Pentagon prodded to Study Native Contracting Reform

Alaska’s Congressional delegation and a dozen other lawmakers are asking the Defense secretary to study how contracting reform has hurt Alaska Native corporations and tribally owned businesses. The lawmakers sent letters this week to Secretary Ash Carter about the 2010 rule change, known as “Section 811.”

The reform came amid a massive boom in Native contracting that critics called scandalous. Under the 8(a) program of the Small Business Administration, disadvantaged businesses can get government contracts without competing for them. For tribes and Alaska Native corporations, Congress abolished the normal $4 million contract cap. That launched a boom worth several billion dollars at its peak in 2010. A slew of negative media and government reports followed, and Congress demanded a change.

But the reform, Section 811, is having more than its intended effect, says Kevin Allis , executive director of the Native American Contractors Association.

“Although on its face it would seem to make sense, the way that it’s actually been implemented it’s been to the detriment to Native American-owned federal contractors,” he said. “They’re actually not awarded these contracts anymore.”

Section 811 requires agencies to supply justification and approval for non-competitive 8(a) contracts worth over $20 million. But Allis says the attention has scared some agencies off dealing with Native 8(a) contractors entirely, and others wrongly interpret the $20 million threshold as a cap. He says Native contractors have signed very few contracts above that level since the rule went into effect. Allis says ANCs and tribally-owned firms need to do business on a large scale because they are trying to improve entire communities.

“The awards that made a measurable difference have evaporated, and that’s why it’s so painful to us,” he said. “It’s not saying that we deserve bigger contracts because of the historical relationship that tribes have with the country …. No — In order for this program to work, which was the design, those larger procurements had a place.”

His trade association wants Congress to modify the rule, and he hopes a Pentagon study of the effects of Section 811 will help make their case. Congress actually mandated the study already, and the deadline was this week.