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Stevens' departure opens window to overhaul Alaska native contracting

Posted By Guy Timberlake, The American Small Business Coalition, LLC, Wednesday, March 11, 2009

Government Executive




Stevens' departure opens window to overhaul Alaska native contracting



Editor's Note: This is the second in a series of articles accompanying the feature "Out in the Cold" in the March issue of Government Executive. The next installment will examine Alaska native corporations' defense of their contracting programs.

Longtime Alaska Republican Sen. Ted Stevens' loss in the November 2008 election could create an opportunity for lawmakers to scale back the contracting preferences afforded to Alaska native corporations.

The political godfather of the ANC program, Stevens pushed through a number of competitive advantages for his home state corporations.

"Nobody wanted to take on Uncle Ted, because he was such a powerful senator," said Guy Timberlake, chief executive officer of the American Small Business Coalition in Columbia, Md. "Now, with him out of the way, I think there is going to be much more activity."

Timberlake and others argue that the preferences granted ANCs, including the ability to win unlimited and uncapped sole-source contracts, have given them an unfair advantage over other participants in the Small Business Administration's 8(a) Business Development program.

A House Oversight and Government Reform Committee staffer said the panel's new chairman, Rep. Edolphus Towns, D-N.Y., has heard from constituents upset about ANC advantages and is exploring legislative remedies.

Possibilities include requiring ANCs to abide by the same sole-source cap as other 8(a) companies -- $3 million for most types of contracts and $5 million for manufacturing deals, the aide said. Another option would be legislation to limit ANCs' ability to form teaming or subcontracting agreements with large corporations. The corporations are allowed to subcontract work to non-8(a) firms as long as they perform no more than half the work.

"The real issue is when an agency does not want to compete a contract and says, 'We can just give it to an ANC and they will just partner with whoever can do it, like a big company, and we'll get it done that way,' " the staffer said.

ANCs also are on the House Small Business Committee's radar. In its January 2009 biennial advocacy agenda, the committee said it would "examine the role [ANCs] play in the 8(a) program and ensure that the program's rules and regulations encourage minority small business growth and development."

Democrats could face pushback from one of their own. Sen. Mark Begich, who defeated Stevens in the election, said during a January interview with Government Executive that restructuring the ANC program would be unwise.

"In this time of creating jobs and opportunities, this would not be a time to limit that with American-grown companies ... that actually keep their dividends here in this country," Begich said. "This is one of the purest American-owned types of companies you can ever get. We talk a lot about creating manufacturing jobs for America and bringing that payroll back here. Well, these companies create the payroll here and produce shareholders here and they produce revenue streams here."

Begich holds some political capital with Democrats, who likely will need his vote to reach a filibuster-proof majority on other agenda items.

"Just from raw politics, I won this race, and I am sure they would like me to be here six years from now," he said. "And that means with some of these issues, I'll need their support."

The House oversight committee aide acknowledged that getting reform measures through the Senate would be a challenge.

The contracting preferences have support not only from the Alaska delegation, but from lawmakers representing areas with large Native American and Hawaiian populations. Companies owned by Indian tribes and native Hawaiian organizations receive the same contracting advantages as ANCs, although they use them less frequently.

"Contracts never trickle to Native Americans or Hawaiians, but [ANCs] lobby them anyway and whip up support in places with large tribal representation like Oklahoma or Michigan," the staffer said. "It's frustrating from our end because no one [else] is actually using that program."

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