Time to reform ANCs
It is one of those odd coincidences that last week as we were finishing up our annual Small Business Special Report
that another scandal involving an Alaska Native Corporation hits the news.
This time the issue is a sole source contract that FDA gave to Alaska Newspapers Inc.
, a company owned by Calista Corp., an ANC. The contract - awarded without competition - was given to Alaska Newspapers because the company had agreed to hire Qorvis Communications to do the work.
Questions have been raised over whether FDA skirted procurements laws. Even if it was all technically legal, that sure isn't the right way to run an acquisition. It lacks transparency and there are few safeguards in place to make sure the government is getting a fair price and the best work.
In our small business special report, you'll find a list ranking the top ANCs and tribally owned companies that are participating in the 8(a) program. The top company, ASRC Federal Holding Co., had $621.8 million in prime IT contracts. The top traditional 8(a) had $95.4 million.
Not only do ANCs have the same advantages as traditional 8(a)s they also have the added perks such as being able to own multiple 8(a) companies and no ceiling on the size of contract the government can direct to them without competition. For a traditional 8(a), the limit is $3 million for services and $5 million for manufacturing.
I know that ANCs and tribally owned companies do a lot of good for their communities. The profits are paid as dividends to their members. Profits also go to building schools and health clinics and providing scholarships. Money also is spent on other economic development efforts.
These are all worthy endeavors and deserve continued support by the government.
But as ANCs and tribally owned companies have grown and have increased their capabilities, the competitive advantages that they hold are no longer needed. Over the last 10 years, many of these companies have developed the technical and business skills to compete in a more full and open environment.
The programs also lend themselves to corruption or at least perversion, such as the case a few months back where two ANC-owned construction companies were passing work to subcontractors owned by their senior executives.
They are doing themselves a disservice by hanging onto these super-sized set-aside programs.
The solution seems simple to me - have them follow the same procurement regulations as other 8(a) companies or at least lower the threshold for the non-compete contracts.
It is not a perfect fix but this will level the playing field somewhat and perhaps make these companies a less attractive vehicle for those looking to skirt procurement rules.
Posted by Nick Wakeman on Oct 06, 2008 at 9:54 AM