Report: Alaska program for fed contracts does little for Natives

WASHINGTON -- A program allowing Alaska Native corporations to win no-bid federal contracts gave $21 billion in government work since 2000 for the top 19 firms but only modest benefits for Alaska Natives, according to a Senate panel's report to be released Thursday.

Proceeds from federal contracting provided about $615 per year in benefits to the 130,000 Alaska Natives who are shareholders of the companies, the analysis by staff of the Senate Contracting Oversight Subcommittee found. All told, the Alaska Native companies provided about $720 million in dividend payments, scholarships, cultural programs and other benefits from their federal contract revenue, the analysis found.

The panel, chaired by Sen. Claire McCaskill, D-Mo., plans to release the report at a hearing Thursday on federal contracting by Alaska Native corporations, which expanded from $508.4 million in 2000 to $5.2 billion in 2008. The analysis also found that 5.2% of the companies' employees were shareholders in their employer and that non-Native managers collected 69% of the executive pay at the Alaska Native companies.

Federal contractig rules give Alaska Native companies "a giant loophole" that inhibits competition and hurts other potential minority-owned government contractors, McCaskill said Wednesday.

"I have no problem that ANCs have grown and become successful," McCaskill said. "The issue is whether the American taxpayer is getting the best value for their dollar in government contracting."

Alaska Native corporations have launched a counteroffensive, buying ads in Capitol Hill publications and posting a website saying the companies are "providing exceptional value to the U.S. government at no extra cost to the taxpayer."

The companies are merely participating in a program Congress created to encourage economic development among some of the nation's poorest communities, said Lance Morgan, chairman of the Native American Contractors Association. The trade group includes Alaska Native corporations and businesses owned by American Indian tribal governments, which have similar contracting advantages.

"We don't want to be punished for our success," said Morgan, a member of the Winnebago Tribe of Nebraska who heads the tribe's Ho-Chunk Inc. contracting firm.

"Nobody says we're doing a bad job. They just seem to resent the fact that we have a job," Morgan said. "This was the government's idea, not ours."

Congress created Alaska Native corporations in 1971 to settle the natives' claims to ownership of most of the state's land. Instead of recognizing tribal governments as in the Lower 48 states, the law made Alaska Natives shareholders in one of 13 regional corporations and in one of more than 200 smaller companies for specific villages and urban areas.

Federal contracting rules give special preferences to Alaska Native corporations and tribally owned firms that aren't available to other disadvantaged small businesses participating in a program overseen by the Small Business Administration (SBA). The Native companies can receive no-bid federal contracts of any amount, while no-bid contracts for other firms in the disadvantaged small business program are limited to $5.5 million for goods and $3.5 million for services.

Last year, 26% of all contract dollars for disadvantaged businesses went to Alaska Native corporations, which account for 2% of participating businesses, according to a report issued last week by the SBA's inspector general. Half of the work went to 11 of the 203 Alaska Native businesses, the inspector general's report says. The watchdog report says five of those firms have annual revenues of more than $500 million and more than 1,500 employees, which would qualify them as large businesses under other SBA regulations.

The inspector general's report says the SBA isn't properly overseeing the program and hasn't corrected most of the managment problems identified in a 2006 report by the Government Accountability Office of Congress. In response, SBA officials Joseph Jordan and Jess Knox wrote that the agency has taken several steps to improve oversight of the program. Jordan and Knox criticized both the GAO and inspector general's reports, calling their tone "unsettling."