Senate panel to probe Alaska native contracting preferences

The leader of a Senate oversight panel on Friday announced that she plans to scrutinize contracting preferences afforded Alaska native corporations.

Sen. Claire McCaskill, D-Mo., chairwoman of the Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight, said she has sent letters to the heads of 20 ANCs requesting information about their business practices. McCaskill asked the companies to respond by May 29 with details on their subsidiaries and related syndicates, key subcontractors, executive compensation, total revenue from federal contracts and subcontracts, and cash dividends or other shareholder benefits.

The panel will use the information to examine a number of advantages that Alaska lawmakers -- most notably former Republican Sen. Ted Stevens -- helped craft for ANCs during the past two decades. The firms, created under the 1971 Alaska Native Claims Settlement Act, can participate in the Small Business Administration's 8(a) program, which is designated for companies that are considered small and disadvantaged. But, unlike other 8(a) participants whose sole-source awards are capped at $5.5 million for goods or $3.5 million for services, ANCs can win sole-source contracts of any value.

The Alaska firms also are free to enter into joint ventures and partnerships with non-Native companies. And while small business owners can have only one 8(a) company at a time -- and for no longer than nine years -- ANCs are allowed multiple affiliate businesses in the program as long as they operate in different sectors. Proponents of the contracting preferences argue this policy is justified because the firms reinvest profits in the community by giving eligible citizens shares in their stock. But critics say ANCs edge out other small businesses looking for government work.

A series of stories by Government Executive, published in March, found ANCs have experienced substantial growth this decade. In fiscal 2008, companies owned by Alaskan regional and tribal corporations earned a record $5 billion in federal contracts, nearly 10 times the $506 million they earned in fiscal 2000. Data shows that 68 percent of ANC contracts since fiscal 2000 were sole-source awards, made without any competition.

The subcommittee plans to hold a hearing on the ANC program on July 16.