Explosive growth for tribal small businesses in Alaska

Jill Burke
Aaron Jansen illustration

A new report from Congress’s investigative arm, the Government Accountability Office (GAO), has found that Alaska Native Corporations in the business of small business -- and more specifically those adroit at gobbling up federal contracts-- do exceedingly well. But there’s room for improvement in the system that’s facilitating those gains.

The report, “Federal Contracting: Monitoring and Oversight of Tribal 8(a) Firms Need Attention,” was issued in January, nearly 10 months after the Small Business Administration revised some of its 8(a) policies in an effort to control waste, fraud and abuse.

With billions of taxpayer dollars at stake, more should be done to make sure public money is well spent, the GAO found. For example, sole-source contracts may not always net the best price. When those sole-source contracts are of unlimited value, as is the case with only tribal 8(a) firms, competition could yield even greater savings.

The report also identified problems monitoring all participants in a contract. Subcontractors and others ineligible for tribal 8(a) perks can reap sizeable benefits through affiliation with tribal firms.

The numbers are impressive. In 2010, 8(a) firms landed $18.5 billion in federal dollars. Of those, $5.5 billion, or about 30 percent, went  to tribal entities. Of those, the lion’s share (85 percent) went to Alaska Native Corporations qualified to participate in the 8(a) program.

The GAO found that tribal firms' participation is growing faster than their non-native small business cohorts. From 2005 to 2010, the amount of federal contracts landed by tribal 8(a)s grew 160 percent, while non-native 8(a)s grew 45 percent. And while tribal 8(a)s represent a fraction of the different kind of disadvantaged businesses enrolled in the program, they’re pulling in nearly a third of the money going to all 8(a) companies.

Sole-source federal contracts anchor the continued growth, representing about 75 percent of the money tribal firms bring in each year, according to the GAO.

Read the full report here