Friday, December 03, 2010

Mississippi Congressman Bennie Thompson And Missouri Senator Claire McCaskill Team Up To Curtail No-Bid Contracts For Alaska Native Corporations

The latest member of Congress to take a shot at no-bid contracts for Alaska Native corporations is Rep. Bennie Thompson (D-MS). He's introduced H.R.6447, designed to be a companion bill to Senator Claire McCaskill's S.3959. The bill has been referred to the House Committee on Small Business and the House Committee on Natural Resources for a period to be subsequently determined by the Speaker. You can read the full text of H.R.6447 HERE.

Here's a summary of the key provisions of H.R.6447:

-- Amends the Small Business Act to exclude from the definition of "Indian tribe" any Alaska Native Corporation (ANC) or Alaska Native Village (ANV).

-- Amends the Alaska Native Claims Settlement Act (ANCSA) to provide that, for purposes of eligibility for procurement contracts provided through the Small Business Administration (SBA), whether an ANC or ANV is socially or economically disadvantaged shall be determined by the SBA Administrator according to eligibility standards for SBA 8(a) general small business loans. Makes members of socially and economically disadvantaged ANCs or ANVs eligible for such loans.

-- Directs the Administrator to apply to small businesses owned by an ANC or ANV the competitive thresholds for awarding SBA sole source contracts that are applicable to small businesses owned and controlled by socially and economically disadvantaged individuals.

-- Prohibits the Administrator from extending or waiving, for small businesses owned by an ANC or ANV, the time limitations applicable to participants in the small business capital ownership development program. Outlines annual report requirements for program participants who are ANCs or ANVs.

-- Requires the Administrator to amend SBA regulations to incorporate amendments made by this Act.

Earlier on November 17th, Senator Claire McCaskill (D-MO) introduced S.3959. Senator McCaskill also happens to be the chair of the Senate Subcommittee on Contracting Oversight. The bill has been read twice and referred to the Senate Committee on Small Business and Entrepreneurship. You can read the full text of S.3959 HERE.

The published summary of the key provisions of S.3959 is identical to that of H.R.6447. But in an October 8th press release, Senator McCaskill offered more specific details about her then-proposed legislation:

-- Eliminate the ability of ANCs to receive sole-source contracts exceeding the caps applicable for other 8(a) participants of $3.5 million for services or $5.5 million for goods;

-- Eliminate the automatic designation of ANCs as socially disadvantaged business enterprises, requiring ANCs to demonstrate their social disadvantage by providing evidence of "racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups";

-- Eliminate the automatic designation of ANCs as economically disadvantaged, requiring any ANC seeking to participate in the 8(a) program to demonstrate that corporation's economic disadvantage upon entering the program;

-- Require ANCs to count all affiliates and subsidiaries in size determinations for 8(a) eligibility, which shall be limited to no longer than nine years, as is required for other 8(a) participants;

-- Require ANCs who choose to participate in the 8(a) program to own a majority interest in only one 8(a) subsidiary at any one time;

-- Require ANCs who choose to participate in the 8(a) program to be managed by individuals who qualify as socially and economically disadvantaged under the program, as other 8(a) participants must do; and

-- Prohibit ANCs who chose to participate in the 8(a) program from operating as pass-throughs to non-Native companies that do not qualify under the 8(a) program.

In short, what Senator McCaskill takes issue with is that the Native corporations can automatically qualify regardless of size or wealth, and that Alaska Natives are automatically presumed to be disadvantaged simply because they are Natives. A search of her website indicates she's been interested in this issue since mid-2009. Senator McCaskill does not appear to be a Nancy Pelosi-type Democrat; instead, she's more of a blue-dog Democrat who promotes fiscal responsibility and opposes amnesty for illegal immigrants; she's probably more conservative than Lisa Murkowski. Missourians generally don't elect spendthrifts to Federal office.

On November 23rd, the Native American Contractors Association (NACA) issued their response. Here are the key paragraphs:

Legislation introduced in Congress last week by Senator Claire McCaskill (D-MO) and Rep. Bennie Thompson (D-MS), if enacted, would economically suffocate America’s Native people by killing one of the only successful indigenous economic development programs in U.S. history.

The ill-conceived legislation would deny Alaska Native Corporations (ANC) and Alaska Tribes Congressionally-promised opportunities within the Small Business Administration’s 8(a) program that, in turn, have provided millions in essential benefits to Native people. The bills would strip ANCs and Alaska Tribes – including those serving tens of thousands of individuals – of all their rights in the 8(a) program, diminishing their participation to the same level as individually-owned 8(a) companies. Such a move would effectively end opportunities derived from the 8(a) program to achieve economic self-sufficiency, and halt critical benefits that today are improving the quality of life for thousands of Native people.


Under numerous treaties and land settlements, Native people gave up the vast majority of their traditional lands worth trillions of dollars in natural resources in exchange for opportunities to achieve socio-economic self-sufficiency through access to programs like 8(a). More importantly, the House and Senate legislation targeting Native people would set a dangerous precedent by terminating a core element of U.S. Federal Indian policy. [Sarah] Lukin argued, “Participation by Tribes, ANCs, and Native Hawaiian Organizations in the 8(a) program did not occur on a whim. Senator McCaskill and Rep. Bennie Thompson intend to eviscerate long-standing Indian policies without any Native consultation or consideration of the drastic socio-economic impact to Native people.”

NACA's complaint about lack of Native consultation may be valid, since one of the objectives of the bill is to amend the Alaska Native Claims Settlement Act. If we're going to amend a treaty, we do need to give Alaska Natives an opportunity to weigh in.

But the time in which Alaska Natives can claim to be disadvantaged simply because they're Natives is long past. Some of these Native corporations are now large enough to compete without extra help. Imposing size and wealth qualifications not only makes sense, but will eliminate a possible source of backlash against Alaska, a backlash partially fueled by the fact that we already get more in Federal resources than we give out.

Both Alaska senators oppose the bills introduced by Bennie Thompson and Claire McCaskill. Sen. Mark Begich said he would clearly oppose it as misguided and shortsighted. But he said he will review reform proposals that strengthen the ANC program. Sen. Lisa Murkowski is even more adamant. "I would oppose and fight any legislation that strips Alaska native corporations, Indian tribes and native Hawaiians of the contracting preferences afforded to them," she said. "We must reform the program to ensure it works the way it was intended." Of course, Murkowski's outspoken opposition becomes even more understandable when you consider that ANCs contributed over one million dollars to her re-election campaign.


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