WASHINGTON -- Stung by the bad publicity from a series of media investigations into their finances, advocates for Alaska Native corporations on Thursday defended the federal contracting preferences that have benefited their businesses.
Critical investigations in recent months by the Washington Post and Pro Publica found that under the preferential contracting program known as 8(a), some large companies were using smaller firms to land big government contracts. The investigations also found that in some Alaska Native corporations, shareholders saw few benefits from the lucrative contracts.
The federal official who oversees the program for the Small Business Administration told the Senate Indian Affairs Committee on Thursday that the contracting program will soon see some major overhauls. They include efforts to reduce fraud and to ensure the program benefits those it's supposed to, Joseph Jordan told the committee.
"I'm proud of where the program is headed," Jordan told Sen. John McCain, R-Ariz., who asked whether the SBA had any misgivings about its previous oversight of 8(a) contracting.
With the title "Promise Fulfilled," though, the hearing in front of the Senate Indian Affairs Committee had a greater focus on the successes of the 8(a) program. The preferential contracting program not only gives Alaska Native corporations an edge in landing federal contracts, but also helps native Hawaiians and tribes in the Lower 48 with business development.
The program "needed some tweaking," but the new SBA rules will continue to boost self-sufficiency in native communities across the country, argued Sen. Mark Begich, D-Alaska.
"There's no question there have been challenges in years past in making sure the 8(a) corporations are successful," Begich said. "They have seen this program to be a success and want to make sure it's modified, and to make sure it works well."
Thursday's hearing was a far more friendly place than a 2009 oversight panel convened by Sen. Claire McCaskill, D-Mo., who has been critical in particular of the Alaska Native corporations. In her inquiry, McCaskill took a look at how Alaska Native corporations grew so spectacularly over the past decade, and found that many of the wealthy corporations that benefit from no-bid federal contracts have used their special preferences far beyond their original purposes.
She's hoping to pass legislation that would force Alaska Native corporations to prove they're socially disadvantaged business enterprises, which other 8(a) participants must do.
Native business leaders said they were pained by some of the revelations, and that they hope to do whatever they can to fix the program so it continues to be a viable economic development tool for underserved Native people.
"It sears my soul when I hear about, and know about abuse within our own institutions," said Byron Mallott, who's on the board of Sealaska, a Native corporation based in Southeast Alaska. "And I know it affects every Native person involved in 8(a) and everything we do in the very same way. For the program to work properly ... we want to be right there at the table with you."
There have been some stumbles, acknowledged Sen. Lisa Murkowski, R-Alaska, who is one of the staunchest supporters of Alaska Native corporations and their contracting privileges.
Murkowski's long-shot write-in bid to hold onto her Senate seat was financed in large part by Alaska Native interests, who took advantage of the recent loosening of restrictions on donations from corporations to help re-elect her.
Alaskans Standing Together, one of the new "super PACs" created last year under new campaign-finance rules, raised $1.7 million over 38 days in its independent effort to re-elect Murkowski. At $308,000, its single biggest contributor was the Alaska Federation of Natives, a nonprofit with a mission "to promote the common good and general welfare of the Alaskan Native community."
Thursday, Murkowski said it was "remarkable" that the corporations didn't give up even under the investigative spotlight.
"When they discovered that they had made mistakes in the selection of business partners, they correct those mistakes," Murkowski said. "And they remember the lessons they have learned. And when they discover they've been ripped off by business partners, they don't sweep things under the rug and hope that nobody's going to notice. They go to court, they recover what's rightfully theirs, and they regain control of their businesses."