'We are not asking for a hand-out': Native contracting program under scrutiny amid success

Tuesday, February 11, 2020  

The Alutiiq people of Kodiak Island understand the importance of harvesting nature’s bounty when it is offered.

Because winter is always coming, and no amount of preparation ever seems enough.

But the impacts of colonization – lost connection to the land and to their culture – has created new challenges for the Alutiiq people, including crime, poverty and sickness.

The Alutiiq people aren’t alone in their problems.

Last June, after a visit to rural Native villages in Alaska, U.S. Attorney General William Barr called for emergency funding to address the public safety crisis he saw unfolding among the state’s indigenous people, including those of Kodiak Island.

“With this emergency declaration, I am directing resources where they are needed most and needed immediately, to support the local law enforcement response in Alaska Native communities, whose people are dealing with extremely high rates of violence,” he said. “Lives depend on it, and we are committed to seeing a change in this unacceptable, daily reality for Alaska Native people.”

But the Alutiiq people have a powerful tool to help them fight back against the economic and social ills that plague them.

A little known federal program that provides lucrative economic opportunities for companies owned by tribes and Alaska Native corporations has helped the Alutiiq begin to rebuild their economy and provide hope to their people.

The U.S. Small Business Administration’s Section 8(a) Business Development Program gives companies owned by individuals or communities that have been historically disadvantaged, including minorities and tribes, preference when it comes to awarding federal work contracts.

For the Alutiiq people, the federal 8(a) program has been an economic shot in the arm to its corporation, Old Harbor Native Corporation. The revenue generated from federal contracts have allowed Old Harbor to provide millions of dollars worth of benefits – including dividend distributions, jobs, internships and burial assistance – to its 439 shareholders, as well as to descendants of former shareholders.

“We are not asking for a hand-out, but we are asking for a fair chance, consistent with the federal government's unique relationship and obligation to Native peoples and Congress's intent and goal to provide the means for economic self-sufficiency of Native American communities, to become productive and equal members of the economy of the United States,” Old Harbor’s chief executive officer, Carl H. Marrs, said in testimony submitted to Congress last October.

But the future of the federal 8(a) program is now in jeopardy following revelations about companies that have benefited from the program that may not be tied to legitimate tribes.

Last year, The Los Angeles Times began publishing reports about companies that weren’t owned by federally recognized tribes, or by citizens of federally recognized tribes, that had reaped hundreds of millions in contracts through the federal 8(a) program.

According to the Times, the companies with questionable legitimacy had earned more than $800 million from the federal 8(a) program. At least a dozen of those companies claimed to be owned by one of three Cherokee tribes that aren’t federally recognized and are considered illegitimate by tribes, the Times wrote.

Several other companies in Alabama claimed to be affiliated with two other tribes that aren’t federally recognized – the Ma-Chis Lower Creek Indian Tribe and the Echota Cherokee Tribe. Companies owned by those two “tribes” alone earned more than $500 million in federal contracts, the Times found.

The Times’ investigation led to an oversight hearing last October before the House small business subcommittee. Those reports also led to Rep. Judy Chu (D-California), who oversees that House subcommittee, to ask the Government Accountability Office, Congress’ investigative arm, to audit how the Small Business Administration vets contractors whose owners claim to be Native.

Joe Valandra, executive director of the Native American Contractors Association, said the allegations of mismanagement within the federal 8(a) program not only divert much-needed revenue from legitimate tribal corporations but also paint the program with a broad and unkind brush.

He said he hopes the allegations lead to stronger vetting practices within the Small Business Administration to ensure only corporations with legitimate tribal ties win federal contracts through the 8(a) program.

He said the Small Business Administration in recent years implemented vetting procedures to ensure only tribally owned companies participate in the program. However, the agency has failed to look back at companies that it previously certified to ensure they meet its new criteria, Valandra said.

In addition, those who administer the program continue to permit corporations that are owned by state-recognized tribes that aren’t federally recognized to participate in the program, according to the Times. Tribes have long considered this wrong as they say states have often failed to properly vet tribes that seek state recognition.

Rep. William Lacy Clay (D-Missouri) recently introduced legislation to ensure only tribal corporations win contracts through the federal 8(a) program. His bill would make it a federal crime for companies seeking participation in the program to fraudulently claim Native ownership.

Valandra said he hopes the questions raised by the Times’ reporting doesn’t lead lawmakers to end the 8(a) program, which he said has been invaluable in ensuring tribes are able to generate revenue for vital social and cultural programs.

“This is such an important program to Indian Country, certainly to NACA members,” he said. “We want to make sure that the rules are being followed and that the ability to address abuse before it gets started, or before it gets bad, is already in the regulations.”