New Rule Aims at Alaska Native Sole-Source Contracts Agencies must provide written, public justification for any high-dollar sole-source contract awarded to an Alaska Native 8(a) firm under a new rule. The interim rule, effective March 16, was mandated by Congress in the 2010 Defense Authorization Act. It requires high-level agency executives to execute a justification and approval, which will be made public, for any sole-source 8(a) contract worth more than $20 million. The requirement kicks in when the total potential value of the contract, including options, exceeds $20 million. Only Alaska Native, American Indian and Native Hawaiian 8(a) firms are permitted to receive sole-source awards above $3.5 million, or $5.5 million for manufacturing. The Alaska firms have been by far the most successful in taking advantage of the preference. Contract awards to those companies increased tenfold, to more than $5 billion, from 2000 to 2008, according to the Senate contracting oversight subcommittee. Some of the Alaska Native Corporations have received sole-source contracts worth hundreds of millions. An agency must determine that the use of a sole-source contract is in the best interest of the government and that the anticipated cost will be fair and reasonable. Comments on the interim rule are due May 16. In announcing the rule, the Federal Acquisition Regulation councils said restrictions on sole-source awards could open more work for competition among 8(a) companies. “The requirement for a [justification and approval] is not a ceiling or a ‘cap’ on sole-source awards over $20 million for 8(a) contractors,” the councils said. “The statute requires execution of a J&A documenting the reasons for making the award on a sole-source basis rather than competing among the small businesses in the 8(a) program.” Critics have charged that the Alaska firms are passing through most of the work on their large contracts to big corporations through joint ventures and subcontracting arrangements. A new SBA rule places limits on the joint ventures. Legislation is pending in Congress to eliminate the Alaska Native companies’ preferences and put them on equal footing with other 8(a) companies. They would no longer qualify for high-dollar sole-source awards and would be permitted to own only one 8(a) firm at a time. Sen. Clair McCaskill, D-MO, is sponsoring the Senate bill and Sen. Bennie Thompson, D-MS, has introduced a companion bill in the House. Several of the Alaska firms have said Congress should limit the size of sole-source awards, while maintaining the special preferences for Alaska natives.