McCaskill proposes end to ANC special status

Bill would remove exclusive provisions for companies owned by Alaska Native Corporations

Alaska Native Corporations face losing their unique status in a federal small-business contracting program with a new bill introduced Nov. 17.

Sen. Claire McCaskill (D-Mo.), a former state auditor and self-described prosecutor of acquisition issues, introduced S. 3959 that would remove exclusive provisions in the Small Business Administration’s 8(a) program for the companies owned by ANCs.

“The law would require Alaska Native Corporations to play by the same rules as other 8(a) companies,” McCaskill said in a speech Nov. 2 at the Coalition for Government Procurement’s 2010 Fall Conference.


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McCaskill, chairwoman of the Senate Homeland Security and Governmental Affairs contracting oversight subcommittee, said ANCs are exempt from the 8(a) program's normal rules, while most small companies have to meet certain requirements to qualify for SBA’s program. In addition, ANCs can receive contracts of any size without competition, unlike restrictions for other types of small businesses.

McCaskill's bill would force ANCs to meet the same requirements as other companies in the program. They would not be allowed to be automatically designated as both socially and economically disadvantaged businesses. ANCs would have to justify their status as such.

ANCs also have more access to contracts under their unique status. An investigation by McCaskill’s subcommittee found that ANCs received many sole-source contracts and often passed work on to traditional, large defense contractors. Between 2000 and 2008, ANCs received $6.6 billion in 8(a) sole-source contracts. Many of these contracts were far above the $3.5 million maximum for sole-source contracts that other 8(a) companies can receive, according to the subcommittee’s investigation.

McCaskill’s bill would eliminate the ability of ANCs to receive sole-source contracts exceeding the caps applicable for other 8(a) companies, and her bill would prohibit them from being pass-through companies for other businesses.

The issue raises the ire of both supporters and opponents of the special status ANC companies enjoy. Other 8(a) small businesses often say they are at a disadvantage because of the ANCs. ANC advocates say their special status helps large tribal communities.

Native American leaders reacted to McCaskill’s new legislation, calling it misguided and wrong.

“The senator’s crusade, despite countless success stories, shows a clear lack of understanding of federal Indian policies and deliberate ignorance of the benefits Alaska Native shareholders, their descendants and families receive because of the program,” said Jana Turvey, vice president of corporate affairs for Afognak Native Corp.

Citing an annual report on ANCs, the Native 8(a) Works organization said that in 2008, 12 Alaska Native Regional Corporations distributed $171 million in dividends to shareholders, representing 66 percent of net profits.

The bill was sent to the Senate Small Business Committee for further consideration.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

Reader Comments

Tue, Feb 15, 2011 Bobby Richardson Warrenton, NC

As with many endeavors that start with good intentions, this one is subject to abuse. And, while there are regulations in place to prevent/minimize this abuse, if there is no provision for enforcement, abusers will continue to get away with it because of the miniscule chances they'll get caught.

Tue, Feb 1, 2011 Celia Guzman San Antonio, Texas

I retired from the SBA 8(a) Business Development Program in 2005. I started working for SBA in 1986 and worked in the 8(a) program during this period. I started when SBA would make a determination who would be elibigle for award an award based on open requirement. Since the MOU, the SBA's role is to accept the offering and make sure the that the 8(a) company who's name is on the offering letter sent to SBA is in compliance in the program. Since that time, been many small business concerns who never received a contract. It has gotten to the point to where the same contractor's get the work. These are company's started by an 8(a) company whose term has expired in the 8(a) program. These newly certified individuals were employees of this ex8(a) company. The new companies are coming in with bonding capacity of $20,000,000 single and 30 or 40 million aggregate. They use the same Accountants and Attorneys and the locations where these new companies are located are owned by the initial 8(a) company whose term has expired. These new companies are teaming with the ex-8(a), Mapco, Inc., and joint jenturing on contract too large for the small businesses coming into the 8(a)program. A local procurement specialist recently said that the 8(a) contracts are getting larger and large exceeding the $4.0M increase. How are these small business going to be provided with the opportunity to grow and become viable without the opportunity to be awarded any contract. The only way that these 8(a) contracts can be performed is by teaming with a large business or an ANC. But why would an ANC want to team with a small 8(a) company? The local SBA offices and procurement official are aware of what is occuring but nothing is being done about this. when is SBA going to step up to the front and start to put a stop to this. This is the purpose of the 8(a) program. Too many 8(a) contracts are being released from the 8(a) program, for example the BAMC contract, now being combined with Wilford Hall Hospital, now it is called SAMMC. There are not any local 8(a) company who possess the capabilities, certifications, credentials, etc to perform this contract, but a large business. This contract is no longer an 8(a) contract, it is now being synopsized in fedbizopp as an unrestricted contract. Small Businesses need your help! Celia Guzman

Tue, Nov 23, 2010

I work for an ANC, and I can tell you that every dollar of profit goes DIRECTLY to the entire tribe of native american share holders. Fairness is recognizing that these "true americans" were here thousands of years before any of us anglos every arrived here...

Tue, Nov 23, 2010 Nick Dushay

New chair of the House Goverment Oversight committee (Rep.Issa ?) needs to hop on this train ASAP. Both Waxman and Tom Davis had the ANC's under the microscope,but nothing ever got done. Fraud, abuse ..... Sole Source on multi-million dollar contracts .... ridiculous. Go get em !!

Tue, Nov 23, 2010

We are an 8(a) company and have seen the impact of ANC's skewing the metrics of 8(a) contract awards because their dollar amounts are so large - many times well over $100m. And, we have met many ANC companies, none of whom had an Alaskan Native involved in the company. This is a ridiculous sham that needs to end!

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