No-Bid Contracts to Alaska Native Corporations Raise Eyebrows
Alaska Native Corporations have scored billions of dollars in no-bid government contracts in the last decade, leading lawmakers to suggest Thursday that the firms, created to provide economic benefits to Alaska's native populations, have exploited a loophole at the expense of taxpayers nationwide.
At issue is an ANC's ability to receive contracts of any size from a federal agency as part of a Small Business Administration program for minority and disadvantaged small businesses.
Government investigations and news reports have exposed how companies take advantage of the unique benefit, often winning large contracts with the departments of Defense or Homeland Security, and sometimes creating complex business partnerships with firms that have no ties to the SBA program or Alaska.
“Nobody begrudges giving small, disadvantaged businesses a chance to win federal contracts,” said Sen. Claire McCaskill (D-Mo.), the chairwoman of a Senate subcommittee on contracting oversight. She noted that several government-backed economic development programs provide assistance to minority groups, women-owned businesses and veterans.
“But the Alaska Native Corporations have used their special preference to bust the door down.”
No-bid contracts awarded to ANCs ballooned from $508.4 million in 2000 to $5.2 billion in 2008, according to an analysis of the 19 largest ANCs prepared by McCaskill's staff. Despite the earnings, ANCs pay only roughly $615 each per year in benefits to the 130,000 Alaska Natives who are company shareholders. The report also suggests that Alaska Natives have not enjoyed enough of the revenues, since approximately 5 percent of ANC employees are Alaska Natives and most executive compensation is earned by managers who are not Alaska Natives.
The latest findings mirror a SBA inspector general report released last week and similar investigations conducted by the Government Accountability Office, including a 2006 report that called the ANC loophole an “open checkbook” for the companies.
Defenders note, however, that the firms have donated millions of dollars to scholarships, internship programs and other civic organizations, providing economic assistance the native Alaskan populations might otherwise not receive.
“Here's a federal program that the government actually got right for native people. The program is making a difference,” said Sarah Lukin, executive director Native American Contractors Association.
“To cut the program that got us this far is absolutely wrong.”
Alaska's two senators, Lisa Murkowski (R) and Mark Begich (D) also attended the standing-room only hearing as guests of the subcommittee. Murkowski warned colleagues that changes to the ANC program would have an adverse effect on other business operated by Indian tribes or Hawaiian natives.
“The sad truth is that there are very few business models that have provided any modicum of success for tribes and Alaska Native Corporations,” she said.
“Our Native leaders have entered into contracts, hired people, created systems, and focused all of their energies on learning this business. Now that same federal government threatens to pull the rug out from under them.”
| July 16, 2009; 4:38 PM ET
Categories: Contracting, Oversight
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