Senator delays action on Native corporation contracting

The U.S. senator who has been examining federal contracting preferences for Alaska Native corporations has decided to hold off on an amendment that would have opened the firms up to more competition for large Defense Department contracts.
Sen. Claire McCaskill, D-Mo., who held an oversight hearing on Native corporation contracts last week, decided not to pursue an amendment for now, a spokeswoman for her office said. Wednesday night, she attached an amendment to a defense spending bill proposing several regulatory changes for the corporations and tribally owned firms. But for now, she has set it aside.
Alaska's two senators moved quickly over the past two days to block the amendment.
A spokeswoman for Alaska Sen. Mark Begich said that he and McCaskill had several discussions about Native contracting on Wednesday night and Thursday morning, and that he persuaded McCaskill to wait. Instead, Begich will work with McCaskill and the Alaska Native corporations on a more exhaustive reform package, said Begich's spokeswoman, Julie Hasquet.
Also, Sen. Lisa Murkowski filed an objection to the amendment in three Senate committees -- Armed Services, Indian Affairs and Small Business & Entrepreneurship -- ensuring that the amendment would face "multiple and difficult hurdles," said Michael Brumas, a Murkowski spokesman.
McCaskill, a former state auditor who has been shining a light on an array of federal contracting issues, said she isn't dropping the issue.
"Reform in this area is going to happen," she said in a written statement. "It's not a matter of if, but a matter of when. The process caused this slowdown but has not impacted the determination to restore competitiveness in government contracts."
Most recently, McCaskill has been looking at the Native corporations in her role as chairwoman of the Senate Subcommittee on Contracting Oversight, and last week examined in a hearing how some Alaska Native corporations grew so spectacularly over the past decade.
Her committee raised a number of concerns, including that Alaska Native corporations might be elbowing out smaller businesses trying to access federal small-business programs for economically disadvantaged, minority-owned firms. It also found that some Alaska Native corporations should probably no longer be considered small businesses. Four were among the 100 largest federal contractors in the country: Arctic Slope Regional Corp. of Barrow and Anchorage, Afognak Native Corp. of Kodiak and Anchorage, NANA Regional Corp. of Kotzebue and Anchorage, and Chugach Alaska Corp. of Anchorage.
Native contractors disagree that they are diverting business away from small businesses. Their main competitors are much bigger firms who are able to handle massive federal contracts, unlike a typical sole proprietorship, said Sarah Lukin, executive director of the Native American Contractors Association.
McCaskill's amendment would have limited Native corporations' ability to obtain no-bid federal defense contracts under the Small Business Administration's 8(a) Business Development Program. Currently, Native corporations, Native Hawaiian organizations and Lower 48 tribes have the ability to land no-bid federal contracts of any size, unlike other minority-owned businesses in the 8(a) program. The other 8(a) firms' contracts are capped at $5.5 million.
The senator's amendment mandated the same $5.5 million cap for Native corporations and tribes when they do business with the Defense Department. The amendment would have prevented the DOD from awarding no-bid contracts to Native firms but would have allowed the DOD to set aside certain contracts for competition among the Native firms.
The senator's amendment also would have prohibited the Native companies that land defense contracts from getting a bonus for using other Native firms as subcontractors.
The amendment caused alarm among Alaska Native executives on Wednesday night. Lukin said her organization is glad McCaskill set it aside. Members of Congress should consult with tribes and other Native organizations before making substantial changes to policies that will affect them, Lukin said.
Because there are billions of dollars at stake in federal contracts -- particularly through the DOD -- the issue has provoked heavy lobbying. McCaskill noted it herself on her personal Twitter feed, where before last week's hearing she wrote that she expected it to be interesting because "ANC's and their lobbyists (are) pushing back hard."
During last week's hearing, McCaskill was confronted by a roomful of Alaskans. Lobbyists, business owners and others with ties to Native corporations waited several hours to enter the standing-room-only hearing, and both of Alaska's senators opened overflow rooms in their offices for people to watch the proceedings.
This is not the first time in recent memory that Alaska's congressional delegation has worked against amendments to undermine Native corporations' federal contracting advantages.
Last year, former Sen. Ted Stevens and Rep. Don Young said they helped block an amendment to a defense spending bill -- one of several failed proposals to reform Native contracts that year -- that would have forced some federal agencies to curtail their no-bid contract awards to Native corporations, tribes and Native Hawaiian organizations.

By:  By Erika Bolstad and Elizabeth Bluemink