senate committee

Advocates say the program is successing and building businesses, which doesn't mean the program should end.

The Alaska Native Corporation small-business preference may not go away so quickly, as the Senate Select Committee on Indian Affairs investigates the issue today.

The committee is holding a hearing entitled, “Promise Fulfilled: The Role of the SBA 8(a) Program in Enhancing Economic Development in Indian Country.”


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Senators will hear from Joe Jordan, the Small Business Administration’s associate administrator of government contracting and business development, and SBA Deputy Inspector General Peter McClintock.

The committee will also hear from the National Congress of American Indians and the Alaska Federation Natives, followed by several owners of native businesses. They plan to present their case for the native 8(a) program’s achievements, saying such a program should not be eliminated because it's helping to grow businesses.

“Frustratingly, now that some native 8(a)s are finally succeeding, some would use that success to bar the door" to other native companies, said Lance Morgan, chairman of the Native American Contractors Association. “The growth of native 8(a) contracts indicates native participation in the 8(a) program is working.”

However, the unique set-aside for the corporations has come under scrutiny lately after investigative reports by the Senate Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee.

Sen. Claire McCaskill (D-Mo.), the subcommittee's chairwoman, has said many small businesses are losing too many contracts to the corporations owned by Alaska native groups and the preference is no longer appropriate. In a 2009 investigation, McCaskill’s subcommittee found evidence of abuses in the system and also found that the companies often don’t employ Alaska natives to work and return only minimal benefits.

On March 30, she offered an amendment to a small business bill to end the corporations’ special allowances, such as unlimited noncompetitive contracts, particularly sole-source contracts through the government’s 8(a) small business contracting program.

McCaskill’s amendment would end special rules for Alaska Native Corporations but make them live by the usual rules of the federal government’s 8(a) program, which is designed to help small and disadvantaged businesses get government contracts. So far though, the Senate has not considered McCaskill's legislation.

Most 8(a) businesses have to meet strict requirements to qualify for the program and are limited by the size of a contract, but Alaska native-owned businesses are allowed to receive contracts of up to $20 million without competition.

 The SBA has proposed rules that would require agencies to justify a large sole-source contract set aside for an Alaska Native Corporation.