Senators prepare for battle over Alaska native contracting

Senate Homeland Security and Governmental Affairs Contracting Oversight Subcommittee Chairwoman Claire McCaskill, D-Mo., is picking a fight with Alaska over contracting breaks state native corporations enjoy, setting up a test for a state delegation eager to show it can keep benefits long protected by the power of former GOP Sen. Ted Stevens.

McCaskill sent letters this month to 20 Alaska Native Corporations, seeking information about their compensation, subsidiaries, shareholder benefits, federal contract revenues and other business practices and scheduled a July 16 subcommittee hearing.

Under a legal regime built up by Stevens-backed legislation since 1971, the Alaska Native Corporations, along with native Hawaiian organizations and Indian tribes, are eligible for federal contracts under the Small Business Administration's 8(a) development program.

Unlike most other small businesses in the program, the ANCs can win no-bid contracts and subcontracts from government agencies and face no limit on total contract value. With those and other benefits, the ANCs have become major federal contractors and cash cows for Alaska, earning $5 billion in federal contracts in fiscal 2008, according to Government Executive magazine.

The ANCs' benefits have been targeted for years by trade groups representing other small business contractors, good-government groups and lawmakers, including former House Oversight and Government Reform Committee Chairman Henry Waxman, D-Calif.

Waxman held a hearing on the ANCs in 2006 and later put provisions into defense authorization bills that would have forced agencies to limit sole-source awards to ANCs. But Stevens and Rep. Don Young, R-Alaska, got the provision removed.

McCaskill said she is "skeptical of the ability to give anybody a noncompetitive bid with no limit. That just kind of offends me at its base." But she said legal changes might not be "doable now. These guys, they're huge corporations; they have huge lobbying efforts under way. I am already feeling the hot breath of the lobbying effort on my neck."

Alaska Sens. Mark Begich, a Democrat, and Lisa Murkowski, a Republican, want to show they can deliver for their constituents on the ANC issue and other state matters. "I'm raring to go on it," said Begich, arguing the corporations cut poverty among Alaska natives.

Begich and Murkowski sent McCaskill a letter asking her to give the ANCs more time to respond and each argued new program rules SBA is developing should be allowed to take effect. Begich said he is eager to "talk to people like Senator McCaskill, who does not have the history on this."

The ANC matter is just one front where Alaska is on the defensive. Murkowski recently announced she has won a commitment from the Obama administration to work with her on its proposed cut of $20 million in the Denali Commission, which supports construction of health facilities in Alaska.

Murkowski said past efforts to restore funds have been successful. But this is the first year Stevens will not be on the Appropriations Committee to aid in that effort.

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