AK Native corporation contracts get a close look

Executives say they've run into this scrutiny in recent years

Posted: Wednesday, May 20, 2009

ANCHORAGE - A senator from Missouri is launching a new investigation into the billions of contracting dollars awarded to Alaska Native corporations by the federal government in recent years.

Last week, Sen. Claire McCaskill, D-Mo., a former state auditor and prosecutor, wrote a letter to 20 of Alaska's biggest Native corporations, asking them to furnish eight years worth of internal records, including how much they paid their executives and how many of their employees were Native. She gave them a deadline of 13 days.

The reactions from Native executives and Alaska politicians this week ranged from frustration to concern about the future of the Native companies, many of which have grown rapidly in recent years due to their success in landing massive federal contracts for services such as security and maintenance at military bases and providing equipment at U.S. border checkpoints.

"We are always open to scrutiny," said Will Anderson, president of the ANCSA Regional Association, a league of the 13 regional Native corporations created by the federal Alaska Native Claims Settlement Act in 1971.

He and other Native executives pointed out that they have run through a gauntlet of congressional investigations in recent years and that the same concerns keep cropping up over and over again.

"The government is getting a very good value for (its) money," Anderson said.

Some watchdog groups disagree.

A series of federal reports in recent years have found that certain Native contractors were violating federal contracting rules, the California-based American Small Business League pointed out Monday.

The government has refused to take "even the most minuscule steps" to address the problem, said Lloyd Chapman, who heads the league, which lobbies Congress on contracting matters for small-business owners.

Alaska's two senators, Lisa Murkowski and Mark Begich, said Monday they have "great concern" about McCaskill's probe, which they worry could lead to far-reaching harm for the Native firms and their shareholders.

Many but not all of Alaska's Native-owned firms have grown into multimillion-dollar companies by using special contracting advantages inserted years ago into federal law by former Sen. Ted Stevens. The key advantage allows the companies to obtain federal contracts of any size. Another advantage lets them get some contracts without bidding against other companies for the work.

Over the past decade, the new opportunity to gain million- or billion-dollar federal contracts has transformed some Native companies that had been struggling into corporate giants with gleaming corporate offices in Anchorage.

In 2007, the government awarded Native companies about $3.2 billion in contracts, 26 percent of the total dollars awarded to minority-owned companies that year, according to data provided by the Native America Contractors Association.

The companies' explosive growth attracted many critics in the Lower 48 and prompted a U.S. General Accountability Office investigation in 2006. That investigation recommended no changes to federal law and cited no abuses by Native corporations, but it did recommend stronger oversight by the U.S. Small Business Administration. The SBA runs the government's minority contracting program.

Some minority groups have raised concerns that Alaska Natives don't have caps on the size of their contracts, like other minority groups do.

At least one of the Native firms that received McCaskill's letter, Anchorage's Cook Inlet Region Inc., says it has never received any money from no-bid contracts.

Another one, The 13th Regional Corp. based in Washington state, is in financial disarray and none of its subsidiaries remain in business.

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