Senator delays action on Native corporation contracting

By Erika Bolstad and Elizabeth Bluemink
adn.com | ebluemink@adn.com
Published: July 23rd, 2009 11:29 AM

The U.S. senator who has been examining federal contracting preferences for Alaska Native corporations has decided to hold off on an amendment that would have opened the firms up to more competition for large Defense Department contracts.

Sen. Claire McCaskill, D-Mo., who held an oversight hearing on Native corporation contracts last week, decided not to pursue an amendment for now, a spokeswoman for her office said. Wednesday night, she attached an amendment to a defense spending bill proposing several regulatory changes, but has since withdrawn it.

A spokeswoman for Alaska Sen. Mark Begich said that he and McCaskill had several discussions about the role of Native corporations in federal contracting, and that he persuaded McCaskill to wait. Instead, Begich will work with McCaskill and the Alaska Native corporations on a more exhaustive reform package, said Begich's spokeswoman, Julie Hasquet.

"We are pleased that Senator McCaskill was responsive to Senator Begich's request and has withdrawn her amendment," Hasquet said in an e-mail.

That doesn't mean she will wait forever, said McCaskill, a former state auditor who has been shining a light on an array of federal contracting issues.

"Reform in this area is going to happen," McCaskill said in a written statement. "It's not a matter of if, but a matter of when. The process caused this slowdown but has not impacted the determination to restore competitiveness in government contracts."

Most recently, McCaskill has been looking at the Native corporations in her role as chairwoman of the Senate Subcommittee on Contracting Oversight, and last week examined in a hearing how some Alaska Native corporations grew so spectacularly over the past decade.

Her committee raised a number of concerns, including that Alaska Native corporations might be elbowing out smaller businesses trying to access federal small-business programs. It also found that some Alaska Native corporations should probably no longer be considered small businesses. Four were among the 100 largest federal contractors in the country: Arctic Slope Regional Corp. of Barrow and Anchorage, Afognak Native Corp. of Kodiak and Anchorage, NANA Regional Corp. of Kotzebue and Anchorage, and Chugach Alaska Corp. of Anchorage.

McCaskill's amendment would have struck a blow to Native corporations and their ability to seek no-bid federal defense contracts under the Small Business Administration's 8(a) Business Development Program. According to federal auditors, 83 percent of Alaska Native corporations' contracts are awarded without competing bids. Currently, Native corporations have the ability to land no-bid federal contracts of any size, unlike other small businesses in the 8(a) program, which are capped at $5.5 million for federal contracts.

The senator's amendment also would have prohibited Alaska Native corporations who land defense contracts from getting a bonus for using other Native corporations as subcontractors.

Because there are billions of dollars at stake in federal contracts -- particularly through the Department of Defense -- the issue has seen heavy lobbying. McCaskill noted it herself on her personal Twitter feed, where before last week's hearing she wrote that she expected it to be interesting because "ANC's and their lobbyists (are) pushing back hard."

During last week's hearing, McCaskill was confronted by a roomful of Alaskans. Lobbyists, business owners and others with ties to Native corporations waited several hours to enter the standing-room-only hearing, and both of Alaska's senators opened overflow rooms in their offices for people to watch the proceedings.