Changes planned for Native contracting program

SBA: Joint ventures likely to see the biggest revisions, agency says.

October 22, 2009 

Federal regulators told at least 100 AFN delegates attending a breakout session Thursday that they are about to make revisions to the controversial federal-contracting program behind the huge growth of many Alaska Native corporations this decade.

For several years, the U.S. Small Business Administration has been working on significant revisions to its federal contracting program for minority-owned firms. SBA officials attending the Alaska Federation of Natives convention in Anchorage said the draft regulations will be published next week, starting a 60-day comment period.

The proposed changes are coming just months after U.S. Sen. Claire McCaskill, D-Mo., launched an investigation of Native firms' contracting privileges. Her investigation found that Native companies landed nearly $24 billion in work over the past eight years. She said she plans to seek changes to the SBA 8(a) program, which allows qualified Native firms to obtain federal contracts of any dollar amount without competitive bidding.

The SBA's proposed regulation changes are substantial enough that they would affect how minority contractors do business in the future, said John Klein, an SBA attorney based in Washington, D.C.

He said one of the significant changes will involve joint ventures -- minority-owned firms teaming with non-minority firms to obtain federal contracts. The proposed changes are meant to prevent abuses in those joint ventures, such as when a larger firm takes more than its proper share of the contract's financial benefits, he said.

The Thursday session at AFN was billed as a tribal consultation on government contracting but the Native organizations that sponsored the session did not allow reporters to attend it. The Native American Contracting Association said it didn't want reporters in the room because it wanted AFN delegates to feel comfortable speaking their minds freely.

However, before the session, the federal regulators talked to a reporter for a few minutes about the contracting program, without having time to get very far into details of the proposed changes, and why they think the program is beneficial to Alaska Natives. They said they planned to address delegates' questions about the program during the breakout session.

It's frustrating that the Native firms are getting criticized now that they are generating revenue from federal contracting, said Maver Carey, president of The Kuskokwim Corp., a village corporation based in Anchorage.

Carey said her company has been working with villages in the Kuskokwim region to show them how they can benefit from contracting opportunities. This week, Carey took several SBA officials on a tour of Kalskag, one of the poorest villages in her region.

SBA director of Native American Affairs Clara Pratte went on the tour and noticed that there were only five full-time jobs in the village.

Contracting could be an economic boon for Alaska villages, she said.


Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.

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