Agency issues revisions to Native contracting program

SMALL BUSINESS: New federal rules will take effect March 14.

February 11, 2011 

A federal agency is implementing what it calls the first comprehensive revisions in more than a decade to a program that gives Alaska Native corporations a significant edge in obtaining federal contracts.

The U.S. Small Business Administration says the changes to the 8(a) Business Development program will take effect March 14.

Native corporations have used the 8(a) program in the past decade to land billions of dollars in federal contracts, some issued without competitive bidding.

The program has transformed some Native companies, making them among the state's largest businesses based on annual revenue.

But the program has attracted critics.

They say it's unfair to let Native companies win contracts of any size while other minority-owned firms are restricted to smaller contracts. They say the extensive issuing of contracts without taking competitive bids is bad public policy. They question how much of the contracting actually benefits typical Natives.

The new rules include:

• Native corporations must report the benefits that flow back to their communities.

• Native corporations partnering with other firms to win contracts must do at least 40 percent of the work.

In a joint statement, three Native American groups said they're worried the changes will cut contracting to Native companies and limit the benefits that have gone to Native communities.

"We are concerned that some of the SBA's regulations dramatically reform Native 8(a) and significantly impact the way Native enterprises can operate and return meaningful benefits to their individual communities," said Sarah Lukin, executive director of the Native American Contractors Association.

Jackie Johnson-Pata, head of the National Congress of American Indians, said, "These regulations may be extremely painful for tribes and Alaska Native corporations, especially for those that are just now witnessing first-hand how 8(a) can transform their Native economies and otherwise have had few opportunities to improve their communities."

The National Center for American Indian Enterprise Development joined in the criticism.

But three Native corporations that have endorsed reforms of the federal contracting praised the change, saying the new rules promote transparency and accountability without denying sustainable business opportunities to socially and economically disadvantaged companies. These companies are Cook Inlet Region Inc. of Anchorage, Doyon Ltd. of Fairbanks and Arctic Slope Regional Corp. of Barrow.

"The SBA struck a meaningful balance by protecting government and taxpayer interests with these reforms while continuing to provide economic opportunities for disadvantaged businesses," said Rex Rock Sr., chief executive of Arctic Slope.

Pending efforts in Congress would strip Native corporations of their contracting edge amid concerns about how much money is being returned to Alaska Natives.

U.S. Sen. Lisa Murkowski, R-Alaska, called the rules change "thoughtful and comprehensive." "The regulations make great strides to ensure that 8(a) businesses are not further victimized by unscrupulous business partners and advisors, that 8(a) businesses perform a significant portion of the contracted work and that benefits to Native corporation shareholders and tribal members are chronicled and tracked," Murkowski said.


The Associated Press contributed to this story.

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