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Web posted Sunday, January 29, 2006

Native-owned companies see drop in contracts

By Melissa Campbell
Alaska Journal of Commerce


  Housing units built by Alutiiq Manufacturing Contractors are unloaded from a barge at the Port of Anchorage in June 2005. Alutiiq is an 8(a)-certified subsidiary of Afognak Native Corp., the regional corporation for Kodiak. Companies with 8(a) certifications are seemingly getting less work from government agencies. PHOTO/Melissa Campbell AJOC archive   
The amount of government contracts to Native American-owned companies based in Alaska saw a 66 percent drop in 2005.

According to information from the Federal Procurement Data System, locally owned Native American companies received 4,780 federal contracts with awards totaling nearly $1.4 billion in federal fiscal year 2004.

In fiscal 2005, agencies awarded 2,371 contracts totaling $466 million. Federal fiscal years run from Oct. 1 through Sept. 30.

It's unclear why government contracts have declined so drastically, or even if they truly have. It all has to do with where the Alaska corporation currently does its business.

The majority of Alaska-based, Native American companies are subsidiaries of Alaska Native corporations. A number of these companies are certified under the Small Business Administration's 8(a) program, which gives preferences to minority-owned businesses.

Native American-owned companies, however, get additional preferences under the 8(a) program, including the ability to negotiate with federal agencies for sole-source contracts - meaning there is no formal competitive bid process - and they can be awarded jobs with no limits on the contract amount.

Minority-owned businesses have award limits of $3 million or $5 million, depending on the type of contract.

Sole-source contracts in general have seen heavy criticism in recent months, and sole-source contracts to Alaska Native companies have been at the center of a heated debate questioning the fairness and efficiency of the program.

No-bid contracts awarded to Alaska Native corporations, referred to as ANCs, have led to a federal Government Accountability Office investigation, several glaring news reports and at least one lawsuit.

Sarah Lukin, the chair of the public relations committee of the national Native American Contractors Association, said government agencies may be in a wait-and-see mode to see how the GAO investigation pans out.

"I think agencies are apprehensive to award contracts to Alaska Native corporations and to tribes at this point," she said. "It's not a matter of performance. Across the board, people have been pleased with the performance of ANCs. But across the board, agencies are more concerned about sole-source contracting. And agencies are catching heat from other companies not to do it."

Calls to several federal agencies to ask about that concern were not returned.

But Ron Perry, president of the Alaska 8(a) Association, said that while that may be true, the smaller contract amount is probably more representative of subsidiaries' successes rather than agencies' hesitations.

When village and regional corporations start up a subsidiary, that company generally has its headquarters in Alaska, he said. But when they get a major government contract that requires the work be done Outside, those offices tend to move their headquarters to that community.

"(Government) agencies want you to be a local company with a local reputation," Perry said.

However reduced the official government contract number is, it's still not a complete picture of just how much Alaska Native corporation subsidiaries are awarded in government contracts.

Government officials don't separate Alaska Native organizations with other Native American companies, say representatives with the SBA and with Federal Procurement. No one can say, either, how many Alaska-based subsidiaries work in the Lower 48 or in international markets.

Melissa Campbell can be reached at melissa.campbell@alaskajournal.com.

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