McCaskill introduces bill to curb preferences for Alaska native corporations

Sen. Claire McCaskill introduced a bill Wednesday to restrict the contracting privileges afforded to Alaska native corporations.

The sweeping legislation would put the Alaskan firms on equal footing with other small disadvantaged businesses operating in the Small Business Administration's 8(a) Business Development Program.

The bill, which McCaskill first announced in October, would eliminate the ANCs' ability to receive sole-source contracts of unlimited value. All other 8(a) firms have their noncompetitive contracts capped at $3.5 million, or $5.5 million for manufacturing.

A longtime critic of ANCs, McCaskill argued the program is rife with abuse, the corporations fail to employ sufficient numbers of Alaska natives and return only minimal benefits to the people the program was intended to help.

"We've seen that a very small portion of these companies' profits are reaching native Alaskans, so it's time to acknowledge the fact that this program is not effective for either native Alaskans, or taxpayers," said McCaskill, who chairs the Senate Subcommittee on Contracting Oversight.

ANC supporters argue it is unfair to compare them to other small businesses that operate under a model designed to benefit individual entrepreneurs. The corporations reinvest some of their profits in the native population through their shareholders. ANCs also spend profits on cultural and social programs that benefit the larger Alaskan community, proponents said.

Jana Turvey, vice president of corporate affairs for Afognak Native Corp., said McCaskill's claims of widespread abuse in the ANC program are false.

"It is clear Sen. McCaskill has turned a blind eye to the progressive policies of her predecessors allowing native people a chance at economic self-sufficiency," Turvey said. "The senator's crusade, despite countless success stories, shows a clear lack of understanding of federal Indian policies and deliberate ignorance of the benefits Alaska native shareholders, their descendants and families receive because of the program."

Data provided by Native 8(a) Works, an advocacy group for ANCs, shows that more than 35,000 jobs worldwide were created through the program. In 2008, the 12 Alaska native regional corporations distributed $171 million in dividends to shareholders, which represented two-thirds of their net profits, the group said.

McCaskill's proposal contains a number of other provisions that could affect the viability of ANCs.

Alaska native firms no longer would be automatically designated as socially and economically disadvantaged and would have to prove that status upon entering the 8(a) program. The corporations also would have to be managed by individuals who qualify as economically and socially disadvantaged. A loophole in the program allows the corporations to be managed by non-natives, often from locations in the Washington metropolitan area.

Under McCaskill's proposal, an ANC would be allowed to have a majority interest in only one 8(a) subsidiary at a time and that affiliate's size would be a factor in determining the ANC's program eligibility. In addition, the firms would be prohibited from operating as pass-through entities to deliver contracts to non-native companies.

The restrictions would apply only to ANCs and not native Hawaiian organizations or corporations owned by native tribes, all of which are provided the same contracting preferences.

The bill, which has been referred to the Senate Small Business and Entrepreneurship Committee, does not have a co-sponsor yet and could face stiff resistance from the Senate's Alaskan delegation.

"This bill is misguided, misinformed and shows a clear lack of understanding for how important the program is for the people of Alaska," Sen. Mark Begich, D-Alaska, told Government Executive last month.

This is not the first time McCaskill has called for major reforms of the ANC program.

Last year, she proposed an amendment to the fiscal 2010 Defense authorization bill that would have stopped ANCs from winning Defense Department contracts of unlimited value without any competition. The amendment also would have lifted a provision that allows Alaska native corporations to earn a bonus when they subcontract with their own subsidiary. But McCaskill dropped the provision after a debate with Begich on the Senate floor.

Begich, who concedes the ANC program could use some "tweaking," said he is planning a "full-court press" to stop the new legislation.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
FROM OUR SPONSORS
JOIN THE DISCUSSION
Close [ x ] More from GovExec
 
 

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

    Download
  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

    Download
  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

    Download
  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

    Download
  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

    Download
  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

    Download
  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

    Download
  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

    Download
  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

    Download
  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.

    Download

When you download a report, your information may be shared with the underwriters of that document.