Alaska native firms lament loss of an advocate

By Robert Brodsky

August 11, 2010

Few, if any, lawmakers had as large a role in developing and nurturing Alaska native contracting as former Alaska Sen. Ted Stevens.

The 86-year-old Republican, who was among five killed when a small plane crashed in a remote region of Alaska on Monday, was the architect and guardian of the program that transformed a handful of regional and tribal corporations into dominant players in the federal small business marketplace.

"Sen. Stevens worked to ensure native peoples had access to quality health care and economic development opportunities on par with other Americans," said Sarah Lukin, executive director of the Native American Contractors Association, a Washington trade group. "He fought to address the chronic poverty and lack of basic infrastructure in rural Alaska native villages."

The 1971 Alaska Native Claims Settlement Act, sponsored by Stevens, created 13 regional corporations and more than 200 village corporations. Eligible citizens from each region were given shares in their corporations' stock, allowing them to benefit from ANC profits.

Nearly 20 years later, Stevens convinced Congress that ANCs, along with companies owned by native Hawaiian organizations and Indian tribes, should be considered small and disadvantaged and therefore eligible to participate in the Small Business Administration's 8(a) Business Development program. Federal agencies are allowed to bypass competition and award sole-source contracts to 8(a) participants.

Stevens later crafted additional benefits for ANCs, allowing them to earn sole source contracts of any value and to have multiple subsidiary firms in the 8(a) program concurrently.

"There is little doubt that we would not have been able to compete if not for some of these provisions," said Chris E. McNeil Jr., chief executive officer of Sealaska, a regional corporation in southeast Alaska.

The exemptions, however, are not available to other 8(a) companies and have been heavily criticized by Democratic lawmakers and other members of the small business community who argue ANCs have an unfair advantage in the marketplace. The criticism has picked up in recent years -- particularly after Stevens lost his 2008 re-election.

The provisions, nonetheless, ultimately paid off. Between fiscal 2000 and fiscal 2008, Alaskan regional and tribal corporations combined to receive more than $24 billion in prime federal contracts. They earned two-thirds of that sum through the 8(a) program, according to data Government Executive obtained last year. SBA data indicates ANCs earned $2.26 billion in government contracts in fiscal 2008, including $1.4 billion in contracts through the 8(a) program. Private sector analyses, however, suggest the figure could be closer to $5 billion.

"No one could have envisioned what this would become," said Willie Hensley, a founder of the NANA Regional Corporation. Hensley worked alongside Stevens to establish the Alaska Native Claims Settlement Act.

SBA is considering changes to the 8(a) program that would clamp down on the ANCs' ability to partner with large contractors and mandate greater disclosure of how program funding is benefitting local communities. The proposal is currently in the interagency review process, SBA officials said.

During the past decade, Alaska native corporations have won jobs in virtually every state and major sector, from reconstruction contracts in Iraq and Afghanistan to multimillion-dollar information technology agreements in the nation's capital.

But, ANC advocates point out the corporations disburse a significant portion of their profits in the form of dividends to local shareholders, and invest in the larger community through economic, social and cultural programs.

"[Stevens] believed that native people, through implementation of forward-thinking federal policy, could build their own institutions and guide their own economic and social destiny," said Jana Turvey, vice president of corporate affairs for Afognak Native Corporation. "Through his efforts native people now have the opportunity to participate in federal procurement, which has changed their lives and created economic opportunity that should be used as a model for the country."

Despite the program's overall success, Alaska natives remain among the poorest citizens in the United States, with a poverty rate of more than 20 percent, according to the 2000 census. That figure far exceeds the national average and is higher than the rate for any other racial or ethnic group, with the exception of American Indians.

"The native community is much stronger and healthier today than it was 40 years ago, and much of the progress that we've made can in many ways be attributed to Sen. Stevens," said Will Anderson, president of ANCSA Regional Association. "Native Americans across the country face challenges that most other Americans simply can't fathom. Sen. Stevens' efforts to provide special contracting advantages created a way for the native community to address these challenges through the building of business skills and expertise."

By Robert Brodsky

August 11, 2010