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Native 8a program

The other economic initiative success story

Part one

WASHINGTON - Gaming is often called the only economic development initiative for Indian country that has ever worked, but there is another one: the Small Business Administration's Native 8a contracting program.

The 8a program rewards government procurement contracts to minority-owned small businesses. The businesses provide manufactured goods or services the government needs, often with the assistance of an established company in a mentoring relationship. The 8a business eventually graduates from the program to enter the commercial market on its own, without the safety net of government contracts to rely on. In brief, small businesses learn the ropes within the 8a program and then go out to compete for themselves.

Indian country offers numerous 8a success stories, including Chickasaw Nation Industries, Ho-Chunk Inc. of the Winnebago in Nebraska and SeaAlaska Corp. In all cases, 8a businesses return revenues to a tribal budget for the benefit of tribal members. One of the most illustrative examples comes from S & K Electronics, which began on the Flathead Reservation of the Salish and Kootenai in Montana.

''Going all the way back to 1935,'' said Greg DuMontier, president and CEO of S & K Technologies Inc. and chairman of the Native American Contractors Association, ''every business that the tribe had run had lost money for every year that it was in operation.'' Businesses like that are well-known in Indian country - jobs programs, keeping people employed as long as the tribe subsidizes it, but incapable of turning a profit to increase the revenue in tribal coffers.

But in the late 1980s, DuMontier persuaded the tribe to separate its business interests from its politics and to bring S & K Electronics into existence as a Native 8a business, manufacturing electronic parts. Eventually it graduated from the 8a program, but not before spinning off a related business, S & K Technologies. S & K Technologies, also a Native 8a firm, used revenues earned off-reservation in the booming information technology sector to assist S & K Electronics, with its hundred-some on-reservation manufacturing jobs, as it transitioned into a then-slumping commercial market. In effect, S & K Technologies sustained the employment opportunities at S & K Electronics until the firm could turn a profit.

The profitability of both firms has paid dividends to the tribe that hasn't always been large, but they beat a request for funding from a jobs program. They've funded scholarships for tribal students, and the hiring of social workers for tribal youth. Recently they led to a memorable telephone call for DuMontier.

''Remember, I spent a long time in tribal government. And one of the things that I did while I was in tribal government is, I helped the tribes to develop our own budgeting process, right, so that we could get everything out on the table at the same time and prioritize it appropriately. That was done in the late '80s. Almost 20 years later, as the CEO of the company [S & K Technologies] - and 100 percent of our profits, if you will, since we're 100 percent owned by the tribe, going directly to the tribe - I get a call, in the very early stages of the tribe's budget process. And they say 'So, what's it look like for next year?'

''The bottom line here is that the success of the company, in terms of generating revenues for the tribe, had risen to a level where it made a difference in their budgeting process ... to the point now that we are a

significant contributor, if you will, to the tribal government, in terms of their revenues, to the point that they have to call me early on in their budget process to understand, you know, where they're going with that. That is a measure of success that personally, to me, it means a great deal.''

It's a measure of success that has begun to spread throughout Indian country, thanks in large part to a Native 8a program that is now under critical scrutiny in Congress.

(Continued in part two)