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Native 8(a) federal contracts: the real story

Over the last few months, much has been reported on the Federal Small Business Administration program that allows certified Native American companies to bid on government contracts.

Unfortunately, the white noise of the debate has drowned out the facts and most importantly the history and intent of this critical program.

The SBA 8(a) Program was created in 1974 to help minority and other small disadvantaged businesses to grow through a program of Federal contracting preferences and set-asides. Through the 8(a) program, eligible firms can be awarded Government contracts on a sole-source, non-competitive basis.

The program was expanded by Congress in 1986 to include a Native 8(a) provision in order to recognize the federal government's unique relationship and obligations to Tribes, Native Hawaiians, and Alaska Natives.

During Senate hearings, lawmakers found a need to include Tribes and Alaska Native-owned firms in government contracting because President Reagan's "Commission on Indian Reservation Economics" had documented that the government's procurement policies were significant obstacles to economic development.

This policy has furthered social goals, increased competition, and expanded and diversified the sources of supplies and products for the government.

In Alaska, Native 8(a) programs have helped Alaska Native Corporations progress into the 21st century while providing their shareholders with the benefits envisioned when President Richard Nixon signed the Alaska Native Claims Settlement Act (ANCSA) in 1971.

However critics, including Sen. Claire McCaskill, D-MO, who held an oversight hearing on Native 8(a) contracting in July, have raised issues about the fairness of the program and worry that Native 8(a) contractors are stealing business from other small businesses.

The facts about the Native 8(a) program don't support critics' concerns

According to an August 2009 memo from the Small Business Administration to Sen. Olympia Snowe, R-Maine, every segment of the 8(a) program is growing.

"A preliminary analysis of contracting data from the Federal Procurement Data System from 2004 to 2008 does not indicate that other firms are losing contracting opportunities when awarding contracts through the 8(a) program to ANC firms."

SBA figures show contracts to Black-owned firms increased by 70 percent, Hispanic-owned firms increased 86 percent, Asian Pacific-owned firms increased by 68 percent and awards to subcontinent Asian American-owned firms grew by 75 percent.

Even with the success of the 8(a) program in general and the Native 8(a) program specifically, government contracting is still very much dominated by the large corporate contractors.

In 2007, the five largest federal contractors received almost 24 percent of the total contract dollars awarded, almost 70 percent from sole source contracts.

Another concern has been that Native 8(a)'s are allowed to garner contracts through no bid procedures

Again, the facts are being overlooked.

These contracts for work are not automatically awarded - each one goes though an extensive review process where the project's scope and budget are carefully examined and negotiated to ensure the government is receiving good value and quality of service.

Each contract is up for annual renewal and subject to close scrutiny by the U.S. government. The financial books and records of native companies are subject to extensive audit by government regulators.

In fact, Native 8(a) firms are consistently recognized by government agencies for their stellar performance in providing value and cost savings to the American taxpayer.

Furthermore, if you break down sole source contracts, 98 percent of sole source contracts in 2007 went to for profit companies and 2 percent went to Native contractors. Meanwhile, companies like Boeing have no obligation to directly fund their communities or provide for their shareholders education and medical expenses.

And while all Native 8(a) contractors were awarded a combined $3.2 billion dollars in both sole source and competitively bid contracts nationwide in 2007, Boeing alone was awarded $8 billion in sole source contracts in Sen. McCaskill's home state of Missouri.

If you were to look at the big picture, in 2007 the federal government spent a total of $439 billion on procurement contracts. Contracts awarded to Native enterprises under section 8(a) totaled $3.2 billion or 0.7 percent.

To drill down even further, the graph below breaks out just how much Native 8(a) enterprises are doing compared to all other 8(a) participants.

halcrograph_9_07_09

During the course of the Native 8(a) program over 31,000 jobs have been created nationwide. In 2005 alone, Alaska Native Corporations (ANC's) issued $33 million in dividends to shareholders and awarded $9.5 million in scholarship funds for Alaska Natives. In addition, ANC's employed more than 9,700 people in Alaska, 30 percent of whom were Alaska Native.

The Native 8(a) program is not a preference as some would call it. The program represents an important policy determination by Congress to recognize their historical obligations to Native Americans who are one of the most socially and economically disadvantaged groups in America.

The program, designed under President Reagan, is working as it was intended.

Native enterprises are just now getting a foothold in the federal marketplace.

Native 8(a)'s are an essential component needed to create a vibrant, healthy economy in some of the poorest regions in the country where unemployment and poverty rates are often staggering.

And while Native 8(a)'s now represent a small slice of total procurement spending, it is having a big impact in Native communities across America while helping provide opportunities for the next generation of Native leaders.

Andrew Halcro is the publisher of AndrewHalcro.com, a blog devoted to Alaska issues and politics. He is president of Avis/Alaska, his family business. Halcro served in the Alaska House of Representatives from 1999 to 2003. He ran for governor in 2006 as an independent. He and Democrat Tony Knowles lost to a woman named Sarah Palin.