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McCaskill knocks Alaska Native Corporations

WASHINGTON – Some members of Congress want to crack down on what they perceive to be out of control federal spending on government contracting projects. But some Native Americans and their representatives are asking why certain lawmakers are focusing so intensely on altering a program that has unquestionably aided tribes and Alaska Natives.

A leading champion of the crackdown is Sen. Claire McCaskill, D-Mo. A close ally of President Barack Obama, she has heeded the president’s wishes to find areas of spending to trim in the federal budget.

One such area that is ripe for trimming, McCaskill believes, is federal contracting with Alaska Native Corporations. The corporations were established in 1971 after Congress passed the Alaska Native Claims Settlement Act, which settled land and financial claims made by Alaska Natives. The law also called for the creation of regional corporations to administer the claims.

Since that time, ANCs have gone on to operate as small businesses and have been able to become part of the government’s Small Business Administration 8(a) program. In the 1980s and 1990s Congress created incentives for ANCs to participate in the program, allowing certain preferences, such as being able to receive no-bid contracts.

Some of the companies have become quite successful under the program, making millions of dollars, which has allowed them to share profits with tribal shareholders, as well as to offer educational programs, including scholarships for Native youth.

At a July 16 hearing of the Senate Subcommittee on Contracting Oversight, McCaskill, who chairs the group, laid out her arguments against ANCs. She indicated the companies are getting too many preferences without enough competition, thus costing the federal government much more money than she believes it should be spending.

“As we hold hearings in this subcommittee on waste, fraud and abuse in government contracts, we’re not going to give anyone a free pass,” McCaskill said in her prepared remarks, adding that the ANCs have a vocal, well-financed lobby behind them.

The hearing was filled to capacity, and some attendees had hired line standers to ensure they would be able to view the proceedings.

McCaskill said it is her responsibility to look out for the needs of taxpayers – not Alaska Native Corporations or their lobbyists.

The concerns expressed by McCaskill received bipartisan support, with Sen. Susan Collins, R-Maine, saying that she believes ANCs should at some point graduate out of the 8(a) program when they reach a certain level of success.

“While I do not question the fundamental proposition that ANCs provide critical services for an economically and socially disadvantaged group of Americans, we should carefully consider whether the structure of the 8(a) program provides disproportionate benefits to one group of minority-owned businesses at the expense of others,” Collins said.

McCaskill and Collins backed up their claims with findings from a recent report by the inspector general of the SBA.

The report found that ANCs received 26 percent of the total 8(a) small business contracts in 2008. It also raised concerns that other minority small businesses have found themselves at a disadvantage in securing federal contracts.

“Consequently, non-ANC 8(a) firms may be losing 8(a) contract opportunities to large ANC companies,” the report stated. “This appears to be inconsistent with the original intent of the 8(a) program, which is to benefit small businesses.”

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Despite the findings, Joseph Jordan, an administrator of contracting within the SBA, testified that the program has been working properly, as Congress intended.

McCaskill later took aim at Jordan, questioning him about specifics in the report, and taking the opportunity to again restate her position against ANCs.

In an attempt to fully air issues surrounding the situation, McCaskill also invited Alaska Sens. Lisa Murkowski (R) and Mark Begich (D), who are not members of the committee, to present their thoughts.

Both strongly support the 8(a) program and the benefits it has brought to their state, as well as to ANCs and Alaska Natives. They also questioned the accuracy of some points in the inspector general’s report.

Begich specifically labeled the report as “spin” and said he believed ANCs participation in the program has been one of “considerable success.”

Murkowski, a member of the Senate Committee on Indian Affairs, also took the time to remind McCaskill and Collins on the special relationship tribes have with Congress.

“I fear that we are moving down the road to breaking yet another promise to the Indians,” Murkowski said.

“If we are not careful, policy changes prompted by this subcommittee inquiry will go down in history as another of the ill conceived policies that we in the Congress are later forced to apologize for.”

McCaskill and Collins at times passed notes to each other and laughed during the presentations of Begich and Murkowski.

Beyond the Alaska senators, three Alaska Natives (Jacqueline Johnson Pata, director of the National Congress of American Indians; Julie Kitka, president of the Alaska Federation of Natives; and Sarah L. Lukin, director of the Native American Contractors Association) were given the opportunity to explain their thoughts on the ANCs’ participation in the program.

The three agreed that the program has brought much money to various programs that have helped Alaska Natives. They also took considerable time providing a general understanding of ANCs to the committee.

Johnson Pata said issues raised by the committee could be looked into further via direct tribal and ANC consultations.

After the hearing, McCaskill did not seem swayed by arguments that the program was working fine as it is, saying she believes there is “real potential for contracting reform in this area.”

In response to the attention from the committee and intensified scrutiny of the program, several tribes, Alaska Natives, businesses and Native organizations have launched a coalition called Native8aworksto lobby Congress on the matter.