Ssenator Claire McCaskill (D) will be chairing an oversight hearing today on contracting through Alaska Native Corporations.
Staff Analysis [pdf] – United States Senate, Committee on Homeland Security & Governmental Affairs, SUBCOMMITTEE ON CONTRACTING OVERSIGHT
FOR IMMEDIATE RELEASE
July 6,2009CONTRACTING OVERSIGHT SUBCOMMITTEE RELEASES ANALYSIS OF ALASKA NATIVE CORPORATIONS
Subcommittee will hold hearing at 2:30 PM [1:30 p.m. Central] today
WASHINGTON, D.C. – The Subcommittee on Contracting Oversight majority staff has released an analysis of data collected from 19 Alaska Native Corporations (ANCs). The subcommittee, chaired by Senator Claire McCaskill, will hold a public hearing at 2:30 PM today on contracting loopholes that allow ANCs to bypass a competitive bidding process while receiving contracts unlimited in size as part of a government small business program, despite their large size…
….The analysis was compiled from information and data provided to the subcommittee by 19 ANCs last month, following a request from the subcommittee. The subcommittee released a preliminary analysis of publicly-available data on ANC contracts last month as well.
Alaska Native Corporations were created by a 1971 law that aimed to foster economic development in Alaska, and in 1986, Congress made ANCs eligible to participate in the Small Business Administration’s 8(a) program. Generally, to qualify for the 8(a) program a business must be socially and economically disadvantaged, and must be relatively small. These eligible businesses can then be awarded small federal contracts on a sole-source basis, but those contracts must be under $5.5 million for goods or $3.5 million for services. In the 1980s and early 1990s, however, Congress carved out several exemptions for ANCs, deeming them to automatically qualify as both socially and economically disadvantaged and giving them the ability to receive no-bid contracts of any size under the 8(a) program. As a result, ANCs are uniquely eligible to receive huge federal contracts without having to compete with other bidders.
Hearing Details:
Who: Subcommittee on Contracting Oversight
What: Public Hearing on Contracting Preferences for Alaska Native Corporations
When: Thursday, July 16, 2009, at 2:30 PM
Where: Dirksen Senate Office Building Room SD-342
Witnesses: Panel I
· Shay Assad, Acting Deputy Under Secretary of Defense for Acquisition & Technology, Department of Defense
· Joseph Jordan, Associate Administrator for Government Contracting and Business Development, U.S. Small Business Administration
· Debra Ritt, Assistant Inspector General for Auditing, Office of Inspector General, U.S. Small Business Administration
Panel II
· Sarah L. Lukin, Executive Director, Native American Contractors Association
· Jacqueline Johnson Pata, Executive Director, National Congress of American Indians
· Julie Kitka, President, Alaska Federation of Natives
· Mark Lumer, Senior Vice President, Federal Programs, Cirrus Technology, Inc.
· Christina Schneider, Chief Financial Officer, Purcell Construction Corporation
The live stream of the hearing is here [starting at approximately 1:30 p.m. Central].
Update: The hearing has been adjourned.
…seems to be saying in so many words “…don’t look too hard.”
She made an opening a statement [along with Senator Begich (D)] as a non-committee member as a courtesy.
…Assistant Inspector General for Auditing, Office of Inspector General, U.S. Small Business Administration – addressed the impact of the preferences which waive size limits for Alaskan Native Corporations placing other small 8(a) businesses at a disadvantage.
Uh, that would defeat the purpose of the 8(a) program for other participants.
…Acting Deputy Under Secretary of Defense for Acquisition & Technology, Department of Defense – “…my concern is competition…we need to significantly improve that [in reference to ANCs and sole source contracts]…”
…ANCs can get a 5% contract bonus for contracting with one of its own subsidiaries. Debra Ritt’s staff confirms that is correct.
…are desperately going after the ANC audit and Debra Ritt – Assistant Inspector General for Auditing, Office of Inspector General, U.S. Small Business Administration.
…the second panel is extolling the benefits of 8(a) corporations for Native Americans (and rightly so), but no one is mentioning the pass through contracts to non 8(a) corporations.
…Senior Vice President, Federal Programs, Cirrus Technology, Inc. – sole source contracting to ANCs is used to shorten procurement process – other 8(a)s and non 8(a)s don’t bother to compete when ANCs are in the process.
…Chief Financial Officer, Purcell Construction Corporation – firm was shut out from bidding contract in New York due to use of sole source contracts awarded to two ANCs.
…questioning ANCs – “…2.2% of your employees were shareholders…” “…45,000 people are employed by ANCs and less than 5% of [shareholders] are employees…”
…”would you have any problem with accepting the same rules as tribes…?”
“…We are not in a position to represent [in negotiation]…”
“I believe it [5% bonus paid to ANC for contracting with subsidiary] is allowed by law, but not by regulation…”
…”I’m curious…[about] line standing…who paid to have people wait in line for you…” [only two individuals raised their hands] senator Mccaskill is about to end hearing.
Senator Lisa Murkowski (r) is speaking. She’s running for reelection, right? Sure sounds like it. “The message from Alaskans is that we have an important story to tell…”
Senator McCaskill closing comments “…This is about whether or not the preferences we have created in the law should be permanent…” “…The question is how long…preferences squeeze out companies that can provide services at [lower cost]…” “…There are many other problems on competitiveness [ANCs not the only problem or the biggest]…”
Hearing adjourned.
[1st Comment- 2 statements]
Mark Lumer… (0.00 / 0)
“I believe it [5% bonus paid to ANC for contracting with subsidiary] is allowed by law, but not by regulation…”
Senator Collins… (0.00 / 0)
…ANCs can get a 5% contract bonus for contracting with one of its own subsidiaries. Debra Ritt’s staff confirms that is correct.
***noted response***
The ANC does not get the bonus- the DOD Contractor that subcontracts to an Native or Tribally owned business can apply. Read DFAR 252.226-7001
2nd Comment- 1 statement]
Shay Assad… (0.00 / 0)
…Acting Deputy Under Secretary of Defense for Acquisition & Technology, Department of Defense – “…my concern is competition…we need to significantly improve that [in reference to ANCs and sole source contracts]…”
***noted response***
You left out the part where he said 40% was competed among the ANC awards. Below DOD average but still 40%.
Quote:
“While we have the authority to use sole source procedures with 8(a) ANCs, we in fact do compete some 8(a) ANC procurements. In 2008,
5
approximately 40% of the DoD ANC awards were competed to some extent. I recognize this is below the DoD average and I would like to compete more.”