Alaska Native corps. fight to keep favoritism in federal contracting

Small business designation under the U.S. Small Business Administration can be a lightning rod for success for companies owned by Alaska Native tribes and corporations, which enjoy privileges under the program not afforded to other participants. In particular, only Native-owned businesses have the ability to land sole-source, no-bid, unlimited-value contracts with the federal government -- a fact that raises some ire among those who oppose the preferential structure.

Critics claim Native corporations too easily secure big money contracts without doing enough to improve life in their shareholders' hometowns -- a founding ethic of the Alaska Native Claims Settlement Act. Plus, they say, unscrupulous outside interests can use the Native corporations as "front companies" to gain access to big contracts from which they might otherwise be excluded, and further direct work to subcontractors in which they have a financial stake. The worst case scenario? Money and jobs are passed on to entities with no Native ties at all.

Supporters counter that the potential for waste or abuse is not a legitimate excuse to thwart opportunity for Natives. Yet changes are already under way in response to demands for increased public accountability. The SBA has proposed requiring Alaska Native corporations to demonstrate how their contracts benefit their communities, and the Department of Defense -- the main source of contracting opportunities -- is requiring its officers to justify sole-source awards in excess of $20 million, which are available only to Native-owned corporations. No-bid awards for all other 8(a) businesses are restricted to $5.5 million or less.

Alaskans are resisting the change on both fronts. Many Alaska Native corporations have urged the SBA to rethink some of its intended reforms, and U.S. Senator Lisa Murkowski intends to try to repeal the new DOD reporting requirement. Murkowski says more paperwork will cause a chilling effect on awards, and more red tape won't necessarily improve transparency. Until she can get the regulation repealed, she's encouraging Secretary of Defense Robert Gates to proceed cautiously and with input from tribes in implementing the DOD's new rules. Murkowski says she's concerned that increased reporting requirements will result in lost opportunities for Native-owned firms.

She also suspects so-called reforms are small steps in a larger, more cutthroat agenda.

"I think it is the intention of some (people) to pull the plug on the 8(a) program for American Indian, Native Alaska and Native Hawaiians because they are demonstrating a level of success as they are pursuing these contracts," Murkowski said in a phone interview from her Washington, D.C., office. "Their shareholders are benefitting and there are others (small businesses) who are realizing they don't have the ability to do the same, and there is competition out there."

Murkowski also believes the preferential treatment Alaska Native corporations receive is a good thing -- and equitable in its own way.

"If it was just for Alaska Natives I would say that it is not fair. But it is (open) to all Native Americans," she said. "There is a trust responsibility that this country owes to our Native Americans. There is a unique political relationship that exists."

Sarah Lukin, executive director of the Native American Contractors Association and a shareholder in two Alaska Native corporations, agrees.

"Native enterprises are not like an individually owned 8(a) company," Lukin said. "Native corporations were formed in perpetuity to provide economic, social and cultural benefits to an entire community. How can an individual disadvantaged company or person have equal rights to a social enterprise that's serving an entire community of disadvantaged people?"