GAO finds Alaska Native contracting advantages problematic

Alaska Native corporations have moved aggressively over the past five years to take advantage of Small Business Administration regulations that allow them to land no-bid government contracts worth hundreds of millions of dollars, according to a draft report being prepared by the Government Accountability Office.

At the same time, SBA and the customer agencies have done a poor job of overseeing the contracts and monitoring to make sure the ANCs, as they are known, are following regulations concerning how much work they are allowed to subcontract. The SBA also has been lax in tracking whether the ANCs' success has come at the expense of other small businesses.

Federal contracts to ANC firms in the SBA 8(a) program have ballooned; in fiscal 2000, they totaled $265 million, but by 2004 they had grown to $1.1 billion. Over that same period, six agencies'the departments of Defense, Energy, Interior, State and Transportation, and NASA'accounted for almost 85 percent of total ANC 8(a) contracts.

The draft report found that contracting officers in those agencies frequently failed to comply with SBA notification requirements when contracts to ANCs were modified to increase their scope or dollar value. Nor did the officials monitor the percentage of work performed by the ANCs versus their subcontractors, even though SBA regulations require that an ANC in the 8(a) program 'must incur at least 50 percent of the personnel costs with its own employees.'

The investigation into the ANCs' contracting advantages was spurred by a request more than a year ago by Rep. Tom Davis (R-Va.), chairman of the Government Reform Committee. Davis' spokesman, David Marin, would not comment on the contents of the draft report, but said the committee will hold hearings on the subject, most likely in June.

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