The ANC Program and Real Reform

Government Executive is continuing its series on the Alaska Native Corporation (ANC) program. Today’s installment gives the ANC community the opportunity to defend their programs.

Government Executive.com, March 18, 2009

…Alaska natives are among the poorest citizens in the United States, with a poverty rate of more than 20 percent, according to the 2000 census. That figure far exceeds the national average and is higher than the rate for any other racial or ethnic group, with the exception of American Indians.

"The rationale is that these are organizations [that] have an obligation to entire communities and they provide a benefit [for] the whole community," said Karen Atkinson, executive director of the Native American Contractor Association, a Washington trade group...

The article also presents a graphic demonstrating the explosive growth of ANC contracts (here).

The real issues with the ANC program were indirectly addressed in the article:

…But, business began to pick up in 1992 when then-Sen. Ted Stevens, R-Alaska, drafted legislation that ANCs, along with companies owned by native Hawaiian organizations and Indian tribes, should be considered small and disadvantaged, and eligible to participate in the Small Business Administration's 8(a) Business Development program.

Stevens later gained additional advantages for ANCs, allowing them to earn sole source contracts of any value and to have multiple subsidiary firms in the 8(a) program concurrently…

ANCs have actively hired powerful lobbyists on Capitol Hill to ensure contracting dollars flow to ANCs. No wonder former Sen. Stevens was known as “Uncle Ted.” However, now that Sen. Stevens is no longer in office, these lobbyists and their allies on Capitol Hill are digging in for a tough fight to combat the wave of contracting reform and increasing opportunities to level the playing field by dismantling some of the advantages that ANCs have enjoyed. If reform is to be taken seriously, and if opportunities for small business are to be expanded, the ANC program needs a hard look.

Government Executive.com, March 18, 2009

…Armed with a host of competitive advantages that Stevens pushed through Congress, Alaska native corporations have become dominant players in the federal marketplace, earning multimillion-dollar reconstruction contracts in Iraq and national security missions at U.S. border checkpoints. Meanwhile, small businesses owned by women or service-disabled veterans have seen their share of the government marketplace stagnate or decline. Stevens' absence from the Senate could change that equation. With the most powerful guardian of ANCs out of their way, opponents who say the program gives Alaskan companies an unfair advantage have begun to mobilize. They recognize that after years of economic and political brick walls, a door to reforming the ANC program finally might have crept open…

We could only hope. The ANC program has become a vehicle for unfair contracting that allows ANCs to become a form of holding company to funnel contracts to large business under “small business” set-aside programs. What small business can be awarded a $100 million contract to perform services that are normally done by the large, multi-billion dollar firms?

I think a comment left by Objective Observer is on point:

The facts of the matter are that the ANC program is nearly 40 years old and is serving a purpose that is long outdated. ANCs have extraordinary special exemptions no other entity enjoys in federal contracting. They generally end up acting as a pass-through and take work away from real contractors who would ordinarily get the work except for the need for the need by an overworked federal procurement workforce who needs to checkoff their small business goal sheets and need to unload some contracts since they are dong the jobs of three or four people today. The goal of federal contracting is not to help communities grow; it is to get the best deal for the government and the ANC program is the worst deal possible for the government.

Could not have said it better myself. The next installment in the series by Gov Exec will be about how other types of small businesses have done “competing” against ANCs. Not too well, I imagine.