GAO: better monitoring of subcontracting needed in 8(a)

Supporters of a federal program that gives Alaska Native corporations a special edge worth billions of dollars in federal contracts said Wednesday that a U.S. government report found what they have long been in favor of: improved oversight of the program.

"It is disappointing that critics are using this innocuous report to attack a program that creates economic opportunity for Native people across the country," said Will Anderson, president of Koniag Inc., a regional Native corporation and member of a coalition representing Native corporations.

The report by the Government Accountability Office says agencies need to do a better job monitoring the Small Business Administration 8(a) program that's designed to help small disadvantaged firms.

The report says Native corporations, also known as ANCs, represented $4.7 billion of the $5.5 billion in 2010 program obligations. Sole-source contracts are a primary source of a growth in the tribal 8(a) program.

The GAO report says an audit found minimal oversight by contracting officers working with Native firms enrolled in the program. A particular area of concern, the report said, was a lack of monitoring on subcontracting.

"Not monitoring the limitations on subcontracting can pose a major risk that an improper amount of work is being done by large business subcontractors under large-dollar value, sole-source contracts to tribal 8(a) firms," says the report released Tuesday.

U.S. Rep. Ed Markey, D-Mass., is calling for a congressional hearing on the report. Markey and other members of Congress have also requested another GAO report to look at ANC financial disclosures and corporate governance.

"We need ANCs to promote economic development and opportunity for Alaska Natives," Markey said. "We should make sure they are serving this purpose above all else."

The SBA implemented new rules last year after the audit began. Companies owned by tribes, Native corporations and Native Hawaiian organizations are now required to report the benefits returning to their communities.

Critics of Alaska Native contracts include U.S. Sen. Claire McCaskill, D-Mo., who has introduced legislation to strip ANCs of their advantage. McCaskill has said only a small percentage of the companies' profits are reaching Native shareholders.

"This report is further proof that there are serious, ongoing problems with Alaska Native contracting and that those problems are wasting taxpayers' money," she said in a statement. "The baby-steps taken so far to crack down on these problems haven't solved the issue, and serious reforms are necessary to protect the American people and their tax dollars."

Supporters include all three members of Alaska's congressional delegation. Republican Sen. Lisa Murkowski said the new SBA rules should be given a chance to take hold, adding that more oversight is desirable. She said it was important to note that the GAO recommendations didn't include making any statutory changes to the program.

"From the perspective of those ANC 8(a)s, they've said 'We don't have any problem with the transparency, the monitoring, the oversight," she said.

Democratic Sen. Mark Begich said there are no negative findings of ANCs themselves in the report, which focuses mostly on how the program can be better managed.

"I've long said the SBA's 8(a) program needs better training and better oversight, and this report confirms that," he said.

The third member of the state's delegation, Republican Rep. Don Young, said he was pleased with to see the SBA revamp its regulations to reduce potential abuse.

"Unfortunately, Alaska Native Corporations have become an unjustified target for criticism from those who fear Native economic development," he said.


02/09/2012 - 6:44am