Alaska Native Corporations Are Hot Alaska Native Corporations received 13% of the prime contract dollars awarded through the 8(a) program in 2004, the Government Accountability Office reported. ANCs’ 8(a) contracts totaled $1.1 billion that year, four times as much as five years before. “Agencies officials told us they have turned to 8(a) ANC firms as a quick, easy and legal method of awarding contracts for any value,” GAO said in its report. ANCs can receive sole-source awards in any amount, while other 8(a) companies are limited to $3 million ($5 million for construction). A sole-source contract can be awarded to an ANC without determining whether the requirement could be competed. Several contracting officials told the auditors that a sole-source ANC award was a quick and easy way to avoid competition. Some of the contracts are huge. GAO reported last month that the Army has awarded security-guard contracts worth nearly $500 million to two ANC firms. (SAA, 4/7) The Interior Department’s National Business Center operates four contracts that were awarded to ANCs, each worth up to $100 million or more, Government Executive magazine reported. GAO found that agencies are not monitoring ANC contractors to ensure that they abide by subcontracting rules. Companies in the 8(a) program are not allowed to subcontract more than 50% of the work, except in construction. The investigators found one instance where an ANC was awarded a sole-source contract, but was directed to use a particular large-business subcontractor chosen by the agency. “SBA oversight has fallen short,” the report says, by not monitoring ANCs’ partnerships with large corporations and by failing to consistently determine whether ANCs are taking contracts away from other small businesses. GAO said SBA officials disagreed with several of its recommendations for improved oversight. By law, ANCs may own an unlimited number of 8(a) businesses, unlike other 8(a) owners, who are limited to one company. When an ANC company graduates from the 8(a) program or outgrows small business size standards, the corporation can form a new subsidiary. GAO said ANC firms own 154 8(a) subsidiaries. The trade group representing ANCs, the Native American Contractors Association, said GAO is unfairly singling out those companies for criticisms that also apply to the entire federal procurement system. “It is important to note that the GAO did not find evidence of abuse by ANC 8(a) companies,” the association said. “Rather, the GAO found that some government agencies do not always follow the rules, and absent improved oversight, there might be potential for abuse.” The association also pointed out that ANCs distribute dividends to tribal members who are their shareholders and give scholarships and other donations to Alaska Native communities. “The 8(a) program is working by enabling ANCs to acquire critical business skills and experience, leverage to build self-sustaining businesses, diversify their economies, and directly and indirectly fund social, economic and cultural benefits for Alaska Natives,” the association said. The chairman of the House Government Reform Committee, Rep. Tom Davis (R-VA), has said he plans hearings on ANC contracting later this year. The report is GAO-06-399, available at www.gao.gov.