US Senate bill would strip Native corps. of contracting edge

Posted: Friday, October 08, 2010

ANCHORAGE - U.S. Sen. Claire McCaskill of Missouri says she wants to strip Alaska Native corporations of the unprecedented edge they now enjoy in obtaining federal contracts worth billions of dollars.

The Democrat said she planned to introduce legislation in mid-November that would, among other changes, eliminate the ability of the corporations to receive contracts with no monetary caps under a Small Business Administration program that aims to help small disadvantaged firms.

"We've seen that a very small portion of these companies' profits are reaching native Alaskans, so it's time to acknowledge the fact that this program is not effective for either native Alaskans or taxpayers," McCaskill said in an e-mail Thursday provided by an aide.

The Washington Post first reported McCaskill's plans.

The corporations would still be able to participate in the program, but they would have to qualify under the same rules as other participants, such as being designated as socially disadvantaged business enterprised, managed by equally disadvantaged individuals and meet size requirements.

The companies, which currently don't have to be managed by Alaska Natives, would no longer enjoy special benefits ushered through Congress two decades ago by then-Alaska Sen. Ted Stevens.

The scores of regional and village corporations were created after the signing of the 1971 Alaska Native Claims Settlement Act to compensate Alaska Natives for the loss of lands historically used or occupied. It appropriated more than $962 million and allowed the regional and village corporations to select 44 million acres of land.

McCaskill spokeswoman Maria Speiser said the corporations would still be able to receive no-bid contracts with $5.5 million caps for goods and $3.5 million for services. "Contracts of larger size would require that they compete," Speiser said.

McCaskill, a former auditor, has said that she believes that a number of Native corporations are too large to qualify as small businesses. She also has said the advantages need to be examined, given the astronomical increase in the contracts awarded to Alaska Native corporations and their hundreds of subsidiaries.

Responding to McCaskill's plan, some Native corporations that are proposing their own reforms said Congress' goal should remain a federal priority. Those preferences were intended to provide economic opportunities to impoverished Alaskans, according to a government report.

"Stripping Alaska Native corporation participation in the program, or eliminating the socially and economically disadvantaged status that Alaska Native corporations rightly hold, is a fundamental attack on the Alaska Native Claims Settlement Act, the Alaska Native people and the state of Alaska," said Anchorage-based Cook Inlet Region Inc., Fairbanks-based Doyon Limited and Barrow-based Arctic Slope Regional Corp.

Both of Alaska's U.S. senators came out Thursday against the plan.

"I would oppose and fight any legislation that strips Alaska Native Corporations, Indian Tribes, and Native Hawaiians of the contracting preferences afforded to them," Republican Sen. Lisa Murkowski said in a statement. "We must reform the program to ensure it works the way it was intended. Completely removing these contracting preferences would set back the progress we have made to address the poverty experienced by our nation's first peoples."

It was not immediately clear whether McCaskill's plan also would eliminate benefits for tribes or Native Hawaiians, but Speiser said the senator focused on the Alaska Natives because "there has been a level of problems documented among the Alaska native corporations that we have not seen elsewhere."

Alaska's other senator, Mark Begich, said through his spokeswoman that McCaskill was "misguided and shortsighted and doesn't understand the program."

Julie Hasquet said Begich believes there was a need for reforms to the program and that he has been working for months with corporations toward that end. But McCaskill's approach is way out of bounds, she said.

"It's not very senatorial and not very collegial to attack another senator's state without working with the senators of that state and the stakeholders involved," Hasquet said.

A summary of the planned bill provided by McCaskill's spokeswoman noted that the current advantages, along with a lack of oversight from the SBA and other federal agencies, has resulted in widespread abuses of the program. It said that a Senate subcommittee hearing and investigation found that almost 95 percent of corporation employees are not shareholders.

The summary said shareholders have averaged about $615 in benefits out of the more than $23 billion in federal contracts to ANCs over the past nine years.

The two-page document also said new information reported in a recent series by the Post raised concerns "about whether potential statutory and regulatory violations by ANCs have become widespread, at a cost to both the taxpayer and the Alaska Natives these corporations purport to benefit."

No-bid contracts have been criticized by federal audits and the SBA has already proposed rules to tighten oversight by the end of the year.



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