Latest SBA Audit Finds Abuses in Alaska Native Corporation Contracts

Last week, we wrote about about the disappointing ruling in the lawsuit brought by Native Americans seeking to recover the billions in royalties, fees and other revenues they claim the Department of Interior owes them due to its incompetent trusteeship of their lands for the past 120 years.

This week brings more news concerning Native Americans, this time from our 49th state.  A report by the Small Business Administration's Office of Inspector General (SBA-OIG) found that two government contractors designated as small, Alaska native-owned corporations directed more than $23 million in unapproved revenues to companies that were owned by non-natives.

Alaska native corporations (ANCs) were established by Congress in 1971 to settle land and financial claims made by aboriginal Alaskans and to spur regional economic development.  Under the SBA's 8(a) disadvantaged business program, ANCs are eligible to receive sole-source contracts for any dollar amount.  (All other 8(a) contractors are limited to awards not exceeding $3 million or, in the case of goods and services associated with manufacturing, $5 million.)  There has been concern, however, that there are instances when ANCs are being used as a "pass-through" to allow large, non-ANC firms to improperly benefit from the noncompetitive program.

The SBA-OIG report highlights two ANC-established companies: APM, LLC, a construction management company, and Goldbelt Raven, LLC, a technology services company.  The report found that the non-Alaskan native managers/owners of these two companies paid other companies they owned with money derived from the contracts through business arrangements that were not pre-approved by the SBA, as is required.

The audit report recommends that APM and Goldbelt Raven, which received a combined total of $465 million in 8(a) contracts between fiscal years 2002 and 2006, be terminated from the program.  According to the Washington Post article, APM and Goldbelt Raven are cooperating with the auditors.

This is not the first time POGO has called attention to problems in the 8(a) program.  Back in 2004, we criticized a $40 million contract awarded to an ANC called Alutiiq to provide security at nuclear facilities because its partner on the project, Wackenhut, a very large and very non-Alaskan security services firm, also stood to benefit.  Not surprisingly, rules governing ANCs are fiercely criticized in small business circles.

If the ANC program isn't working as intended, and competitive contracting procedures are being routinely evaded, it might be time for Congress to reconsider the program.

-- Neil Gordon

Comments

[Posted on: Oct 10, 2008 at 11:53 PM]

Even a single media in Alaskan has given their report on this topic. The the report that has been disignated by the two government contractors was very use full. The SBA should take care in this matter.

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john

FSBO

[Posted on: Aug 29, 2008 at 01:53 AM]

Funny, not one single Alaskan media outlet, not one, has reported on this.

[Posted on: Aug 16, 2008 at 01:28 AM]

It's not general or specific relativity so you don't have to be me to understand what audit agency in the news would have audited ANCs.