Some Native corporations may limit contracting

Posted: Tuesday, October 05, 2010

ANCHORAGE - Some Native corporations are proposing limits on contracts with the federal government to head off more drastic reforms being suggested in Congress.

"To reform it is to save it," said Cook Inlet Region CEO Margie Brown.

The Anchorage Daily News reports Native firms have won hundreds of millions of dollars in contracts through the Small Business Administration 8(a) program, which aims to help small disadvantaged firms.

Federal audits have been critical of no-bid contracts. The SBA has already proposed rules to tighten oversight by the end of the year.

A top SBA official told one Alaska Native executive at a recent hearing that the 8(a) program is "in fact a business development program. It's not a contracting program."

The official, Joe Loddo, stressed that thousands of companies have joined the 8(a) program, but few have graduated from it in the last several years. That makes it hard to defend the program from attacks, and it's why some rules need to change, he said.

A nine-point reform package recently announced by Anchorage-based Cook Inlet Region Inc., Fairbanks-based Doyon Limited and Barrow-based Arctic Slope Regional Corp. echoes many of the federal agency's proposed changes. It includes a requirement that Native 8(a) contractors disclose annually how they have benefited shareholders and tribal members.

Cook, Doyon and Arctic Slope propose capping contracts at $100 million.

Will Anderson, chief executive of Koniag Inc., said one reason the cap is troubling for other Native firms is that it could restrict growth for corporations with a large number of shareholders.

He said his company, for example, needs to expand its business operations to provide a more meaningful dividend to its 3,700 shareholders who have roots in the Kodiak region.

The Native American Contractors Association, a trade group that represents some but not all Alaska Native, Lower 48 tribal and Native Hawaiian 8(a) contractors, attacked the $100 million cap as arbitrary.

The association said the proposal opens the door to continued downward pressure on contract awards.



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