Senator vows closer look at Alaska native contracts

The leader of a Senate oversight subcommittee plans to pursue a tough line of questioning during a hearing on Thursday on procurement advantages that have helped Alaska native corporations dramatically increase their business with the federal government.

Sen. Claire McCaskill, D-Mo., chairwoman of the Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight, said on Wednesday that she expects to thoroughly examine the contracting rules that apply to ANCs, including their ability to win sole source awards of any size through the Small Business Administration's 8(a) Business Development program.

"The 8(a) program is designed to let small businesses get a foot in the door," McCaskill said during a briefing with reporters in her Senate office. "But, based on the growth of the ANC program, they have busted down the door."

The senator said she has not reached any decision on whether to seek legislative reforms to the ANC contracting program and prefers to wait until the hearing to determine the basis for providing the corporations with a competitive advantage.

But, McCaskill acknowledged she has a bias toward increasing competition, noting that the ANC program is responsible for a high degree of sole source contracting. Excuses that the acquisition workforce is overwhelmed and needs sole source ANC contracts to keep up will not be acceptable, she said.

"It's a competitive bidding issue," she said. "This is not about Alaska. We need to figure out why a certain set of companies [has] a different set of rules."

If the senator does propose legislative reforms, mustering support could prove difficult. The preferences benefit not only Alaskans, but native Hawaiians and Native American tribes.

In May, the subcommittee requested data from 20 ANCs regarding their 8(a) subsidiaries, contracts, finances and benefits provided to shareholders. A summary of that data is expected to be released at the hearing. Last month, the panel released a preliminary analysis of ANC contracting data based on publicly available documents, indicating that contract awards to the Alaska firms increased tenfold from $508 million in fiscal 2000 to $5.2 billion in fiscal 2008. Government Executive reported similar findings in March.

ANCs responded to the subcommittee inquiry this week by forming Native8aWorks, a coalition of native groups and businesses that aims to educate Congress on the successes of the program.

"Native 8(a) businesses are being misrepresented by competitive critics and select lawmakers on Capitol Hill," the group's Web site says. "The current McCaskill inquiry is an attempt to discredit a federal economic development policy that actually works."

When the group was formed on Monday, language on the site called the McCaskill inquiry a "21st century witch hunt," but those words have now been removed.

McCaskill said she was stunned by how contentious the debate has become. "I am surprised by the heat and interest this hearing has drawn," she said. "I think we are on to something here. But, the teeth scratching … has not been in proportion to what we have released so far."

Last week, the Small Business Administration inspector general released a detailed report on the growth of ANCs. The audit found that a handful of the corporations are receiving a disproportionate share of contracts awarded through the 8(a) program.

Debra Ritt, assistant inspector general for auditing at SBA, is expected to testify at the hearing on Thursday. Other witnesses will include Shay Assad, the Pentagon's acting deputy undersecretary of Defense for acquisition and technology; Joseph Jordan, associate administrator for government contracting and business development at SBA; and representatives of the ANC community and non-native small businesses.