Important Reinterpretation of 8(a) Federal Procurement Law May Mean High-Value Government Contracts will be Returning to Alaska Native Corporations
The continued initiative from Alaska Senators has recently brought about a reinterpretation of the requirements imposed by the Small Business Administration’s “8(a)” program – aimed at helping companies owned by minorities and disadvantaged groups compete in federal contracting. In 1986, Congress expanded the “8(a)” program to include Alaska Native Corporations (ANCs) and Indian tribes. After the 1986 8(a) expansion, ANCs received many sole source federal defense contracts. ANCs thrived under this procurement model, but their success in federal contracting was scrutinized by some in Washington D.C.
The 2010 National Defense Authorization Act (NDAA) changed the law relating to 8(a) procurement and specifically to sole source procurements then valued at over $20 million. For defense contracts, the 2010 law required, among other things, the contracting officer obtain approval from the respective secretaries of the military branches. DoD entities interpreted the language to mean that, rather than securing approval from a designee, they had to obtain approval from the actual branch secretary. The burden associated with this perceived requirement proved so prohibitive that contracting officers largely abandoned their sole source authority for ANCs for any procurements affected by the new law. The change to sole source contracting (which became effective through the Federal Acquisition Regulation in March 2011) had a significant adverse impact on ANCs, drastically reducing the use of this once abundant procurement model. Indeed, by some accounts, the change has decreased awards of federal defense contracts to ANCs by over 80%, thus significantly impacting what was once a powerful economic growth engine for ANCs and village corporations.
Recently, however, the Army, Navy and Air Force through a series of internal memoranda have adopted a more sensible reading of the statue, agreeing to reinterpret the approval requirements imposed by the 2010 NDAA law. Instead of requiring the actual signature of the secretary of these branches, the Army, Navy and Air Force now agree that contracting officers can once again award sole source contracts to ANCs by obtaining approval from a proper designee of the secretary of the agency, without getting the actual signature of the secretary themselves, a prohibitively burdensome requirement. This more sensible interpretation may reopen the door to federal contracting for ANCs and again provide an important economic boon to the Alaska economy. While the door has now been reopened, it is left to be seen whether the sole source procurements for ANCs will return to its pre-2011 activity. Stay tuned.