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Government Contracts Law Update: More Details Revealed on ANC Contracting Legislation

Anne Marie Tavella view profile

Senator Claire McCaskill (D-Mo.) has released additional details regarding the bill she intends to introduce next month that will eliminate certain contracting preferences for Alaska Native Corporations (ANCs) that currently exist as part of the Small Business Administration's 8(a) program.


According to a press release issued by McCaskill on October 8, the bill, which has not yet been publicly released, will:
  • Eliminate the ANCs ability to be awarded sole-source contracts above the caps ($3.5 million for services and $5.5 million for goods) that apply to other 8(a) businesses;
  • Eliminate the automatic designation of ANCs as socially disadvantaged business enterprises, requiring ANCs to demonstrate their social disadvantage by providing evidence of "racial or ethnic prejudice or cultural bias within American society because of their identities as members of groups;"
  • Eliminate the automatic designation of ANCs as economically disadvantaged, requiring any ANC seeking to participate in the 8(a) program to demonstrate that corporation's economic disadvantage upon entering the program;
  • Require ANCs to count all affiliates and subsidiaries in size determinations for 8(a) eligibility, which shall be limited to no longer than nine years, as is required for other 8(a) participants;
  • Require ANCs who choose to participate in the 8(a) program to own a majority interest in only one 8(a) subsidiary at any one time;
  • Require ANCs who choose to participate in the 8(a) program to be managed by individuals who qualify as socially and economically disadvantaged under the program, as other 8(a) participants must do; and
  • Prohibit ANCs who choose to participate in the 8(a) program from operating as pass-throughs to non-Native companies that do not qualify under the 8(a) program.
One of McCaskill's main criticisms regarding the contracting preferences for ANCs, in addition to lack of oversight by the SBA, is that very little of the federal contracting funds actually benefits Alaska Natives.  However, ANC advocates argue that since the creation of the ANCs, Alaska Native high school graduation rates have tripled, household income rates have risen, while the number of Alaska Natives living below the poverty line has decreased.  Interestingly, there is no indication that McCaskill's bill will increase the amount of contracting dollars that reach Alaska Natives. 

The announcement of McCaskill's bill culminates months (and years) of criticism against the SBA for lack of oversight concerning abuse of the various small business programs, including several recent stories by The Washington Post specifically describing program abuses involving ANCs.  In response to some of this criticism, on April, 26, 2010 President Obama created an interagency task force to review the participation of small businesses in federal contracting. 


The task force recently released a report that called for a better trained federal workforce, greater accountability and enforcement within the programs, and for creating easier to use tools to assist small businesses in obtaining federal contracts as prime contractors. 

To view the task force report click here

We welcome your questions or comments, which can be sent to Anne Marie Tavella at 206.623.3427 or email: tavella@oles.com

The Government Contracts Practice Group at Oles Morrison has an established history of assisting contractors with claims against federal and state agencies, bid protests and providing advice and counseling on all issues involving public procurement