Firms Redirected Contracts Awarded Through SBA Set-Aside Program
Two government contractors designated as small, Alaska-native-owned firms used a Small Business Administration loan program to direct millions of dollars in fees to other companies owned by managers who were not Alaska natives and should not have received the payments.
The findings are part of an ongoing review by the Office of Inspector General at the Small Business Administration, reports Robert O'Harrow Jr. of The Washington Post in Firms Redirected Money Meant For Native Alaskans, Audit Finds.
The inspector general is looking at the status of Alaska native corporations, or ANCs, which are eligible to receive sole-source contracts of any size from federal agencies. Congress three decades ago permitted the creation of ANCs as a means to settle land claims and to spur economic development.
In this case, the firms, established by ANC parents, hired managers who soon gained ownership in the companies. These managers then hired other companies they personally owned and paid them with money from the set-aside contracts, according to the report. The financial arrangements allowed those other companies to take advantage of the set-aside programs without the SBA's approval, auditors found.
The audit report recommended that the two companies -- APM, a construction management company from Yorba Linda, Calif., and Goldbelt Raven, a Chantilly firm that provides acquisitions support, program management and technology services -- be terminated from the agency's 8(a) small business set-aside program.
From 2003 to 2006, the firms secured federal contracts worth up to $833 million.
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