WASHINGTON – American Indian and Alaska Native corporations participating in the Small Business Administration’s 8(a) program, going after and obtaining sole source government contracts where the sky is the limit on dollar amounts may be in jeopardy due to changes in a Department of Defense provision and recent court ruling.
During a presentation at the 11th Native Information Management Technology Conference in Phoenix last month, Clara Pratte, national director, Office of Native American Affairs for the U.S. Small Business Administration, laid out those potential changes.
For starters, changes to Section 811 of the National Defense Authorization Act places a cap on contracts at $20 million when it comes down to the DOD doing business with Native 8(a) companies.
“It doesn’t eliminate contracts, but what it does say, it has to go through a justification and approval process prior to those contracts being let, which is not currently the case,” Pratte said. “Even though it’s not formally implemented, there has been concern that the passage has already started to cool the procurement market for those entities seeking sole source contracts over $20 million.”
She also said the Department of Defense plans to meet with Native 8(a) businesses to address concerns and discuss potential impacts.
In mid-May, Alaska Native owned NANA Development Corporation reported that Democratic Sen. Mark Begich of Alaska met with DOD’s Director of Defense and Acquisition Policy Shay Assad. Assad agreed to start setting up meetings to address the concerns of Native 8(a) companies in both Alaska and the lower 48 states.
The other issue that could change the inner workings of the 8(a) program was a ruling in favor of the plaintiff in the Mission Critical Solutions v. U.S. case by the Federal Court of Claims in March.
MCS, an 8(a) certified and Historically Underutilized Business Zone (HUBZone) small business was awarded a one year contract to provide IT services to the Office of the Judge Advocate General, U.S. Army, in 2008 for nearly $3.5 million – the cap for a non-Native owned company.
But the Army tacked on an additional two years bringing the total amount of the contract to $10.5 million. Since this amount exceeded the threshold set by the SBA, the Army rescinded on the deal and contracted with Copper River Information Technology, LLC, an Alaska Native corporation.
MCS argued that rather than awarding the contract to Copper River on a sole source basis, the Army should have competed it among other HUBZone businesses. The court agreed.
Robert Lapham, former executive director of the National 8(a) Association, said if this ruling becomes a prerequisite for the SBA to abide by, then HUBZones have to be considered first before sole source awards are made to 8(a) businesses. “It kind of guts the program.”
Pratte was hesitant to comment on the case, but explained that the SBA is in favor of parity among its programs that serve minority and disadvantaged businesses.
“We can’t comment on it except to say that it has implications on the contracting policy as a whole, but we’re seeking a legislative fix to ensure that HUBZone, 8(a) and serviced disabled veterans are equal, and that it’s up to each federal procurement office to decide how they would like to let the contract.”
Additionally, Platte said the Office of Native American Affairs is in the process of updating regulations, the first time in 12 years. They already held six meetings to garner feedback on the changes. “There will be some large changes no doubt, but we hope that those changes benefit the program to make it more transparent and to increase the clarity.”
The 8(a) program, named for a section in the Small Business Act, was created to help small disadvantaged businesses compete in the economy by providing them preference in the federal procurement market among other incentives.
For more information visit www.sba.gov/aboutsba/sbaprograms/naa/index.html.