Some significant changes to the federal contracting program used by many Alaska Native firms could be finalized this year after nearly a decade of heated congressional debate. One major change has already been approved by Congress.
The rules for the contracting program, created to assist minority-owned businesses and run by the U.S. Small Business Administration, are still being rewritten. One of the proposed requirements: the Native-owned companies must report annually on how the federal contracts are benefiting their shareholders.
The SBA isn't stripping out the program's most controversial provision, which allows Native-owned firms in Alaska, the Lower 48 and Hawaii to obtain federal contracts of any size without competition.
In an interview Tuesday, SBA administrator Karen Mills said that the Obama administration supports the minority contracting program but is tightening oversight of the program and rewriting the program's rules to respond to critics.
The spectacular rise of many of Alaska's Native corporations is largely due to their success in landing no-bid and other federal contracts worth millions of dollars. But that success has attracted criticism from other minority business owners, including Hispanics who remain ineligible for no-bid contracts, in addition to politicians and advocacy groups who say no-bid contracts are a bad deal for U.S. taxpayers.
One of the major critics, Sen. Claire McCaskill, D-Missouri, runs a Senate oversight committee that has been investigating Alaska Native corporations' participation in the SBA program.
In interviews, McCaskill has said that she believes that a number of Native corporations are too big now to qualify as small businesses.
McCaskill supports additional reforms and she is responsible for one of the big changes faced by the Native firms this year: an amendment to a U.S. Department of Defense spending bill that prevents the firms from receiving no-bid defense contracts worth more than $20 million unless a defense contract officer provides a written justification that is then approved by an administrator.
The amendment worries Native firms because they routinely obtain defense contracts worth hundreds of millions of dollars. Some Native executives said Tuesday they were upset that they were not given a chance to comment on the amendment, which was inserted into the spending bill after all of the hearings had ended.
Sarah Lukin, who heads the Washington, D.C.,-based Native American Contractors Association, said the amendment might discourage the Defense Department from working with Native firms. The amendment is already having a chilling effect, she said.
Many of Alaska's Native corporations, including some of the state's largest -- NANA Development Corp., Arctic Slope Regional Corp., Chugach Alaska Corp. and Chenega Corp. -- are defense contractors.
"This (amendment) came through at the 11th hour," said Clyde Gooden, vice president for business development at NANA Development Corp., the business arm of Kotzebue-based NANA Regional Corp.
Gooden remains unsure about the amendment's impact on NANA and he said he'll know more after federal officials meet with the Native firms on the matter. The Defense Department must create new regulations for the amendment, and the department has agreed to host tribal consultations before creating them.
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