GAO urges more oversight of Alaska Native Corporations

The Small Business Administration must improve its oversight of Alaska Native Corporations, according to a new Government Accountability Office report released last week.

The April 27 report criticizes SBA for inadequate oversight of business relationships involving ANCs and a recent surge in the use of an 8(a) provision that regulates those entities.

GAO also said SBA is not ensuring that partnerships between ANCs and large firms meet SBA regulations. It recommended that SBA increase its oversight and that procuring agencies give guidance to contracting officers who deal with ANCs.

Obligations to ANCs under the 8(a) provision jumped from $265 million in fiscal 2000 to $1.1 billion in fiscal 2004, according to the report. About 77 percent of the obligations were for sole-source awards.

“We knew the potential for abuse with these contracts was there,” said Robert White, a spokesman for the House Government Reform Committee. The committee will hold a hearing on ANCs in June.

The ANC program, which evolved from the Alaska Native Claims Settlement Act of 1971, has been controversial. It allows companies that are at least 51 percent owned by members of Alaska tribes to gain competitive advantages, including some sole-source contracting opportunities.

Some large companies have won government contracts by forming partnerships with Alaska native companies, leading some critics to charge that the companies are fronts for larger firms.

SBA officials agreed that improvements are needed and said they would revise some policies. But they disagreed with portions of the report.

“The tone of the report is unsettling,” wrote Calvin Jenkins, SBA’s deputy to the associate deputy administrator for government contracting and business development. “The ANCs are utilizing the statute to bring resources back to improve their native Alaskan communities.... The tone of the report could lead one to conclude that GAO has concerns with this result.”

Jenkins said GAO’s analysis relied too heavily on isolated anecdotes.

Chris McNeil Jr., chairman of the Native American Contractors Association, said the report “shows the success of the federal policy.”

NASA and the departments of Homeland Security, Interior, State and Energy also commented on the report and generally agreed with GAO’s recommendations.