“It’s no secret many senators still have quite the learning curve when it comes to understanding the unique needs of Alaska,” Sen. Mark Begich (D) said July 2, after one of his fellow Democrats in the Senate, Claire McCaskill of Missouri, called for a Small Business Administration investigation into Alaska Native Corporations.
Describing it as part of her continuing “oversight of waste, fraud, and abuse in contract management,” McCaskill, the chairman of the subcommittee on Financial & Contracting Oversight, “demanded answers” from the SBA about rules to improve oversight of Alaska Native Corporations.
ANCs have grown into multimillion-dollar federal contracting companies that participate in the SBA’s small and disadvantaged business contracting 8(a) program.
That status was fine, McCaskill said, when Congress passed a series of laws which made ANCs eligible for federal contracting opportunities in the 1980s and 1990s. But times have changed and so have the Alaska Native Corporations.
Alaska Native Corporations stem from congressional action on the Alaska Native Claims Settlement Act of 1971 in response to both politically active native Alaskans and oil company executives who wanted approval for a trans-Alaska pipeline after oil was discovered in 1968.
Forty million acres of land was set aside by the act and was divided among 12 regional native corporations and 220 village corporations, according to ProPublica.
Congress passed legislation in 1986 that allowed the ANCs to participate in the Small Business Administration’s 8(a) program for disadvantaged businesses. It sets aside federal contracts for minority-owned or other disadvantaged companies.
Thanks to strong lobbying from Alaska Sen. Ted Stevens (R), the ANCs were also granted additional 8(a) benefits, which allowed them to win no-bid contracts for any amount and to own multiple subsidiaries in the program, something other businesses in the 8(a) program cannot do.
McCaskill said as a result the ANCs have grown into multimillion-dollar giants that should no longer be eligible for the program.
This is not the first time the Missouri Democrat has raised this concern.
“In 2009, I held a hearing that highlighted my concerns about ANCs’ participation in the 8(a) program, including a lack of oversight by SBA, the use of ANCs to circumvent the federal contracting process, and that the benefits were not reaching disadvantaged Alaskan natives,” McCaskill said in a statement.
Following McCaskill’s 2009 investigation of ANCs that found the SBA allowed these frequently large organizations to receive unlimited, high-value government contracts without competition while providing only minimal benefits to their communities, the SBA put in place rules to tighten requirements for ANCs in ventures with companies unaffiliated with the SBA’s small and disadvantaged contracting program and to require ANCs to report the benefits they provide to their communities.
To ensure these procedures are being followed, McCaskill’s letter requests the SBA provide a list of joint venture contracts awarded under the program where an ANC was a party, documentation of the SBA’s oversight of these new rules for joint ventures and follow-on contracts, and all reports filed by ANCs detailing the amount of benefits flowing back to their communities.
McCaskill has introduced legislation to crack down on waste and abuse in contracting by eliminating the unique government contracting preferences and loopholes for ANCs. Along with Sen. John McCain (R-Ariz.), she also demanded answers from the Department of Defense in the wake of a Washington Post article about the indictment of two Defense Department officials and one senior official of an Alaska Native Corporation who allegedly conspired to defraud the government of more than $20 million.
She wants the SBA to provide a list of joint venture contracts awarded to which an ANC or a tribal entity was a partner after March 13, 2011, all reports filed by ANC and tribal entities on benefits that flowed back to their communities since that date, and information that details the Small Business Administration’s oversight of the program.
And McCaskill wants all of that no later than July 11.
Begich agreed the Alaska Native Corporations have become very successful entities. However, he said, they should not be penalized for that success.
He said the benefits the Alaska Native Corporations provide to the state of Alaska through the 8(a) program, including scholarships, services, jobs and dividends, support some of the most economically challenged areas of the country and improve the lives of thousands.
“Just because ANCs have seen economic growth and success, as they were intended to do, doesn’t mean they deserve this type of targeted attack from a sitting senator who simply refuses to try and understand the history and culture of a great state like Alaska,” Begich said.
Begich also said in a statement released following McCaskill’s announcement that she was going to the SBA that Alaska was being unfairly targeted because people, like his colleague from Missouri, just don’t understand Alaska.
He believes the Alaskan way of life is being punished and targeted by the McCaskill investigation.
“I’m afraid my colleague, Senator McCaskill — through her narrow lens as a ‘government oversight and efficiencies guru’ — has trouble understanding Alaska history, even with my repeated attempts to reason with her.”
Begich can’t afford to look weak on this. Real Clear Politics has him running in a dead heat for re-election against Dan Sullivan, the leading Republican in the three-way GOP Senate primary.
(For complete 2014 midterm coverage, get your campaign fix on The Grid.)