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GENERAL MEMORANDUM 11-021

GENERAL MEMORANDUM 11-021
Bills Reintroduced to Restrict Alaska Native Corporations' Participation in Federal Small Business Development Program

On January 31, 2011, Senator Claire McCaskill (D-MO) introduced S 236, a bill that would roll back many of the economic development policies intended to help Alaska Native Corporations (ANCs) achieve self-determination and economic success. Senator McCaskill introduced an identical bill at the end of the last Congress. The McCaskill bill would terminate key aspects of the U.S. Small Business Administration's (SBA) Native 8(a) Business Development Program available to Alaska Native small business corporations. The bill does not affect American Indian tribes' participation in the Native 8(a) program. The bill is co-sponsored by Senator Tom Carper (D-DE) and has been referred to the Senate Small Business Committee.

Neither senators serve on the Small Business Committee but Senator McCaskill Chairs the Senate Subcommittee on Contracting Oversight and Senator Carper Chairs the Permanent Subcommittee on Investigations. Senator McCaskill's Subcommittee held a hearing on ANC participation in the Native 8(a) program in 2009. Last year, Chairman McCaskill announced that she would "crack down on waste and abuse in contracting" by eliminating "unique" benefits and "loopholes" for Alaska Native Corporations. She also sent a letter to the SBA's Inspector General requesting an investigation of allegations made in a Washington Post investigative series on the operation of Alaska Native Corporations in the SBA's 8(a) program. Her letter also requested that the Inspector General turn over his findings to the U.S. Department of Justice, if necessary.

The House version of the bill, HR 589, is identical to S 236 and was introduced on February 9, 2011, by Representative Bennie Thompson (D-MS) and co-sponsored by Representatives Barbara Lee (D-CA), Corrine Brown (D-FL), and Jackie Speier (D-CA). HR 589 has been referred to the Committee on Small Business and the Committee on Natural Resources. Representative Thompson is the Ranking Member of the House Committee on Homeland Security but does not serve on any of the Committees to which the bill has been referred, nor do any of the bill's co-sponsors.

Details of the McCaskill-Thompson bills

Under S 236/ HR 589 Alaska Native Corporations would:

  • Lose the ability to win contracts over $3.5 million for services or $5.5 million for goods without competing against other firms
  • No longer be automatically designated as socially disadvantaged or economically disadvantaged
  • Be required to hire people who qualify as socially and economically disadvantaged to manage their companies
  • Be restricted to having a majority interest in one 8(a) subsidiary at a time
  • Be prohibited from operating as pass-through entities to send contracts to non-native companies
  • Be required to count all affiliates and subsidiaries in size determinations for 8(a) eligibility

The legislation would also require Native Hawaiian organizations who wish to participate in the Native 8(a) program to demonstrate that they meet the definition of "economically disadvantaged."

The Alaskan Senators strongly oppose the bills but have indicated that some reforms may be in order.

Please contact us if we may provide additional information regarding the bills discussed in this Memorandum.

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Inquiries may be directed to:
Chris Stearns (cstearns@hobbsstraus.com)
Geoff Strommer (gstrommer@hobbsstraus.com) or
Craig Jacobson (cjacobson@hobbsstraus.com)

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