Government Reform looks into rules on contracts to Alaska Native companies

Rep. Tom Davis (R-Va.)

The House Government Reform Committee is investigating whether special procurement regulations that give Alaska Native corporations an edge in federal contracting are beneficial to the government or Alaska natives.

Rep. Tom Davis (R-Va.), chairman of the committee, and Henry Waxman (D-Calif.), the committee's ranking minority member, have asked the Government Accountability Office to review contracts awarded to the companies as sole-source deals.

The congressmen also have asked the departments of Defense, Homeland Security and State to turn over information about the number and value of large sole-source contracts awarded to the Alaskan companies.

There has been growing interest in the deals'many of which are for systems and IT services (, The top four small-business IT contractors in federal government are run by Alaska Natives.

Davis said numerous anecdotes suggest that agencies are using the rules to avoid the time and expense of open competitions and to steer work to large companies that work as subcontractors to the Alaskan companies.

'We're going to hold hearings to look at what the facts are,' Davis said.

The companies are tribal corporations set up in the 1970s as part of the Alaska Native Claims Settlement Act. They can own numerous 8(a) small businesses and receive benefits that other 8(a) companies do not.

For example, there is no limit on the value of sole-source contracts the companies can win, while most 8(a) companies have a $3 million cap for sole-source services contracts.

Davis said that although the intent of the program'providing economic development opportunities to historically disadvantaged tribal peoples in Alaska'is un- derstandable, there has been little or no review of whether it is meeting its goals.

Both Davis and Waxman expressed concern about the subcontracting. It would seem that the large companies providing the bulk of the work on these contracts 'should be capable of obtaining federal contracts through the standard competitive process,' Davis and Waxman noted in their letter to GAO.

Tribal corporations also have an advantage in obtaining Defense Department outsourcing contracts that are subject to A-76 competitions, which let federal employees compete with contractors for work. The military can sidestep the A-76 process through 'direct conversion,' awarding a contract directly to a tribal company without going through the review procedure.

Given the advantages available to the Alaskan companies, 'it is not surprising that five Alaska Native corporations were among the top 10 disadvantaged minority small businesses for 2004, and that they advertise their ability to receive federal contracts without competition,' the congressmen noted in their GAO letter.

As a group, the Alaskan companies deny that they are fronts for other companies.

'The Native American Contractors Association welcomes any investigation by the government that gets the full story of this program out to the American people. We believe that there are plenty of misstatements about the 8(a) program but very little data,' the association's chairman, Chris McNeil, said in a statement.

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