More controls placed on ANC contracts

Officials now justify sole-source contracts over $20M

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.

About the Author

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

Reader Comments

Fri, Nov 18, 2011

FYI - If the ANC, Tribal, and 8(a) concerns were held to "fair and reasonable" prices for the services performed, very few of these set-asides would exist. Consultants to the 8(a) business community will state (in front of SBA representatives) that they will never have a higher rate multiple than while they are operating in the program. The average base cost labor multiple for 8(a) concerns often exceeds 1.8, whereas non-disadvantage businesses servicing the Federal market are typically in the 1.45 +/- range.

Fri, Nov 18, 2011

Tribally owned 8(a) concerns also have the ability to receive awards with no ceiling, though the new requirement for a Justification & Approval signed by the agency head or authorized delegate will significantly reduce the number of such awards. The ANC & Tribal companies are frequently operated by caucasian businessmen who line their pockets with not only the proceeds (before profits) from these contracts, but also pocket or squander the investments made by the ultimate owners/shareholders.

Thu, Mar 17, 2011 Guy Timberlake Maryland

What Bob fails to see is that only ANC's have this "unique" feature that allows them to have non-protestable and directed awards with no ceilings. Bob: In this program, the ANC's are the BIG COMPANIES and if you have not read the headlines lately, apparently a number of those organizations that are supposed to share profits with "hundreds if not thousands" have been in fact pocketing it themselves. This rule needs to be more than an interim one as it represents one step towards creating fairness among the other small businesses that represent a much larger segment of the national and government contracting small business community than do the ANCs and their constituents. Guy Timberlake Co-Founder and Chief Visionary The American Small Business Coalition

Thu, Mar 17, 2011

The shareholders in other companies INVEST THEIR OWN MONEY -- at risk! -- and the dividends they are paid are essentially interest on their investment. Furthermore, they pay onerous taxes on those capital gains. Have you ever met an ANC which actually has an Alaskan Native as an integral member of the company, responsible for the day-to-day operations? Me neither. And that is unlike every other special designation (woman-owned, veteran-owned, etc.) who must prove that the disadvantaged individual is the backbone of the company and has the necessary experience to personally be running the show.

Wed, Mar 16, 2011 Bob Alaska

If we are just going to do this with Native Organizations what about everybody else that is in the program. You never here anything about the other big companies, Native Organizations have to share the profits with hundreds if not thousands of shareholders where as these other companies pocket the profits for them selves

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