ANCHORAGE, Alaska — U.S. Sen. Claire McCaskill plans to introduce legislation this week that would eliminate the advantage tapped by Alaska Native corporations in obtaining federal contracts worth billions of dollars.
The Missouri Democrat will file the bill Wednesday or Thursday, her spokeswoman said Tuesday.
Among other changes, the bill would strip the corporations of contracts with no monetary caps under the Small Business Administration’s 8(a) program, which is designed to help small disadvantaged firms.
“Sen. McCaskill believes that the federal government does have a role in helping Native people,” spokeswoman Maria Speiser said. “But we’ve seen that a very small portion of these companies’ profits are reaching Native Alaskans, so from her perspective it’s time to acknowledge the fact that the program, it’s not effective for either the Native Alaskans or taxpayers.”
The corporations would still be able to participate in the SBA program.
However, they would no longer enjoy the unprecedented benefits ushered through Congress two decades ago by then-Alaska Sen. Ted Stevens.
McCaskill, a former auditor, has said only a small percentage of the companies’ profits are reaching Native shareholders.
Under McCaskill’s plan, Native corporations would have to qualify under the same rules as other program participants, such as being designated as socially disadvantaged business enterprises and managed by equally disadvantaged individuals. They also would have to meet size requirements.
The companies currently don’t have to be managed by Alaska Natives.
Scores of regional and village corporations were created after the 1971 Alaska Native Claims Settlement Act was signed to compensate Alaska Natives for the loss of lands historically used or occupied. It appropriated more than $962 million and allowed the corporations to select 44 million acres of land.
Speiser said the corporations would still be able to receive no-bid contracts with $5.5 million caps for goods and $3.5 million for services. Larger contracts would require that they compete.
McCaskill has said she believes a number of Native corporations are too large to qualify as small businesses. She also has said the advantages need to be examined, given the astronomical increase in the contracts awarded to Alaska Native corporations and their hundreds of subsidiaries.
Federal audits have criticized no-bid contracts and the SBA already has proposed rules to tighten oversight by the end of the year.
Some Native corporations that are proposing their own reforms said Congress’ goal should remain a federal priority. According to a government report, the preferences were intended to provide economic opportunities to impoverished Alaskans.
The reform promoters include Anchorage-based Cook Inlet Region Inc., Fairbanks-based Doyon Limited and Barrow-based Arctic Slope Regional Corp.
“Senator McCaskill appears to use individual incidents and a broad brush to sweep Alaska Native corporations and the positive impact they have on their shareholders under the rug,” they said in a joint statement.
“We’ve already proposed responsible reforms that will improve the program, and we stand ready to work with the SBA and Congress to implement them,” the statement says.
Both of Alaska’s U.S. senators have said they oppose the plan.
“The participation by Alaska Native corporations in the 8(a) program creates hundreds of jobs for Alaskans and provides benefits to some of the most remote, high-cost communities in America,” Democratic Sen. Mark Begich said in a statement e-mailed to The Associated Press on Tuesday.
“That’s why it’s so disappointing that Senator McCaskill would introduce legislation to gut the program without even bothering to talk to those affected or visit Alaska to see how it works first-hand,” Begich said. “Trying to impose a Washington solution without bothering to talk to those affected is careless and irresponsible.”
Republican Sen. Lisa Murkowski hadn’t seen the legislation yet and declined to comment Tuesday through her spokesman, Mike Brumas.
A summary of the legislation Speiser provided to the AP in October noted that the current edge, along with a lack of oversight from the SBA and other federal agencies, has resulted in widespread abuses of the program. It said that a Senate subcommittee hearing and investigation found that almost 95 percent of corporation employees are not shareholders.
According to the summary, shareholders have averaged about $615 in yearly benefits out of the more than $23 billion in federal contracts to the corporations over the past nine years.
The document also said new information reported in a recent series by the Washington Post raised concerns “about whether potential statutory and regulatory violations by ANCs (Alaska Native corporations) have become widespread, at a cost to both the taxpayer and the Alaska Natives these corporations purport to benefit.”
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