[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]




 
                     DIVERSIFYING NATIVE ECONOMIES

=======================================================================

                           OVERSIGHT HEARING

                               before the

                     COMMITTEE ON NATURAL RESOURCES
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                     Wednesday, September 19, 2007

                               __________

                           Serial No. 110-44

                               __________

       Printed for the use of the Committee on Natural Resources



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                     COMMITTEE ON NATURAL RESOURCES

               NICK J. RAHALL II, West Virginia, Chairman
              DON YOUNG, Alaska, Ranking Republican Member

Dale E. Kildee, Michigan             Jim Saxton, New Jersey
Eni F.H. Faleomavaega, American      Elton Gallegly, California
    Samoa                            John J. Duncan, Jr., Tennessee
Neil Abercrombie, Hawaii             Wayne T. Gilchrest, Maryland
Solomon P. Ortiz, Texas              Chris Cannon, Utah
Frank Pallone, Jr., New Jersey       Thomas G. Tancredo, Colorado
Donna M. Christensen, Virgin         Jeff Flake, Arizona
    Islands                          Stevan Pearce, New Mexico
Grace F. Napolitano, California      Henry E. Brown, Jr., South 
Rush D. Holt, New Jersey                 Carolina
Raul M. Grijalva, Arizona            Luis G. Fortuno, Puerto Rico
Madeleine Z. Bordallo, Guam          Cathy McMorris Rodgers, Washington
Jim Costa, California                Bobby Jindal, Louisiana
Dan Boren, Oklahoma                  Louie Gohmert, Texas
John P. Sarbanes, Maryland           Tom Cole, Oklahoma
George Miller, California            Rob Bishop, Utah
Edward J. Markey, Massachusetts      Bill Shuster, Pennsylvania
Peter A. DeFazio, Oregon             Dean Heller, Nevada
Maurice D. Hinchey, New York         Bill Sali, Idaho
Patrick J. Kennedy, Rhode Island     Doug Lamborn, Colorado
Ron Kind, Wisconsin                  Mary Fallin, Oklahoma
Lois Capps, California               Kevin McCarthy, California
Jay Inslee, Washington
Mark Udall, Colorado
Joe Baca, California
Hilda L. Solis, California
Stephanie Herseth, South Dakota
Heath Shuler, North Carolina

                     James H. Zoia, Chief of Staff
                   Jeffrey P. Petrich, Chief Counsel
                 Lloyd Jones, Republican Staff Director
                 Lisa Pittman, Republican Chief Counsel
                                 ------                                

      

                                CONTENTS

                              ----------                              
                                                                   Page

Hearing held on Wednesday, September 19, 2007....................     1

Statement of Members:
    Bishop, Hon. Rob, a Representative in Congress from the State 
      of Utah, Prepared statement of.............................    34
    Cole, Hon. Tom, a Representative in Congress from the State 
      of Oklahoma................................................     2
    Napolitano, Hon. Grace F., a Representative in Congress from 
      the State of California....................................     5
    Rahall, Hon. Nick J., II, a Representative in Congress from 
      the State of West Virginia.................................     1
        Prepared statement of....................................     2
    Shuler, Hon. Heath, a Representative in Congress from the 
      State of North Carolina....................................     5
    Young, Hon. Don, a Representative in Congress from the State 
      of Alaska, Prepared statement of...........................     4

Statement of Witnesses:
    DuMontier, Greg, Chairman, Native American Contractors 
      Association, Washington, D.C...............................    56
        Prepared statement of....................................    58
    Garcia, Joe, President, National Congress of American 
      Indians, Washington, D.C...................................    48
        Prepared statement of....................................    50
    Hall, Tex G., Chairman and CEO, Inter-Tribal Economic 
      Alliance, Mandaree, North Dakota...........................    43
        Prepared statement of....................................    45
    Kitka, Julie E., President, Alaska Federation of Natives, 
      Anchorage, Alaska..........................................    71
        Prepared statement of....................................    73
    Largent, William H., Assistant Administrator, Office of 
      Native American Affairs, U.S. Small Business 
      Administration, Washington, D.C............................    12
        Prepared statement of....................................    14
    Lukin, Sarah L., Director of External Relations, Afognak 
      Native Corporation and Alutiiq, LLC, Anchorage, Alaska.....    94
        Prepared statement of....................................    95
    McCaleb, Neal, Chairman of the Board of Directors, Chickasaw 
      Nation Industries, Inc., Ada, Oklahoma.....................   106
        Prepared statement of....................................   108
    Middleton, Dr. Robert W., Director, Office of Indian Energy 
      and Economic Development, U.S. Department of the Interior, 
      Washington, D.C............................................     6
        Prepared statement of....................................     7
    Schinasi, Katherine V., Managing Director, Acquisition and 
      Sourcing Management, United States Government 
      Accountability Office, Washington, D.C.....................    17
        Prepared statement of....................................    20
    Taylor, Jonathan B., Research Associate, The Harvard Project 
      on American Indian Economic Development, Harvard 
      University, Cambridge, Massachusetts, and Senior Policy 
      Associate, Native Nations Institute, University of Arizona, 
      Tucson, Arizona, and President, The Taylor Policy Group, 
      Inc., Cambridge, Massachusetts.............................   115
        Prepared statement of....................................   117

Additional materials supplied:
    Denson, Beasley, Tribal Miko (Chief), Mississippi Band of 
      Choctaw Indians, Statement submitted for the record........   126
    NACA Joint Legislative Proposal on Small Business Contracting 
      submitted for the record...................................   128
    National Center for American Indian Enterprise Development, 
      Statement submitted for the record.........................   129


         OVERSIGHT HEARING ON ``DIVERSIFYING NATIVE ECONOMIES''

                              ----------                              


                     Wednesday, September 19, 2007

                     U.S. House of Representatives

                     Committee on Natural Resources

                            Washington, D.C.

                              ----------                              

    The Committee met, pursuant to call, at 10:02 a.m. in Room 
1324, Longworth House Office Building, Hon. Nick J. Rahall, II 
[Chairman of the Committee] presiding.
    Present: Representatives Rahall, Young, Kildee, 
Faleomavaega, Christensen, Napolitano, Grijalva, Boren, Inslee, 
Baca, Herseth Sandlin, Shuler, Fortuno, Cole and Bishop.

STATEMENT OF THE HONORABLE NICK J. RAHALL, II, A REPRESENTATIVE 
          IN CONGRESS FROM THE STATE OF WEST VIRGINIA

    The Chairman. Committee on Natural Resources will come to 
order.
    At the beginning of this Congress, I stated that the 
Committee would focus on economic development options and other 
issues of importance to Native America. The Committee is 
meeting today to hold the first in a series of hearings on 
Diversifying Native Economies.
    Today's hearing will focus on the Small Business 
Administration's Native 8[a] program designed to provide 
business opportunities to Indian tribes and Alaska Native 
Corporations.
    With a 26 percent poverty rate in Indian Country and 
unemployment rates as high as 80 percent, the need for economic 
development in Native communities is pretty self-evident. Some 
Native governments have made great strides in combating this 
situation while others continue to struggle. Likewise, some 
Federal programs have worked better than others.
    The Native 8[a] program demonstrates Congress' commitment 
to promoting tribal self-determination and self-sufficiency. 
The program reflects the unique character of Native governments 
and their responsibility to provide governmental services and 
other benefits to their members. Testimony today will discuss 
the benefits that the Native 8[a] program has brought to Native 
America.
    Data shows that Tribal and Alaska Native Corporations 
received less than 1 percent--less than 1 percent of the $377.5 
billion awarded through Federal procurement contracts. Of the 
$145 billion awarded through some source contracts, Tribal and 
Alaska Native Corporations only received approximately 1.4 
percent of that amount.
    At the same time, the GAO issued a report last year 
highlighting the need for better oversight and administration 
of the program. So I look forward to today's testimony on how 
this program affects Native communities and how it can be 
improved to ensure that it is working as intended.
    Congress needs to carefully examine the barriers and the 
challenges facing Native governments as well as which programs 
are working and why they are working. In doing so, we must 
ensure that the Federal programs designed to assist Native 
governments in addressing their needs are fair and working 
appropriately.
    I now recognize the Acting Ranking Member, the gentleman 
from Oklahoma, Mr. Cole.
    [The prepared statement of Mr. Rahall follows:]

       Statement of The Honorable Nick J. Rahall, II, Chairman, 
                     Committee on Natural Resources

    At the beginning of this Congress, I stated that the Committee 
would focus on economic development options and other issues of 
importance to Native America. The Committee is meeting to hold the 
first in a series of hearings on Diversifying Native Economies.
    Today's hearing will focus on the Small Business Administration's 
Native 8(a) program designed to provide business opportunities to 
Indian tribes and Alaska Native corporations.
    With a 26% poverty rate in Indian country and unemployment rates as 
high as 80%, the need for economic development in Native communities is 
self-evident. Some Native governments have made great strides in 
combating this situation while others continue to struggle. Likewise, 
some Federal programs have worked better than others.
    The Native 8(a) program demonstrates Congress' commitment to 
promoting tribal self-determination and self-sufficiency. The program 
reflects the unique character of Native governments and their 
responsibility to provide governmental services and other benefits to 
their members. Testimony today will discuss the benefits that the 
Native 8(a) program has brought to Native America.
    Data shows that Tribal and Alaska Native Corporations received less 
than 1% of the $377.5 billion awarded through Federal procurement 
contracts. Of the $145 billion awarded through sole source contracts, 
Tribal and Alaska Native Corporations only received approximately 1.4% 
of that amount.
    At the same time, the General Accountability Office issued a report 
last year highlighting the need for better oversight and administration 
of the program. I look forward to hearing testimony on how this program 
affects Native communities and how it can be improved to ensure that it 
is working as intended.
    Congress needs to carefully examine the barriers and challenges 
facing Native governments as well as which programs are working and 
why. In doing so, we must ensure that Federal programs designed to 
assist Native governments in addressing their needs are fair and 
working appropriately.
    Thank you.
                                 ______
                                 

   STATEMENT OF THE HONORABLE TOM COLE, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF OKLAHOMA

    Mr. Cole. Thank you very much, Mr. Chairman. I want to 
begin by reading Ranking Member Young's statement in the 
record, and then if I may, I will make a couple of brief 
comments of my own.
    Mr. Chairman, I commend you for holding this hearing today 
on the subject of diversifying Native economies. My 
understanding is that you plan on holding a series of hearings 
on this broad theme. I hope these hearings are a tool to 
measure progress in implementing Indian self-determination, a 
policy set forth in 1970.
    For anyone who wants to read the eloquent statement which 
launched the present era of self-determination, he should read 
President Richard Nixon's Special Message to the Congress on 
Indian Affairs dated July 8, 1970. Let me quote the first lines 
of this message.
    ``The first Americans, the Indians, are the most deprived 
and most isolated minority group in our nation on virtually 
every scale of measurement--unemployment, income, education, 
health--the condition of Indian people ranks at the bottom.''
    Today, conditions are greatly improved for the first 
Americans. They are closing the gap. Sadly, they still rank 
below the total population of the United States in the 
measurements described by President Nixon. There is much more 
work to be done. Progress that has been achieved so far has 
been achieved through a policy of self-determination. We should 
reenforce it as the primary means for Indians to improve their 
lives and control their destinies.
    These days, Native Americans' summits and conferences tend 
to involve bankers, lenders, tax experts, natural resource 
managers and investors more than government workers. This is a 
healthy sign that Native Americans have taken the reins of 
their destinies.
    One area in which Native enterprises has been a success is 
in the 8[a] contracting program. There have been some 
misconceptions about Native involvement in 8[a], bubbling up in 
various news reports and in other committees in Congress. 
Today's hearing will air out these issues and give the 
witnesses an opportunity to explain how the program is working 
for Native American economies.
    That concludes Chairman Young's statement. Let me add, if I 
may, Mr. Chairman, from my own perspective----
    The Chairman. This is Ranking Member Young.
    Mr. Cole. Did I--you know. We can always hope, you know. 
Don't have much else right now.
    [Laughter.]
    Mr. Cole. He is present, by the way. In case you didn't 
know that, those were his words.
    The Chairman. Oh, OK.
    Mr. Young. It seems like you are doing an outstanding job.
    [Laughter.]
    Mr. Cole. Well, that is because I was reading from your 
script. You usually tell me that, Mr. Young, when I do that.
    But I do want to note that I am very privileged to 
represent a district that has an enormous amount of Tribal 
activity, Mr. Chairman. Obviously, my own tribe, the 
Chickasaws, but also the Choctaw Nation, Comanche Nation, Fort 
Sill Apaches, Cheyenne, you know, Southern Cheyenne, Arapaho, 
others, and they are in various states of economic development. 
This program has made an enormous difference, and I see tribal 
entities, frankly, investing in areas in my district that 
nobody else would invest in, bringing in resources, 
opportunities and jobs, and I think, as you eloquently point 
out in your statement, and Mr. Young in his statement, there is 
no question that if we looked at it on a per capita basis, 
there is not an undue amount of Federal money or contracts 
flowing into Tribal economies, but they have taken what is 
there and leveraged it and provided enormous opportunity for 
their people, and frankly, in the case of my tribe, we have 
11,000 employees, and we are a tribe of over 40,000 people, so 
we are very substantial, the majority of those jobs are to non-
Native Americans, frankly.
    There are other people in depressed areas that are brought 
into the economy other than just Native Americans by Native 
American activity.
    So I want to commend you very personally and very sincerely 
for holding this hearing and giving us an opportunity to 
educate the rest of Congress about how important this is so we 
don't inadvertently kill the goose that has laid at least one 
or two golden eggs along the way, and I mean that quite 
sincerely. So thank you so much for holding the hearing, Mr. 
Chairman.
    The Chairman. Thank you, Mr. Cole, for your statement and 
the Chair will recognize the Ranking Member if he has any 
additional comments to make.
    Mr. Young. Thank you again, Mr. Chairman, for having this 
hearing. This issue is something dear to my heart. We have done 
much to try to help, especially the Alaskan Native and American 
Natives, in this committee, and we have succeeded in some areas 
and failed in other areas, but this is one area, this ability 
to get involved economically has been quite successful. It is 
under attack, and I think it is time we have a chance to expose 
what it has done for groups within the nation, especially in 
the State of Alaska, and this is what this is all about.
    I believe there is going to be another hearing in another 
committee. For some reason, they want to attack this program 
when it has been successful, and we ought to be patting people 
on the back and saying this is the right way to go, and there 
is nothing that has been a better success story than this 
story.
    So again thank you for these hearings. I want to thank the 
witnesses that are going to be here from the administration and 
from especially the State of Alaska for flying this long 
distance to be here to give their side of the story as it 
should be for the record.
    With that, I yield back the balance of my time.
    [The prepared statement of Mr. Young follows:]

       Statement of The Honorable Don Young, Ranking Republican, 
                     Committee on Natural Resources

    Mr. Chairman and Members of the Committee, I want to thank you for 
holding this hearing. This is an issue that is very important to Alaska 
Natives and Indian Tribes and I would like to thank the witnesses for 
being here today. I know that many have traveled great distances to 
testify before this committee.
    I'd like to start out by briefly going over the history of the 
Alaskan Native Corporations, or ANCs and their participation in the 
8(a) program. The Alaskan Native Corporations were formed in a deal 
between Alaska Native leaders and the federal government. In exchange 
for giving up their land claims, 12 Alaska Native regional corporations 
were created, along with over 200 village corporations. These 
corporations were also given one ninth of the land that they had 
aboriginal claim to and a monetary settlement as part of the deal. A 
thirteenth regional corporation was later created for the Alaskan 
Natives that had moved from the state.
    Each ANC is owned entirely by Native shareholders, none of whom can 
sell their shares. Any profits the corporations make are returned to 
the shareholders through a dividend, reinvested in the company or used 
to support the Native community, through cultural and social programs 
and scholarships.
    The 8(a) program has been a success story for the Alaskan Native 
community. It has allowed the ANCs to create economic opportunity for 
their communities while preserving their culture and heritage. Most 
Alaskan Native villages are unreachable except by plane, severely 
limiting their ability to develop economically. Without this 
development, life in the villages would be one of day to day survival. 
As it is, many villages do not have water or sewer systems, offer few 
opportunities for employment and lack some of the modern conveniences 
that people in the Lower 48 take for granted, such as electricity and 
telephones.
    Of the almost 200 regional and village corporations, only twelve 
are significant participants in government contracting. These twelve 
receive less than 1% of all federal contracts and less than 17% of all 
contracts awarded through the 8(a) program. They have still had a huge 
impact on the Alaskan Native community, employing over 3100 Natives, 
awarding $22 million in scholarships and donations to programs to 
preserve their culture and improving the lives of Alaskans in the 
villages.
    This is a good start. However, more Alaska Native Corporations and 
Indian Tribes from the Lower 48 should be encouraged to participate in 
the 8(a) program so that their communities can also benefit.
    Native participation in the 8(a) program allows the United States 
to keep its promises to Alaskan Natives and Indian tribes while 
creating the opportunities they need to create better lives for 
themselves. It is important that we continue to honor our promises and 
allow Alaska Natives and Indian Tribes to continue to work to better 
their lives while maintaining their cultural heritage.
    I applaud Chairman Rahall (D-WV) for holding this hearing to 
discuss diversifying Native economies. I am glad to see that the 
Natural Resources Committee is exercising its jurisdiction over this 
important part of National Indian Policy.
                                 ______
                                 
    The Chairman. The Chair thanks the gentleman from Alaska as 
well for his comments, and totally agreed with him.
    The Chair will recognize for the record the gentleman from 
North Carolina, Mr. Heath Shuler is also present. If he has any 
comments, he is certainly welcome.

 STATEMENT OF THE HONORABLE HEATH SHULER, A REPRESENTATIVE IN 
           CONGRESS FROM THE STATE OF NORTH CAROLINA

    Mr. Shuler. I would like to thank the Chairman and the 
Ranking Member and Mr. Cole for their statements. We have seen 
so often, growing up close to the Cherokee Indian Reservation 
in North Carolina, how difficult the struggles have been for 
quite some time. We are seeing how some of these policies that 
we have done that actually have worked, and if we continue to 
work together within this committee, I do think that we can 
save it, and I commend both the Ranking Member, Mr. Cole, and 
the Chairman for their hard work and their continued 
dedication, that we can work together and we can make a 
difference in their lives.
    Thank you, sir.
    The Chairman. Thank you, Mr. Shuler.
    The Chair recognizes the gentlelady from California, Ms. 
Napolitano.

       STATEMENT OF THE HONORABLE GRACE F. NAPOLITANO, A 
    REPRESENTATIVE IN CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Napolitano. Thank you, Mr. Chair, and it is a pleasure 
to be here on such an important subject.
    Being a minority, we understand many of the perplexities 
that face minority business and contracting out, and we have 
been for many years trying to get the Federal government to 
live up to the Federal mandate of the MWBE, Minority Owned, 
Women Owned, et cetera, and it has not been easy. In the Small 
Business Committee, they try to hold them accountable, they try 
to have them come in and explain why they can't meet that 
government mandate, and it is still not anywhere near where it 
should be.
    Somewhere along the line the powers that be don't impress 
upon some of the agencies the importance of being able to allow 
minority business to have a piece of the government contact, 
which is huge, and there is no reason for that other than 
possibly some of the people are not interested in taking the 
time to help some of these entities along, and I think it is 
time that we begin to really scrutinize and have them 
understand the importance of allowing small business growth so 
that we don't have to import the groups that come in from 
outside, from other countries to take over our business and 
decimate our own economy.
    So thank you, Mr. Chair, Mr. Ranking Member. This is of 
great importance to some of us. Thank you.
    The Chairman. Thank you. We will now turn to our panel, the 
first of which consists of Dr. Robert Middleton, the Office of 
Indian Energy and Economic Development, Department of the 
Interior; Mr. William Largent is Assistant Administrator, 
Office of Native American Affairs, Small Business 
Administration; and Ms. Katherine Schinasi, Managing Director, 
Acquisition and Sourcing Manager, General Accountability 
Office.
    Mr. Largent, I understand that you work on Native policy 
issues, not the 8[a] contracting program, so your testimony, as 
I understand, will focus on Native issues, and you will respond 
to the Committee in writing with any questions that are outside 
of your issue area, am I correct? Thank you.
    Lady and gentlemen, you may proceed. Dr. Middleton, do you 
want to go first since I introduced you first?

   STATEMENT OF ROBERT MIDDLETON, DIRECTOR, OFFICE OF INDIAN 
    ENERGY AND ECONOMIC DEVELOPMENT, U.S. DEPARTMENT OF THE 
                   INTERIOR, WASHINGTON, D.C.

    Mr. Middleton. I would be pleased to do that.
    Good morning, Mr. Chairman and members of the Committee. My 
name is Bob Middleton. I am Director of the Office of Indian 
Energy and Economic Development at the Department of the 
Interior, and I am pleased to be here to deliver the 
department's statement about diversifying Native economies.
    As you are aware, Secretary Kempthorne has implemented two 
initiatives: one, to promote safe Indian communities, and the 
second to strengthen educational opportunities for Indian 
youth. However, Secretary Kempthorne and Assistant Secretary 
Artman also realize that building sound and foundational Native 
economies is a key ingredient to achieve the goals of these two 
initiatives, and they both strongly support our Indian economic 
development programs.
    Without viable economies, jobs, physical stability, any 
initiative to fight for safe Indian communities and to increase 
Indian student achievement will have an uphill battle. The 
efforts to enhance Indian educational levels and graduation 
rates may be compromised if students are not given the hope of 
a stable job opportunity and a better life after graduation. A 
sustainable wage and the ability to allow individuals to 
support a family are vital to successful Indian communities.
    In addition, many of the troubles plaguing reservations, 
including increases in drug and alcohol abuse, continuing 
domestic violence, high unemployment rates, are often derived 
from the lack of meaningful, fulfilling, and life-sustaining 
work, and work that is located in the local reservation 
communities.
    A strong and diverse Tribal economy also goes to the heart 
of sovereignty. It is hard to imagine that Tribes could be and 
feel truly sovereign if they primarily rely on Federal programs 
to sustain their governments. Economic self-sufficiency will 
improve with Tribes' ability to achieve self-governance and 
self-determination.
    Now, the Secretary of Interior created my office to develop 
and implement innovative programs that benefit Native American 
economies by increasing Tribal business knowledge, increasing 
the number of successful Indian-owned businesses, increasing 
capital investment in Indian Country and to provide technical 
assistance for economic development of their energy and mineral 
resources.
    Now, my programs are achieving these goals by partnering 
with other Federal agencies, American Indian organizations and 
tribes, and facilitating economic development opportunities in 
Indian Country. We also collaborate with private organizations 
and colleges and universities to provide training and financial 
services to Indian Country. Using these partnerships, we 
leverage our existing resources to enhance and strengthen 
Tribal economies and economic development opportunities.
    The 8[a] program has been one of the tools that has been 
available to us to work with Tribal governments to, in fact, 
develop and enhance economies out on reservations.
    Thank you for the opportunity to participate in this 
important discussion, and I will be happy to answer any 
questions you have either now or after the panel concludes.
    [The prepared statement of Mr. Middleton follows:]

Statement of Dr. Robert W. Middleton, Director, Office of Indian Energy 
  and Economic Development, Office of the Assistant Secretary--Indian 
                Affairs, U.S. Department of the Interior

    Good morning, Mr. Chairman and Members of the Committee. My name is 
Bob Middleton, and I am the Director of the Office of Indian Energy and 
Economic Development (IEED) at the Department of the Interior 
(Department). I am pleased to be here today to deliver the Department's 
statement about diversifying Native economies.
Strengthening Indian Economies
    Without viable economies, jobs, and fiscal stability, any 
initiatives to fight for safe Indian communities and to increase Indian 
student achievement will have an uphill battle. The efforts to enhance 
Indian education levels and graduation rates may be compromised if 
students are not given the hope of a stable job opportunity after 
graduation. A sustainable wage and the ability to allow individuals to 
support a family are vital to successful Indian communities.
    It is also likely that any incentive for students to engage in a 
new education initiative will not be effective if students do not see 
the possibility of meaningful employment and a better life as an 
outcome. In addition, many of the troubles plaguing reservations, 
including the increases in drug and alcohol abuse, continuing domestic 
violence, and high unemployment rates are often derived from a lack of 
meaningful, fulfilling, and life-sustaining work opportunities in the 
local reservation communities.
    IEED was created to develop and implement innovative programs that 
benefit Native American economies. These efforts focus on:
      improving Indian economic development,
      increasing tribal business knowledge,
      increasing jobs and the number of successful small and 
medium Indian-owned businesses,
      increasing capital investment, and
      providing technical assistance in developing energy and 
mineral resources.
National Economic Development Summit
    In May 2007, the National Summit on Economic Development in Indian 
Country was held in Phoenix, Arizona. We worked in partnership with 
other Federal agencies and organizations including the National 
Congress of American Indians (NCAI), the Affiliated Tribes of Northwest 
Indians, the Alaska Federation of Natives, the United South and Eastern 
Tribes, and the Inter Tribal Council of Arizona. The participants 
provided information on what activities would provide the most economic 
stimulation for Indian businesses and identified the impediments in 
technical capabilities, training, capital investment, and 
infrastructure that are preventing the development of sustainable 
reservation economies.
    The Summit was a huge success with over 500 registered attendees 
ranging from tribal leaders and individuals, to tribal governments, 
tribal organizations, federal agencies and private industry.
    The Summit examined Native American economic development issues in 
three areas:
    (1)  Access to capital and finance;
    (2)  Improving physical and legal infrastructure; and
    (3)  Fostering domestic and international business enterprises.
    The Summit resulted in a list of economic development impediments 
identified by the participants and a corresponding list of recommended 
regulatory and legislative solutions. The information flowing from the 
Summit sessions was tremendous in volume and more ideas and 
perspectives are communicated to us daily that need to be incorporated 
into the list. Accordingly, we are working in conjunction with NCAI on 
a number of new tasks, including:
      A follow-on discussion about access to capital and 
finance was conducted on September 4-5, 2007, in Jersey City, New 
Jersey, sponsored by the Department in conjunction with NCAI and the 
Native American Finance Officers Association's (NAFOA). This ``Wall 
Street'' conference was presented to help tribal leaders and their 
finance professionals obtain a clarity of vision for the present and 
future, and continue to preserve and promote sovereignty through strong 
financial management.
      A follow-on discussion on tribal community comprehensive 
planning will be jointly hosted by the Department, NCAI, the University 
of New Mexico (UNM) and Arizona State University (ASU) on October 5-6, 
2007, at the ASU campus in Tempe, Arizona. The conference will bring 
together tribal planners from Arizona and New Mexico, key policy 
stakeholders, and university planning faculty from the UNM School of 
Architecture and ASU School of Planning. The conference is considered 
an important step toward defining comprehensive planning and its role 
in tribal communities. The conference will be supported by a white 
paper on the topic.
      A follow-on discussion about tribal legal infrastructure 
will be jointly hosted by the Department, NCAI and ASU on November 29-
30, 2007. Improving the tribal legal infrastructure is critical to 
creating a business friendly environment and sustaining tribal 
development, including reform of tribal constitutions and establishing 
tribal commercial laws to create a business-friendly environment for 
sustainable tribal development.
Economic Development
    IEED is continuing to build upon a successful start and expand 
programs that are improving the quality of life and communities for 
American Indians and Alaska Natives. We have taken the initial action 
to improve economic development by assisting in: (1) building the 
Indian Country physical and legal infrastructure vibrant economies 
require; (2) creating new jobs and expanding existing tribal and 
Indian-owned enterprises; (3) training existing tribal and native 
business executives; (4) increasing access to capital investments; and 
(5) providing technical assistance to develop Indian Country's sizeable 
energy and mineral assets.
 Build a Strong Legal Infrastructure
    Indian Affairs is working towards a strong legal infrastructure to 
support economic growth. In 2006, we initiated a tribal commercial law 
project. We began by funding some of the tribes who had helped develop 
a model tribal secured transactions law in consultation with the 
Federal Reserve Bank's Helena, Montana Branch and the National 
Conference of Commissioners on Uniform State Laws (NCCUSL). To date, 
the Chippewa Cree Tribe, Crow Nation, the Umatilla Tribes and the Warm 
Springs Tribes have enacted various tribal commercial laws, including 
secured transactions law, in the belief that such laws will aid their 
reservation economies. To complement the enactment of commercial laws, 
we funded NCCUSL to develop a curriculum on commercial law to train 
tribal law administrators. We expect the curriculum to be used in 
future classes offered to the tribes.
 Increase Jobs and Businesses
    A great many of Indian Country's 56 million acres of land are 
abundant in commercially and strategically important minerals and other 
natural resources. In addition, IEED, through small grants, assisted 
remote villages in Alaska and the Pribilof Islands in evaluating wind 
power to supplement expensive diesel fuel. We helped the Laguna Pueblo 
use local resources to generate power for a tribal electrical utility. 
In FY 2007, grants were provided to assist: (1) the Cherokee Nation of 
Oklahoma to develop a hydropower generating plant, (2) the St. Regis 
Mohawk Tribe to save money and provide cheaper energy to local 
businesses by developing a hydroelectric power plant, (3) the 
Passamaquoddy Tribe to take advantage of its coastal location by 
developing tidal energy, (4) the Coquille Indian Tribe to plan and 
build a woody biomass generating facility, and (5) the Jicarilla Apache 
Tribe and San Juan Pueblo to embark upon a joint venture to produce 
from timber resources fuel wood pellets and select lumber.
    We have assisted tribes in formulating long-term, strategic plans 
to accelerate employment opportunities. In FY 2006-2007, funds were 
provided for economic planning professionals to work with tribal 
leaders to identify tribal job creation and enterprise needs based on 
the unique circumstances of each reservation. Notably, the Ysleta Del 
Sur Pueblo used this funding to retain successful economic planners 
from the Winnebago Tribe of Nebraska and the Harvard Project on 
American Indian Economic Development to identify ways to diversify and 
resuscitate its moribund economy.
    Under its Native American Business Development Institute (NABDI) 
conceived in FY 2006, IEED has developed partnerships with the Nation's 
elite business schools to assist tribal businesses in the preparation 
of business plans, the assessment of financial opportunities, and to 
enhance their skills in drafting proposals to obtain financing and loan 
guarantees from private lenders, foundations, and government entities. 
IEED and the teaching staff of these business schools coordinate with 
tribes in identifying specific economic development projects. These 
schools assign a high-performing Masters in Business Administration 
candidate or candidates, as part of their academic curriculum, to work 
directly with a tribe to prepare a business plan.
    The NABDI helps tribes assess how to expand their role in a market 
or region, and increase their profitability. Some examples follow and 
are broken out by fiscal year:
FY 2006:
      Performed a wind energy study for the Inter-Tribal 
Council on Utility Policy in the Great Plains, and
      Developed a meat processing business plan for the Fort 
Belknap Indian Community.
FY 2007:
      Helped the Jamestown S'Klallam Tribe analyze the 
potential of a business park, a security business, and a medical supply 
business;
      Assisted the Yakama Tribe in expanding employment 
opportunities in the tribe's timber production;
      Helped the Ft. Peck and Crow Tribes review the potential 
for new jobs in upland bird hunting;
      Assisted the Ysleta del Sur Pueblo in its desire to 
create new economic development uses for a dormant tribal wellness/
recreation center; and
      Helped the Mescalero Apache Tribe review the potential 
for new employment opportunities through the installation of a glass-
covered greenhouse heated by way of woody biomass.
    We are also expanding the Buy-Indian Act efforts, including 
coordination with other federal agencies to encourage Federal 
Government-wide purchases of American Indian goods and services. This 
will increase Indian employment opportunities and revenues for Indian 
owned firms. Indian Affairs has used the Secretary's Buy-Indian Act 
authority to expand Departmental purchases of Indian goods and 
services. In FY 2007, a new performance measure was established to 
increase by 5 percent the FY 2006 total dollar value of $13.6 million 
of Indian Affairs government charge card purchases from Buy-Indian 
vendors of office supplies, followed by a 1 percent increase annually 
in subsequent Fiscal Years 2008-2011. IEED achieved the 5 percent goal 
for FY 2007 ($675,000).
    Since 1994, Indian Affairs has implemented Pub. L. 102-477 which 
allows tribes to integrate 10 Federal programs from the Department of 
Health and Human Services, Department of Labor, and Bureau of Indian 
Affairs (BIA) into one comprehensive resource for education, training, 
job placement, welfare reform, child care and related services. The 
program has been highly acclaimed by tribal leaders, the Congress and 
independent evaluations. The ``477'' program has received the highest 
PART score from the Office of Management and Budget of all American 
Indian programs in the Department. The ``477'' program is an effective 
tool for creating jobs, training and educating tribal members and 
assisting them in becoming self-sufficient, and promoting economic 
development. Tribes participating in ``477'' are more effective in 
moving people from welfare-to-work and reducing their dependence on 
public welfare due to the ability of tribes to provide comprehensive 
consolidated resources.
 Increase Business Knowledge in Tribal Communities
    To carry out its long-term goal of increasing business knowledge, 
we have pursued programs to train young Native Americans in 
entrepreneurship and tribal businessmen on how to avoid common 
competitive pitfalls, take advantage of federal procurement and Buy-
Indian Act opportunities, and expand their businesses. Our goal is to 
equip hundreds more tribal entrepreneurs and those who aspire to be 
entrepreneurs with business knowledge that will enhance their prospects 
of success.
    During this fiscal year, we have funded a one-year Entrepreneurial 
Education pilot project designed for students at five reservation high 
schools. The pilot project is a collaborative effort with the Bureau of 
Indian Education (BIE) and the National Foundation for Teaching 
Entrepreneurship (NFTE). NFTE has developed award-winning text books, 
teaching plans, and support materials along with a Certified 
Entrepreneurship Teacher Training Program.
    In FY 2006-2007, we also partnered with the top-rated Tuck School 
of Business at Dartmouth College to provide a series of intensive 
training workshops for executives of Native American businesses that 
focus on developing and improving business management skills; 
establishing and running a business; maintaining accounting records; 
assessing performance; creating high-performing enterprises; and 
expanding existing operations. In fact, members of my staff are 
assisting with one of these workshops this week in Fort Yates, North 
Dakota near the Standing Rock Sioux reservation. These training 
sessions receive uniform praise from participants. We will also augment 
the number of business training sessions conducted by distinguished 
business school academics for American Indian businesses.
    We are also working with tribes to expand business opportunities 
through the 8(a) program within the Small Business Administration 
(SBA). As part of the process, IEED is encouraging tribal leaders, 
where appropriate, to begin the process of applying for tribal 8(a) 
status, and offering to connect the tribe with 8(a) experts if the 
tribe is interested in using a consultant to aid them in this process. 
We offer guidance to tribal businesses seeking Federal, Commercial and 
Tribal opportunities, and we help facilitate Mentor/Protege 
relationships with the SBA, the Department of Defense or other 
appropriate Federal agencies during the 8(a) application process.
    We are currently working with the BIA Procurement Division and the 
Division of Policy and Planning to explore policies that will increase 
the use of Tribal 8(a) businesses. In addition, IEED is also working 
with the General Services Administration to develop a tracking system 
of contracts awarded to Tribal 8(a)s and Alaska Native Corporations.
    IEED continues to partner with SBA to present Regional Procurement 
Workshops to provide training on the 8(a) and other Small Business 
Programs which include the following highlights:
      The background of 8(a), the purpose of 8(a), how tribes 
can use 8(a) in business planning, the difference between individual 
8(a) and tribal 8(a), and information about how to apply for tribal 
8(a) status.
      One-on-one meetings with SBA staff and tribal economic 
planners during workshops for more in-depth discussions about 
individual tribe's 8(a) potential.
      Work with SBA and other appropriate Federal agencies to 
pursue sub-contracting opportunities both during the application 
process and once 8(a) status has been approved.
      Serve as liaison with the Department's Office of Small 
and Disadvantaged Business Utilization and other Federal agency small 
business programs to identify projects that will enhance tribal 
procurement opportunities including planning, policies, training, and 
development of outreach materials for procurement personnel.
 Increase Access to Capital Investment
    Part of our mission is to help tribal communities develop viable 
business enterprises and foster sustainable economic growth. Our 
Division of Capital Investment offers assistance predominantly through 
programs established under the Indian Financing Act of 1974, as 
amended. We seek parity in accessing capital and sustainable economic 
growth between Indian and non-Indian communities.
    We operate the Loan Guaranty, Insurance, and Interest Subsidy 
Program, 25 U.S.C. Sec. 1481 et seq. and 25 CFR Part 103 (``Program''). 
This Program offers private lenders Federal guarantees and insurance to 
cover the risk that a loan made to an American Indian-owned business 
will not be repaid in full or on time. By enhancing loan security in 
this manner, the Program enables lenders to make loans that they 
otherwise would not make and the opportunity to offer loan terms 
substantially better than what they would offer absent the Program 
guaranty or insurance.
    This Program leverages appropriated funds in a significant way. For 
example, in FY 2006, from the $6.25 million appropriated for the Loan 
Guaranty, Insurance and Interest Subsidy Program, the Program was able 
to guarantee about $108 million in loans to American Indian owned 
businesses and administer the program. In addition, we maintained a 
loss percentage of less than 2 percent.
    We are currently writing regulations to implement changes to the 
Indian Financing Act from Title IV of the Native American Technical 
Corrections Act of 2006 (``Act''). We are using this opportunity to 
make other changes to the Loan Guaranty, Insurance, and Interest 
Subsidy Program regulations as well, both to reflect changes under the 
Act and to improve management of the loan guarantee program.
 Development of Energy and Mineral Assets
    Absent the gaming and timber industries, the development of energy 
and mineral resources provides the best economic development 
opportunities for many tribes. In FY 2006, alone, these resources 
generated $579 million in royalty revenue paid to Indian individuals 
and tribes. We estimate that about 25 percent of Indian and tribal 
lands contain undeveloped energy and mineral resources. The 
Department's goal is to help tribes gain access to these energy and 
non-energy mineral resources while ensuring the responsible use of 
lands that are developed.
    In consultation with tribes, we provide ongoing assistance in the 
exploration and development of over 2 million acres of actively 
producing energy and mineral leases. This activity includes the 
collection of resource assessment data, feasibility studies, market 
analyses and other resource development initiatives, as well as 
overseeing leasehold agreements of oil, gas, coal and industrial 
mineral deposits located on Indian lands for the benefit of tribes and 
individual Indian owners. Through collection and analysis of 
exploration data we help tribes and individual Indian landowners with 
the assessment of their energy and mineral resources to determine the 
potential value of their lands for leasing purposes and assist in 
resource development planning. Information about land status and the 
activities that impact this status is a key component in effective 
decision-making.
    We also provide timely information, economic analysis, 
recommendations, and support to tribes during the negotiation and 
approval phases of the Mineral Development Agreements as authorized 
under the Indian Mineral Development Act of 1982. We also provide 
monetary grants through our Energy and Mineral Development Program to 
allow tribes to evaluate energy and mineral resource potential through 
the acquisition of exploratory data and geotechnical data 
interpretation. Program funds also support the development of computer-
based systems to make this information readily accessible to the Indian 
mineral owner. By providing this type of information to the Indian 
energy and mineral owner before negotiations with developers begin, we 
greatly enhance the ability of the tribe to maximize income from the 
development of their resources. As a result, requests for assistance 
from tribes to determine their energy and mineral resources development 
potential continue to increase.
    We sponsor national and regional conferences on energy and mineral 
development opportunities in Indian Country. This outreach program 
helps to stimulate industry interest in pursuing economic development 
opportunities for Alaska Natives and on Indian reservations. It 
provides a forum for tribes and Alaska Natives interested in 
considering energy and mineral proposals, publishes geotechnical data 
on mineral resources on American Indian trust lands, and discusses the 
positive effects of doing business on American Indian lands.
    The successful development of energy and non-energy mineral 
resources creates many long-term career level jobs for American Indians 
and Alaska Natives, provides sustainable, supplemental funding streams 
for tribal government operations and improves the overall quality of 
life within reservation communities.
Conclusion
    We will continue to partner with the tribes, other Federal 
agencies, and American Indian organizations to facilitate economic 
development opportunities in Indian Country. We will also seek ways to 
leverage our existing appropriations to maximize benefits to enhance 
and strengthen tribal economies and economic development opportunities. 
Thank you for holding this hearing on diversifying Native economies. I 
will be happy to answer any questions you may have.
                                 ______
                                 

   STATEMENT OF WILLIAM H. LARGENT, ASSISTANT ADMINISTRATOR, 
    OFFICE OF NATIVE AMERICAN AFFAIRS, U.S. SMALL BUSINESS 
                ADMINISTRATION, WASHINGTON, D.C.

    Mr. Largent. Chairman Rahall, Ranking Member Cole, 
Distinguished Members of the Committee, thank you for inviting 
me here today to discuss diversifying native economies and the 
Small Business Administration's efforts along these lines.
    My name is Bill Largent. I am the Assistant Administrator 
of the Small Business Administration's Office of Native 
American Affairs. The Office of Native American Affairs' goal 
is to promote and support economic activities for Native 
Americans, Alaska Natives, and Native Hawaiian business 
development. We engage in numerous activities, including tribal 
consultations and development and participating in national 
economic development conferences.
    Since the Office of Native American Affairs is not the 
program office responsible for administering the 8[a] program, 
I will limit my discussion of the program to a brief overview 
of 8[a], its history, and comment briefly on the April 2006 
Government Accountability Office report concerning Alaska 
Native Corporation's use of the 8[a] program. I will also 
address other issues and projects important to enhancing and 
diversifying Native economies that the Office of Native 
American Affairs is working on.
    Before I talk about what the office is doing with respect 
to economic development and business ownership, it might be 
helpful for the Committee to know a little about me. I was 
appointed to the position of Assistant Administrator in 
February of last year. I am a member of the Keweenaw Bay Indian 
Community, Lake Superior Band of Chippewa, Martin Clan in 
Michigan's Upper Peninsula.
    I started my first business on the reservation in 1976. It 
was not sophisticated or high tech, but a small commercial 
janitorial service that allowed me to support myself and my 
family. After I started the company, members of my Tribe and 
even family members often asked me how it was I knew how to 
start a business and what made me believe I could own and run a 
business.
    I tell you this to make a simple point. In 1976, the 
concept of owning and running businesses was unfamiliar to my 
people. Since then, Tribes have increased their focus in 
economic development and job creation. However, there is more 
to do, especially for potential small business owners, and that 
is where the SBA and the agency's Office of Native American 
Affairs comes in.
    For the moment, let me shift my attention to the 8[a] 
program. The 8[a] program was enacted during the 1960s, to 
assist eligible small, disadvantaged business concerns to 
compete in the American economy through business development. 
The Small Business Act authorizes SBA to develop business 
ownership programs for people whose ability to compete in the 
free enterprise system have been impaired due to diminished 
credit and capital opportunities.
    Alaska Native Corporations, Native Hawaiian Organizations, 
Community Development Corporations, and Tribally owned 8[a] 
firms are deemed by statute to be socially and economically 
disadvantaged. The primary difference between ANC-owned 8[a] 
firms and non-ANC-owned firms lies in the intent of their 
participation in the program. The 8[a] program's design 
anticipates that organization-owned firms, including ANCs, will 
utilize the program to provide economic development to the 
respective communities.
    I must emphasize that as the law is currently written the 
8[a] program is simultaneously providing business development 
programs to disadvantaged individuals while also providing 
regional or community economic development to organization-
owned firms, including ANCs.
    In April of 2006, the Government Accountability Office 
published a report entitled ``Increased Use of Alaskan Native 
Corporation's Special 8[a] Provisions'' called for tailored 
oversight to address some of the differences I just mentioned. 
The report notes that Federal contract dollars awarded to firms 
owned by ANCs grew from 265 million in Fiscal Year 2001 to 1.1 
billion in Fiscal Year 2004.
    The SBA takes it oversight responsibility over Federal 
procurements very seriously. Even before the release of the GAO 
report, the agency had taken a number of steps to improve the 
oversight of the 8[a] concerns owned and controlled by ANCs, 
Native Hawaiian Organizations, and Indian Tribes, and the 
agency has continued to look at ways to strengthen the program 
and increase SBA's oversight capabilities.
    While the Office of Government Contracting and Business 
Development is working with the Federal agencies, the President 
has tasked my office, the Office of Native American Affairs, to 
host tribal consultations to allow Tribes to provide insight 
into how the SBA can better manage the programs and address 
concerns.
    As I mentioned earlier in my testimony, when I started my 
first business there was a lack of awareness of business 
principles. I saw much of the same situation through my work as 
a board member of the Native American Business Alliance. When 
NABA expanded its mission to include businesses located on 
reservations, both tribally owned and individual entrepreneurs, 
I was asked to travel to Indian Country to determine the 
interested tribes and the best method for representing those 
interests. It was during this period that I came to fully 
appreciate the unenviable position of Tribal leaders for 
identifying, creating, and running the economic engines that 
create jobs and revenue streams without the basic resources 
available to virtually every other government in the United 
States.
    The key barriers to success are more than just remote 
locations, lack of capital, absence of internet or even basic 
utilities, these are substantial hurtles, but the unawareness 
of how business is conducted, the speed, competitiveness, 
demand and measures of quality are little understood or even 
discussed.
    The unique nature of Native governance and culture makes 
business creation in Indian Country especially challenging. 
Because of this, I have come to the realization that what 
Indian Country needs is a tool that will prove a comprehensive 
checklist, an assessment of inventory of assets, so the 
decisionmakers can pursue businesses that are consistent with 
their unique governance, culture, vision, internal capabilities 
and the resources available to them.
    To assist business development in Indian Country, it 
envisioned a web-based system that will be available to anyone 
with internet access though we also anticipate that hard copy 
will be utilized in some areas. The tool is being developed by 
the Office of Native American Affairs with the help of over 25 
well-respected volunteer private sector attorneys, economists, 
Tribal leaders, small and large business people of Native 
descent who are well versed in Indian issues.
    It is important to note that the tool will not be a magic 
box. It will not solve problems, nor will it recommend specific 
solutions. It will only reflect the value, culture, and 
strengths and weakness of the communities that utilize it.
    While the Office of Native American Affairs has other 
responsibilities, the Tribal self-assessment tool is our 
priority. The goal is to provide decisionmaking tools that will 
enable tribes to create a positive business environment where 
they can compete effectively in the private sector.
    After a business environment that fits the Tribe's culture 
has been developed, other SBA programs, such as our loan 
programs and technical assistance, will be of greater value.
    Again, thank you for inviting me to testify on this 
important subject. I will be happy to address questions you 
might have about how the Office of Native American Affairs 
works.
    [The prepared statement of Mr. Largent follows:]

          Statement of Bill Largent, Assistant Administrator, 
    Office of Native American Affairs, Small Business Administration

    Chairman Rahall, Ranking Member Young, distinguished members of the 
Committee, thank you for inviting me here today to discuss 
``Diversifying Native Economies'' and the Small Business 
Administration's efforts along these lines.
    My name is Bill Largent and I am the Assistant Administrator of the 
Small Business Administration (SBA) Office of Native American Affairs. 
The Office of Native American Affairs' goal is to promote and support 
economic activities for Native Americans, Native Alaskans, and Native 
Hawaiian entrepreneurs. We engage in numerous activities including 
tribal consultations, developing tools to support economic development 
and participating in national economic development conferences. Other 
offices within SBA oversee loan programs, individual entrepreneurial 
training opportunities and business development and government 
contracting programs.
    Since the Office of Native American Affairs (ONAA) is not the 
program office responsible for administering the 8(a), I will limit my 
discussion of the program to a brief overview of 8(a) and comment 
briefly on the April 2006 GAO report concerning Alaska Native 
Corporations' use of the 8(a) program. I will also address other issues 
and projects important to enhancing and diversifying native economies 
that ONAA is working on.
    Before I talk about what ONAA is doing with respect to economic 
development and business ownership it might be helpful for the 
Committee to know a little about my own experiences. I was appointed to 
the position of Assistant Administrator of the Office of Native 
American Affairs in February of last year. I am a member of the 
Keweenaw Bay Indian Community, Lake Superior Band of Chippewa, Marten 
clan in Michigan's Upper Peninsula. I started my first business on the 
Reservation in 1976. My business was not sophisticated or high tech, 
but a small commercial janitorial service that allowed me to support 
myself and my family.
    When we started it was just me and my partner but it grew to 15 
employees doing commercial janitorial, carpet cleaning, and fire 
restoration along with equipment and supply sales. I sold it in 1986 
and moved to Detroit where I continued my entrepreneurial endeavors in 
various fields of business.
    After I started my first company, members of my Tribe and even 
family members often asked me how I knew how to start a business and 
what made me believe I could own and run a business. I tell you this to 
make a simple point. In 1976 the concept of owning and running 
businesses was unfamiliar to my people, and Keweenaw Bay is not, and 
was not then, entirely isolated. Since then the Tribes are much more 
aware of the value of sustainable economic development. However, there 
is more to do, especially for potential small business owners, and that 
is where the SBA and the Agency's Office of Native American Affairs 
come in.
The 8(a) Business Development Program
    Since the Committee has specifically expressed an interest in the 
SBA's 8(a) Business Development Program or the 8(a) program, as it is 
commonly known, I will begin with a quick overview of that program. The 
8(a) program was enacted during the 1960s to assist eligible small 
disadvantaged business concerns to compete in the American economy 
through business development. The Small Business Act authorizes SBA to 
develop business ownership programs for people whose ability to compete 
in the free enterprise system has been impaired due to diminished 
credit and capital opportunities. Individual applicants must 
demonstrate social and economic disadvantage. Although some groups are 
presumed to be socially disadvantaged, they, as well as all other 
applicants, must also demonstrate economic disadvantage. Alaskan Native 
Corporations (ANCs), Native Hawaiian Organizations (NHOs), Community 
Development Corporations (CDCs) and Tribally-owned 8(a) firms are 
deemed by statute to be socially and economically disadvantaged. In 
addition, all U.S. citizens who can demonstrate social and economic 
disadvantage as well as compliance with the other eligibility 
requirements are welcome to apply for participation in the 8(a) 
program. Besides the management and technical assistance provided under 
the program, firms that are certified for 8(a) program participation 
may be eligible to receive contracts that Federal Agencies offer to SBA 
for the 8(a) program through either sole source or restricted 
competition.
    In 1986, Congress enacted legislation that allowed ANCs, NHOs, CDCs 
and Tribally-owned firms to participate in the 8(a) program. Congress 
intended this legislation to foster economic development to these 
respective communities.
    Under the Alaska Native Claims Settlement Act, Congress extended 
certain procurement advantages to 8(a) ANC firms, such as the ability 
to win sole-source contracts for any dollar amount. In comparison, non 
ANC-owned 8(a) firms can receive sole-source contracts for up to $5 
million for manufacturing or $3 million for all other contracts; 
contracts above those amounts must be competed.
    Additionally, for non-ANC 8(a) firms, procurements must be competed 
whenever possible before being accepted on a sole-source basis while 
for ANC-owned 8(a) firms, procurements need not be competed before 
being accepted on a sole-source basis. Another way ANC-owned firms 
differ from non-ANC 8(a) firms: there is no limit on the number of 
firms an ANC 8(a) participant may own as long as each business is in a 
different primary industry. Moreover, the president or CEO of a non-ANC 
8(a) must be a disadvantaged individual, whereas the management of an 
ANC-owned 8(a) firm need not be a disadvantaged individual.
    The primary difference between ANC-owned 8(a) firms and non ANC-
owned firms lies in the intent of their participation in the 8(a) 
program. The 8(a) program design anticipates that organization owned 
firms, including ANCs, will utilize the program to provide economic 
development to their respective communities. All other 8(a) participant 
firms utilize the program to receive individual business development, 
as was the initial intent of Congress. Again, I must emphasize that as 
the law is currently written, the 8(a) program is simultaneously 
providing a business development program to disadvantaged individuals 
while also providing regional or community economic development to 
organization owned firms including ANCs.
    In April 2006 GAO published a report entitled ``Increased Use of 
Alaska Native Corporations' Special 8(a) Provisions Call for Tailored 
Oversight'' to addresses some of the differences I just mentioned. The 
report notes that Federal contract dollars awarded to firms owned by 
ANCs grew from $265 million in Fiscal Year 2001 to $1.1 billion in 
Fiscal Year 2004. While there is no indication within this report of 
wrongdoing by any participants in this program, the report did find 
that ANCs are increasingly utilizing the special advantages Congress 
has provided them. The report also found that contracting officers 
often need guidance on how to effectively use the program to ensure 
taxpayer dollars are spent wisely, and SBA could make improvements to 
its oversight of the program.
    Also, significant increases in Federal contract dollars went to 
other groups during the same period of time. From Fiscal Year 2001 to 
Fiscal Year 2004, contract awards to women-owned small business grew 
from $5.5 billion to $9.1 billion, service-disabled veteran-small 
businesses grew from $554 million to $1.2 billion, HUBZone firms grew 
from $1.6 billion to $4.8 billion, and overall small business grew from 
$50.1 billion to $69.2 billion. The Federal Government achieved its 
goal during Fiscal Year 2003 and Fiscal Year 2004 that 23 percent of 
its prime contracting dollars were awarded to businesses that qualified 
as small businesses, including ANCs. Although there is a small 
disadvantaged business contracting goal which includes the 8(a) 
program; there is no separate goal for 8(a). However, in Fiscal Year 
2004, 8(a) firms were awarded $8.4 billion of the SDB achievement of 
$18.5 billion.
    SBA takes its oversight responsibility over Federal procurement 
programs very seriously. Even before the release of the GAO Report, the 
Agency had taken a number of steps to improve the oversight of the 8(a) 
concerns owned and controlled by ANCs, NHOs, and Indian Tribes and the 
Agency has continued to look at ways to strengthen the program and 
increase SBA's oversight capabilities. For instance, the Agency is 
exploring possible additions to the Business Development Management 
Information System (BD-MIS) being built to electronically manage all 
aspects of the 8(a) operations. SBA's efforts also include addressing 
the staffing levels in the Alaska district office.
    Additionally, SBA's Office of Government Contracting and Business 
Development has been holding meetings with all Agencies to discuss our 
concerns with Partnership Agreements, which delegate 8(a) contracting 
authority from SBA to various Federal procuring agencies, to clarify 
their roles and responsibilities for monitoring contract compliance of 
and performance by 8(a) firms. SBA has also increased training to field 
staff responsible for working on 8(a) issues and created a roundtable 
with the seven largest contracting Agencies to specifically discuss ANC 
and 8(a) issues.
Office of Native American Affairs and Native American Economic 
        Development
    While the Office of Government Contracting and Business Development 
is working with Federal Agencies, the President has tasked SBA-ONAA 
(through Executive Order 13175) to host tribal consultations to allow 
tribes to provide insight into how SBA can better manage the program 
and address concerns.
    As I mentioned earlier in my testimony, when I started my first 
business there was a lack of awareness of business principles. I saw 
much of the same situation through my work as a Board Member of the 
Native American Business Alliance (NABA). When NABA expanded its 
mission to include businesses located on reservations, both tribally 
owned and individual entrepreneurs, I was asked to travel to Indian 
Country to determine the interest of tribes and the best method for 
representing their interest. It was during this period that I had come 
to fully appreciate the unenviable position of Tribal Leaders for 
identifying, creating and running the economic engines that would 
create jobs and revenue streams, without the basic resources available 
to virtually every other government in the United States.
    Traveling around Indian Country, I came to understand that much if 
not most of Indian Country was not ready to be in business. The key 
barriers to success are more than just remote locations, lack of 
capital, absence of Internet, or even basic utilities, but an 
unawareness of how business is conducted. The speed, competitiveness, 
demand and measures of quality are little understood or even discussed.
    The unique nature of the Native governance and culture make 
business creation in Indian Country especially challenging. Because of 
this I came to the realization that what Indian Country needs is a tool 
that will provide a comprehensive checklist, assessment and inventory 
of assets so that decision makers can pursue businesses that are 
consistent with their unique governance, culture, vision, internal 
capabilities and resources available to them.
    To assist business development in Indian Country I envision a web-
based system that will be available to anyone with internet access, 
though we anticipate that hard copies will be utilized in some areas. 
This tool is being developed by ONAA with the help of over 25 well 
respected volunteer private sector attorneys, economists, Tribal 
leaders and small and large businesspersons of Native descent who are 
well versed in Indian issues.
    Topics in the tool range from the highly technical to the 
practical, including issues such as:
      Constitutional reform,
      Development of judicial codes,
      The role of government in business,
      Inventorying assets and resources such as hard assets, 
natural resources, workforce education and skill,
      Assessing relationships with states, local governments, 
non-tribal members, tribal members living off the reservation,
      Assessing how business practices like hiring, 
bereavement, compensation and decision making work within the Tribal 
way of life,
      How does expanding a business economy impact traditional 
culture,
      Assessing organizational, physical and technical 
infrastructure.
    It is important to note that the tool will not be a magic box, nor 
will it recommend specific solutions. It will only reflect the value, 
culture, strengths and weaknesses of the communities that utilize it. 
Whether it is gaming or other tourism and entertainment endeavors, 
manufacturing, technology, natural resources, energy or alternative 
energy, retail or building entrepreneurial environments, the decision 
is theirs.
    While ONAA has other responsibilities and numerous other 
initiatives, projects and ad hoc tasks the Tribal self assessment tool 
is our priority. The goal is to provide decision making tools that will 
enable Tribes to create a positive business environment where they can 
compete effectively in the private sector. After basic assessments have 
been made and a business environment that fits the Tribe's culture has 
been developed, issues such as the SBA loan guarantee programs and 
entrepreneurial technical assistance will be of greater value. This is 
why ONAA believes that focusing on providing the basics through the 
self assessment tool is the first, and most important, course of action 
in developing, enhancing and diversifying Native economies.
    Again, thank you for inviting me to testify on this important 
subject. I will be happy to address questions you might have about 
ONAA's work.
                                 ______
                                 
    The Chairman. Thank you. Ms. Schinasi. I hope I pronounced 
it correctly.
    Ms. Schinasi. Pardon me?
    The Chairman. I hope I pronounced your name correctly.
    Ms. Schinasi. That was perfect. Thank you. And unusual.
    [Laughter.]

    STATEMENT OF KATHERINE V. SCHINASI, MANAGING DIRECTOR, 
     ACQUISITION AND SOURCING MANAGEMENT, U.S. GOVERNMENT 
            ACCOUNTABILITY OFFICE, WASHINGTON, D.C.

    Ms. Schinasi. Thank you for inviting me today to testify on 
our prior work on Alaska Native participation in the Small 
Business Administration's 8[a] business development program.
    With your permission, I would like to put my full statement 
in the record and summarize it right now.
    The Chairman. Without objection.
    Ms. Schinasi. As you know, the 8[a] program is one of the 
Federal government's primary mechanisms for developing small 
businesses owned by socially and economically disadvantaged 
individuals, and Congress has extended additional procurement 
advantages to ANC firms participating in the 8[a] program, the 
most significant of these is the ability to receive sole source 
contracts for any amount, and the ability of the Alaska Native 
Corporations to create numerous subsidiaries to receive 
government contracts.
    My statement today focuses on the findings and 
recommendations we made in an April 2006 report. Because of the 
scope of our work, we offer observations neither in support of 
nor challenge to the program itself. Rather, we evaluated the 
trends in 8[a] ANC contracting, how ANCs are using the 8[a] 
program, and the facts and circumstances behind the award of a 
sample of large sole source contracts.
    We made a number of recommendations and my statement today 
also includes information on actions that SBA and the procuring 
agencies are taking or plan to take to address our 
recommendations for improved oversight.
    It is important to point out that management of this 
program is a shared responsibility among government agencies as 
SBA has delegated the contract execution function to Federal 
procuring agencies through its partnership agreements. SBA, 
however, remains primarily responsible for implementing the 
8[a] program.
    Let me start with some trends. By one measure, Mr. 
Chairman, as you said, 8[a] ANC contracting continues to 
represent a very small amount of total Federal procurement 
spending. However, as Mr. Largent pointed out, the contracts 
awarded to the 8[a] ANCs increased four-fold over the five-year 
period that was in the scope of our review--That is 2000 to 
2004--growing from $265 million to $1.1 billion.
    Dollars obligated under sole source contracts to the 8[a] 
ANC firms during that period from the six agencies in our 
sample also increased from about $180 million in 2000 to about 
$876 million in 2004, which represented about 77 percent of the 
8[a] contracts awarded to ANCs over that period by the agencies 
in our sample.
    Another trend that we noted was the increasing complexity 
of the corporations' business arrangements, including use of 
subsidiaries. In 1998, one ANC owned one subsidiary. By 2005, 
49 ANCs owned 154 subsidiaries.
    We found that the Alaska Native Corporations were using the 
8[a] program in a variety of ways. Our GAO team traveled to 
Alaska and met with representatives of 30 village and regional 
corporations of various sizes who were engaged in a wide 
variety of business activities, and used various business 
models, including some that did not participate in the 8[a] 
program at all.
    We found for the ANCs that do participate in the 8[a] 
program some are heavily reliant on the program to generate 
revenues for the benefit of their shareholders, while others 
approach it as one of many revenue-generating opportunities 
that also include investments in stocks or real estate.
    We also looked at the facts and circumstances behind the 
award of 16 large sole source contracts awarded to 8[a] ANC 
firms by seven Federal agencies. These covered a wide range of 
services, such as facility support services in the U.S. and 
overseas, training and equipping security guards in Iraq, 
detention facility operation support, and information 
technology services. The contracts that we reviewed ranged in 
value from $11 million to almost $600 million.
    As you know, Alaska Native Corporations in the 8[a] may be 
awarded sole source contracts without regard to dollar 
thresholds, which contrasts with the thresholds that have been 
established for sole source awards to other 8[a] firms, and the 
preference for competition in structuring most other government 
contract awards.
    Our review found that agency officials view contracting 
with 8[a] ANC firms as a quick, easy and legal way to award 
contracts while at the same time helping their agencies meet 
the small business goals. In several cases agency official 
stated that they turn to 8[a] ANC firms because they do not 
have the time nor the people needed to structure competitive 
awards.
    Let me say now a few words about the oversight of the 
program. When we looked, we found shortcomings in both the 
procuring agencies and in SBA regarding their management of the 
program. Some of these shortfalls stem from the very nature of 
the complex business arrangements that the ANC 8[a] firms are 
involved in.
    For example, SBA was not tracking subsidiary participation 
in secondary industry codes to ensure that only one subsidiary 
of an ANC generate most of its revenue as is required. In other 
cases, agency contracting officers believed that SBA had 
responsibility for actions that SBA relied on the agencies to 
undertake. This was true, for example, in monitoring compliance 
with the Federal Acquisition Regulation limitation on 
subcontracting clause which requires 50 percent of personnel 
costs to be maintained by the prime contractor.
    With respect to SBA itself, we found that the agency had 
not tailored its policies and practices to account for the ANCs 
unique status and rapid growth in the 8[a] program. SBA 
officials told us they face a challenge in this regard. They 
noted that the goal of ANCs, which is economic development for 
Alaska Natives from a community standpoint, is not always 
consistent with the primary purpose of the larger 8[a] program, 
which is business development for individual small 
disadvantaged businesses.
    We made a number of recommendations to SBA on actions that 
can be taken to revise regulation and policy as well as to 
improve their oversight practices. At the time of our review, 
SBA officials stated that they were planning to revise their 
regulations and policies to address the ANCs unique status in 
the 8[a] program. They have not yet done so.
    However, the agency has taken actions to implement one of 
the recommendations, which is to revise its partnership 
agreements with the procuring agencies to emphasize that it is 
the procuring agency's responsibility to monitor compliance 
with such things as the limitations on subcontracting. SBA has 
also instituted training for its own personnel and for those in 
the procuring agencies.
    Also during the time of our review, SBA indicated that a 
new automated data collection tool would help them more readily 
collect information on 8[a] firms, and thereby help their 
monitoring efforts. The system was expected to be operational 
during this fiscal year. Although that could be helpful to SBA, 
I would also note that GAO's work has shown that upgrading the 
technology and management information systems is useful only 
when the underlying management policies and practices work 
well.
    We also recommended that the procuring agencies in our 
review work with SBA to develop guidance for contracting 
officers on how to comply with requirements of the 8[a] 
program, in particular, when contracting with ANC firms. Most 
of the agencies have begun to address this recommendation.
    We will continue to follow up on agency actions to 
implement our recommendations. Until strong oversight is in 
place, there is a potential for abuse and unintended 
consequences.
    Mr. Chairman, that concludes my summary, and I would be 
happy to answer any questions you or the members have.
    [The prepared statement of Ms. Schinasi follows:]

Statement of Katherine V. Schinasi, Managing Director, Acquisition and 
  Sourcing Management, United States Government Accountability Office

    Mr. Chairman and Members of the Committee:
    I am pleased to be here today to discuss our April 2006 report on 
Alaska Native Corporation (ANC) 8(a) firms. 1 In December 
1971, Congress enacted the Alaska Native Claims Settlement Act to 
resolve long-standing aboriginal land claims and to foster economic 
development for Alaska Natives. This legislation created ANCs, which 
would become the vehicle for distributing land and monetary benefits to 
Alaska Natives in lieu of a reservation system. As of December 2005, 
there were 13 regional ANCs and 182 village, urban, and group 
corporations.
---------------------------------------------------------------------------
    \1\ GAO, Contract Management: Increased Use of Alaska Native 
Corporations' Special 8(a) Provisions Calls for Tailored Oversight, 
GAO-06-399, (Washington, D.C.: Apr. 27, 2006).
---------------------------------------------------------------------------
    In 1986, legislation was enacted that allowed ANC-owned firms to 
participate in the Small Business Administration's (SBA) 8(a) program--
one of the federal government's primary means for developing small 
businesses owned by socially and economically disadvantaged 
individuals. Since then, Congress has extended special procurement 
advantages to ANC firms. For example, ANC firms are permitted to 
receive noncompetitive contracts for any amount, whereas other 8(a) 
companies are subject to competitive thresholds of $5 million for 
manufacturing contracts or $3 million for all other contracts. ANCs can 
also own multiple subsidiaries participating in the 8(a) program, 
2 unlike other 8(a) firms that may own only one in a 
lifetime and no more than 20 percent of another 8(a) firm.
---------------------------------------------------------------------------
    \2\ Each 8(a) ANC firm must be in a different primary industry.
---------------------------------------------------------------------------
    Our 2006 report on 8(a) ANC contracting identified (1) trends in 
contracting with ANC firms, (2) the reasons agencies have awarded 8(a) 
sole-source contracts to ANC firms and the facts and circumstances 
behind some of these contracts, and (3) how ANCs are using the 8(a) 
program. We also evaluated SBA's oversight of 8(a) ANC firms. We made a 
number of recommendations to SBA and also recommended that the agencies 
in our review work with SBA to develop training for their contracting 
personnel.
    Today I will discuss the highlights of our report and provide an 
update on actions SBA and the other agencies have taken to address our 
recommendations.
    To address the objectives of our 2006 report, we obtained data on 
federal 8(a) contracting with ANCs. It is important to note that there 
is no readily available central source of information on ANC 8(a) 
contracting activity. We obtained each ANC firm's Data Universal 
Numbering System (DUNS) number and used this information to obtain data 
from the Federal Procurement Data System (FPDS) and agencies. To assess 
the reliability of the procurement data, we (1) compared FPDS and 
agency data to verify its accuracy, (2) reviewed related documentation, 
including contract files, and (3) worked closely with agency officials 
to identify and resolve any data problems. When we found discrepancies, 
we brought them to the agency's attention and worked with them to 
correct the discrepancies before conducting our analyses. We also 
analyzed 16 large, sole-source 8(a) contracts awarded to ANC firms from 
the departments of Defense, Energy, the Interior, State, 
Transportation, and Homeland Security and the National Aeronautics and 
Space Administration (NASA). We selected the contracts based on high 
ultimate award values and high dollar obligations that represented a 
variety of contractors and services. We traveled to Alaska and met with 
executives of 13 regional ANCs and 17 village or urban corporations. 
The report on which this testimony is based was prepared in accordance 
with generally accepted government auditing standards.
    Our work did not include within its scope an objective or analyses 
that either support or challenge special ANC advantages within the 8(a) 
program. The program has been established in law and any changes are up 
to the Congress.
ANC Trends in and Use of 8(a) Contracting
    8(a) ANC contracting represents a small amount of total federal 
procurement spending. However, dollars obligated to ANC firms through 
the 8(a) program grew from $265 million in Fiscal Year 2000 to $1.1 
billion in 2004. Overall, during the 5-year period, the government 
obligated $4.6 billion to ANC firms, of which $2.9 billion, or 63 
percent, went through the 8(a) program.
    During this period, six federal agencies--the departments of 
Defense, Energy, the Interior, State, and Transportation and NASA--
accounted for almost 85 percent of total 8(a) ANC obligations. 
Obligations for 8(a) sole- source contracts by these agencies to ANC 
firms increased from about $180 million in Fiscal Year 2000 to about 
$876 million in Fiscal Year 2004.
    ANCs use the 8(a) program as one of many tools to generate revenue 
with the goal of benefiting their shareholders. Some ANCs are heavily 
reliant on the 8(a) program for revenues, while others approach the 
program as one of many revenue-generating opportunities, such as 
investments in stocks or real estate. ANCs are using the 
congressionally authorized advantages afforded to them, such as 
ownership of multiple 8(a) subsidiaries, 3 sometimes in 
diversified lines of business. From Fiscal Year 1988 to 2005, numbers 
increased from one 8(a) subsidiary owned by one ANC to 154 subsidiaries 
owned by 49 ANCs. Figure 1 shows the recent growth in ANCs' 8(a) 
subsidiaries.
---------------------------------------------------------------------------
    \3\ In this testimony, ``ANC'' refers to the parent corporation. 
The term ``ANC firm'' denotes a business owned by an ANC. We use the 
term ``ANC firm'' and ``subsidiary'' interchangeably.
[GRAPHIC] [TIFF OMITTED] T7848.001

    ANCs use their ability to own multiple businesses in the 8(a) 
program, as allowed by law, in different ways. For example, some ANCs
      create a second subsidiary in anticipation of winning 
follow-on work from one of their graduating subsidiaries; 4
---------------------------------------------------------------------------
    \4\ There is a 9-year limit to participation in the 8(a) program; 
firms could graduate earlier if they outgrow their primary industry 
size standards.
---------------------------------------------------------------------------
      wholly own their 8(a) subsidiaries, while others invest 
in partially-owned subsidiaries; and
      diversify their subsidiaries' capabilities to increase 
opportunities to win government contracts in various industries.
Contract Execution Shortfalls
    Our review of 16 large sole-source contracts awarded by 7 agencies 
found that agency officials view contracting with 8(a) ANC firms as a 
quick, easy, and legal way to award contracts while at the same time 
helping their agencies meet small business goals. 5
---------------------------------------------------------------------------
    \5\ ANC firms in the 8(a) program are deemed by law as socially and 
economically disadvantaged. Awards to these firms are credited to 
agencies' small business goals.
---------------------------------------------------------------------------
    Memoranda of Understanding (partnership agreements) between SBA and 
agencies delegate the contract execution function to federal agencies, 
although SBA remains responsible for implementing the 8(a) program. We 
found that contracting officials had not always complied with 
requirements to notify SBA when modifying contracts, such as increasing 
the scope of work or the dollar value, and to monitor the percentage of 
the work performed by the 8(a) firms versus their subcontractors. For 
example:
      Federal regulation requires that when 8(a) firms 
subcontract under an 8(a) service contract, they incur at least 50 
percent of the personnel costs with their own employees. 6 
The purpose of this provision, which limits the amount of work that can 
be performed by the subcontractor, is to ensure that small businesses 
do not pass along the benefits of their contracts to their 
subcontractors. For the 16 files we reviewed, we found almost no 
evidence that the agencies are effectively monitoring compliance with 
this requirement. In general, the contracting officers we spoke with 
were confused about whose responsibility it is.
---------------------------------------------------------------------------
    \6\ For general construction, the 8(a) firm is required to incur at 
least 15 percent of the personnel costs.
---------------------------------------------------------------------------
      Agencies are also required to notify SBA of all 8(a) 
contract awards, modifications, and exercised options where the 
contract execution function has been delegated to the agencies in the 
partnership agreements. We found that not all contracting officers were 
doing so. In one case, the Department of Energy contracting officer had 
broadened the scope of a contract a year after award, adding 10 
additional lines of business that almost tripled the value of the 
contract. These changes were not coordinated with SBA.
SBA Lacks Oversight of 8(a) ANC Activity
    We reported in 2006 that SBA had not tailored its policies and 
practices to account for ANCs' unique status and growth in the 8(a) 
program, even though officials recognize that ANC firms enter into more 
complex business relationships than other 8(a) participants. SBA 
officials told us that they have faced a challenge in overseeing the 
activity of the 8(a) ANC firms because ANCs' charter under the Alaska 
Native Claims Settlement Act is not always consistent with the business 
development intent of the 8(a) program. The officials noted that the 
goal of ANCs--economic development for Alaska Natives from a community 
standpoint--can be in conflict with the primary purpose of the 8(a) 
program, which is business development for individual small, 
disadvantaged businesses.
    SBA's oversight fell short in that it did not:
      track the primary business industries in which ANC 
subsidiaries had 8(a) contracts to ensure that more than one subsidiary 
of the same ANC was not generating the majority of its revenue under 
the same primary industry code;
      consistently determine whether other small businesses 
were losing contracting opportunities when large sole-source contracts 
were awarded to 8(a) ANC firms;
      adhere to a statutory and regulatory requirement to 
ascertain whether 8(a) ANC firms, when entering the 8(a) program or for 
each contract award, had, or were likely to obtain, a substantial 
unfair competitive advantage within an industry; 7 ensure 
that partnerships between 8(a) ANC firms and large firms were 
functioning in the way they were intended under the 8(a) program; and
---------------------------------------------------------------------------
    \7\ This requirement is set forth in the Small Business Act (15 
U.S.C. Sec. 636(j)(10)(J)(ii)(II)).
---------------------------------------------------------------------------
      maintain information on ANC 8(a) activity.
    SBA officials from the Alaska district office had reported to 
headquarters that the makeup of their 8(a) portfolio was challenging 
and required more contracting knowledge and business savvy than usual 
because the majority of the firms they oversee are owned by ANCs and 
tribal entities. The officials commented that these firms tend to 
pursue complex business relationships and tend to be awarded large and 
often complex contracts. We found that the district office officials 
were having difficulty managing their large volume and the unique type 
of work in their 8(a) portfolio. When we began our review, SBA 
headquarters officials responsible for overseeing the 8(a) program did 
not seem aware of the growth in the ANC 8(a) portfolio and had not 
taken steps to address the increased volume of work in their Alaska 
office.
Previous Conclusions, Recommendations, and Agency Responses
    In 2006, we reported that ANCs were increasingly using the 
contracting advantages Congress has provided them. Our work showed that 
procuring agencies' contracting officers are in need of guidance on how 
to use these contracts while exercising diligence to ensure that 
taxpayer dollars are spent effectively. Equally important, we stated, 
significant improvements were needed in SBA's oversight of the program. 
Without stronger oversight, we noted the potential for abuse and 
unintended consequences.
    In our April 2006 report, we made 10 recommendations to SBA on 
actions that can be taken to revise its regulations and policies and to 
improve practices pertaining to its oversight of ANC 8(a) procurements. 
Our recommendations and SBA's June 2007 response are as follows.
    We recommended that the Administrator of SBA:
     1.  Ascertain and then clearly articulate in regulation how SBA 
will comply with existing law to determine whether and when one or more 
ANC firms are obtaining, or are likely to obtain, a substantial unfair 
competitive advantage in an industry.
            SBA response: SBA is exploring possible regulatory changes 
        that would address the issue of better controlling the award of 
        sole-source 8(a) contracts over the competitive threshold 
        dollar limitation to joint ventures between tribally and ANC-
        owned 8(a) firms and other business concerns.
     2.  In regulation, specifically address SBA's role in monitoring 
ownership of ANC holding companies that manage 8(a) operations to 
ensure that the companies are wholly owned by the ANC and that any 
changes in ownership are reported to SBA.
            SBA response: SBA is building a Business Development 
        Management Information System to electronically manage all 
        aspects of the 8(a) program. According to SBA, this system, 
        scheduled to be completed in Fiscal Year 2008, will monitor 
        program participants' continuing eligibility in the 8(a) 
        program and could include an ANC element in the electronic 
        annual review that would monitor the ownership of ANC holding 
        companies that manage 8(a) operations and ensure that any 
        changes in ownership are reported to SBA.
     3.  Collect information on ANCs' 8(a) participation as part of 
required overall 8(a) monitoring, to include tracking the primary 
revenue generators for 8(a) ANC firms to ensure that multiple 
subsidiaries under one ANC are not generating their revenue in the same 
primary industry.
            SBA response: The planned electronic annual review can 
        collect information on ANCs' multiple subsidiaries to ensure 
        that they are not generating the majority of their revenues 
        from the same primary industry. Further, to ensure that an ANC-
        owned firm does not enter the 8(a) program with the same North 
        American Industry Classification System (NAICS) code 
        8 as another current or former 8(a) firm owned by 
        that ANC, the ANC-owned applicant must certify that it operates 
        in a distinct primary industry and must demonstrate that fact 
        through revenues generated. SBA notes that the planned annual 
        electronic reviews can validate this information.
---------------------------------------------------------------------------
    \8\ SBA has designated a small business size standard for every 
NAICS code. 8(a) applicants must qualify as small under their primary 
NAICS code at the time of application and SBA's certification date. SBA 
regulation requires that at least 2 years lapse after an ANC firm exits 
the 8(a) program before another firm owned by the same parent ANC can 
enter the program with the prior firm's primary NAICS code. However, 
once accepted into the program, 8(a) firms may pursue contracts in any 
line of work, called secondary NAICS codes.
---------------------------------------------------------------------------
     4.  Revisit regulation that requires agencies to notify SBA of all 
contract modifications and consider establishing thresholds for 
notification, such as when new NAICS codes are added to the contract or 
there is a certain percentage increase in the dollar value of the 
contract. Once notification criteria are determined, provide guidance 
to the agencies on when to notify SBA of contract modifications and 
scope changes.
            SBA response: SBA stated that its revisions to its 
        partnership agreements with federal agencies address this 
        recommendation. However, we note that the revised agreement 
        does not establish thresholds or include new criteria for when 
        agencies should send SBA contract modifications or award 
        documentation. The agreement states that agencies ``shall 
        provide a copy of any contract...including basic contracts, 
        orders, modifications, and purchase orders'' to SBA.
     5.  Consistently determine whether other small businesses are 
losing contracting opportunities when awarding contracts through the 
8(a) program to ANC firms.
            SBA response: SBA stated that it plans to require the 
        contracting agencies to include impact statements in their 
        contract offer letters to SBA.
     6.  Standardize approval letters for each 8(a) procurement to 
clearly assign accountability for monitoring of subcontracting and for 
notifying SBA of contract modifications.
            SBA response: SBA agreed with the recommendation but did 
        not indicate an action taken or planned.
     7.  Tailor wording in approval letters to explain the basis for 
adverse impact determinations.
            SBA response: SBA agreed with the recommendation but did 
        not indicate an action taken or planned.
     8.  Clarify memorandums of understanding (known as partnership 
agreements) with procuring agencies to state that it is the agency 
contracting officer's responsibility to monitor compliance with the 
limitation on subcontracting clause.
            SBA response: SBA has implemented this recommendation by 
        revising the partnership agreements with the procuring 
        agencies. It added several provisions that delineate the 
        agencies' responsibilities for oversight, monitoring, and 
        compliance with procurement laws and regulations governing 8(a) 
        contracts, including the limitation on subcontracting clause.
     9.  Evaluate staffing levels and training needed to effectively 
oversee ANC participation in the 8(a) program and take steps to 
allocate appropriate resources to the Alaska district office.
            SBA response: SBA stated that the planned Business 
        Development Management Information System should help the 
        Alaska district office more effectively oversee ANC 
        participation in the 8(a) program. It stated that it is 
        providing training to the Alaska district office. However, no 
        plans were in place to evaluate staffing levels at the office.
    10.  Provide more training to agencies on the 8(a) program, 
specifically including a component on ANC 8(a) participation.
            SBA response: SBA has provided training to agencies on the 
        revised 8(a) partnership agreements; however, our review of the 
        slides SBA used for the training found no reference to ANC 8(a) 
        firms specifically. According to an SBA official, SBA will 
        include a component on ANC 8(a) participants in future training 
        sessions.
    We also recommended that procuring agencies provide guidance to 
contracting officers to ensure proper oversight of ANC contracts. The 
procuring agencies generally agreed with the recommendation. Some 
agencies are waiting for SBA to implement our recommendations before 
they take their own actions, but others have taken steps to tighten 
their oversight of contracts with 8(a) ANC firms. The Department of 
Homeland Security, for example, recently issued an ``acquisition 
alert'' requiring that its heads of contracting activities provide 
guidance and training on the use of 8(a) firms owned by ANCs. The alert 
provides that use of the authority to award sole-source 8(a) contracts 
to ANCs must be judicious with appropriate safeguards to ensure that 
the cost/price is fair and reasonable, that the ANC has the technical 
ability to perform the work, that the ANC will be performing the 
required percentage of the work and that the award is in the best 
interests of the government. The Department of Energy revised its 
acquisition guidance regarding small business programs to remind 
contracting officers to use care in awarding and administering ANC 
contracts, to include notifying SBA of contract modifications and 
monitoring the limits on subcontracting. The Department also provided 
training on the 8(a) program, to include contracting with ANC firms. By 
providing contracting officers with appropriate training on these 
issues, the government is taking steps to ensure that the ANC firms are 
operating in the program as intended, thereby mitigating the risk of 
unintended consequences or abuse of some of the privileges provided to 
these firms.
    This concludes my testimony. I would be happy to answer any 
questions you may have.
Contacts and Staff Acknowledgements
    For further information regarding this testimony, please contact 
Katherine V. Schinasi at (202) 512-4841 or [email protected]. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this statement. Key contributors were 
Michele Mackin, Sylvia Schatz, and Tatiana Winger.
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                                 ______
                                 
                                 [GRAPHIC] [TIFF OMITTED] T7848.002
                                 
    The Chairman. Thank you. The Chair would like to thank 
each of you for your time and testimony today as well as for 
your public service and your commitment to Indian Country, and 
your help to our Native Americans. We all deeply appreciate 
that service.
    Let me start with Dr. Middleton first. Your testimony 
indicated that your office is encouraging other Federal 
agencies to increases purchases of American Indian goods and 
services. My question is does this include encouraging the use 
of tribally owned and Alaska Native Corporation 8[a] companies?
    Mr. Middleton. Yes, it does. Under the Buy Indian Act, we 
are trying to encourage Federal government to be a procurer of 
goods and services from Indian-owned businesses, whether they 
are individually Indian-owned or tribally owned, and which 
would include 8[a] firms.
    The Chairman. And are tribally owned and/or Alaska Native 
Corporation 8[a] companies eligible for the training provided 
by your office?
    Mr. Middleton. They are actually. We go out and we provide 
a series of conferences to talk about business development in 
Indian Country, and any firms that may be applying for or in 
fact have applied for 8[a] status would be eligible for this 
training. One in particular would be the training we provide 
through Dartmouth College. That is in fat put in place to be 
able to allow existing businesses to either enhance their 
business development or expand their business development. It 
has been very effective and they can in fact participate in 
those programs.
    The Chairman. Your testimony indicates that your office is 
working with the GSA to develop a tracking system of contracts 
awarded to Tribal 8[a] and Alaska Native Corporations. Does the 
tracking system that is being developed track contracts awarded 
by all Federal agencies to Tribal and Alaska Native 8[a]s or 
only those awarded by the DOI?
    Mr. Middleton. We are looking to do it government wide. The 
existing system in GSA at this time does not allow for 
designation of tribally owned 8[a] businesses, only 8[a] 
businesses, and so we are trying to work with GSA to try and 
identify those Native American 8[a] businesses that are in fact 
getting contracts across the Federal government.
    The Chairman. Mr. Largent, in its 2006 report on Alaska 
Native Corporation in the 8[a] programs, the GAO recommended 
that the SBA improve the monitoring and oversight of Alaska 
Native Corporations in 8[a] program. Does the Small Business 
Administration have a way to track procurement data on Tribal 
and Alaska Native Corporation participation in the program?
    Mr. Largent. I don't know that I could answer that question 
with any reliability. Can we get back to you in writing on 
that?
    The Chairman. Sure. Let me ask you one final one. Can the 
SBA develop and make recommendations to other Federal agencies 
to develop mechanisms to accurate track Tribal and Alaska 
Native Corporation procurement data?
    Mr. Largent. I am aware that a meeting has been scheduled 
with seven of the largest agencies that do procurement with 
Indian Country and 8[a]s. I think that meeting is scheduled in 
October, and we can give you more detail on that in writing 
also.
    The Chairman. OK. The Committee would appreciate it.
    Ms. Schinasi, in your written testimony you indicated that 
from Fiscal Year 2000 to 2004 contracts to ANCs increased by 
265 million to 1.1 billion. Was there an increase in the total 
amount of contracts obligated by the Federal government from 
the same time period, 2000 to 2004, to all entities?
    Ms. Schinasi. Yes, sir. We see the same explosion in 
service contracting generally.
    The Chairman. In your study, I noticed that you indicated 
that the SBA and the Federal contracting agencies were not 
conducting adequate oversight. Did you find any illegal 
activity being performed by the ANCs?
    Ms. Schinasi. No, sir.
    The Chairman. OK, I appreciate it. That concludes my 
questions. I will turn to the Ranking Member, Mr. Cole, Mr. 
Young. I am sorry.
    Mr. Young. Thank you, Mr. Chairman.
    Katherine, I won't pronounce your last name, I would rather 
say Katherine, it is a lot easier.
    [Laugher.]
    The Chairman. I slaughtered the language anyway.
    Mr. Young. You said that the SBA has made some progress or 
significant progress toward implementing your changes that were 
recommended. Do you believe the SBA and procuring agencies will 
be able to make the remaining changes on their own without 
significant intervention by this body or any other body?
    Ms. Schinasi. Yes, sir, I do.
    Mr. Young. I am glad the question was asked by the Chairman 
about the growth of this total contracting because I was a 
little concerned when you mentioned that it went from 200 
million to 1.5 billion. If you look at the total number of 
contracts, it is still, I believe, 0.5 percent of the total 
contracts that are let. So it is not a huge growth. It is a 
growth, but everybody else grew too, so I think it is good.
    I don't have any other questions, Mr. Chairman. I think you 
did quite a good job on it. I want to thank the witnesses for 
being here, and again, this whole program is a success and I 
hope we encourage it instead of discourage it. The oversight 
part is probably needed, and I think it is good for everybody. 
I have found no one that has an interview with your agency that 
objected to that. I think that is good for the SBA. I think it 
is good for the 8[a]s, and we will encourage that. Thank you.
    The Chairman. The gentleman from North Carolina, Mr. 
Shuler.
    Mr. Shuler. Thank you, Mr. Chairman.
    Mr. Largent, can you share with us how the process for 
deciding if a Tribe is deemed social or economically 
disadvantaged, and does gaming enter into this decision?
    Mr. Largent. Again, that is not my area. I am not with the 
program office. I do know that it is incredibly thorough 
assessment. It takes a considerable amount of time, and we are 
looking to streamline that process so that Tribes that are 
applying for 8[a] certification can more easily navigate it, 
but it is a comprehensive and thorough process, and I would be 
happy to get back to you from the program office if you would 
like.
    Mr. Shuler. Very good. And this could be for anyone on the 
witness panel. Can you give me some examples of Tribes who have 
entered into the process of the 8[a] program and graduated from 
that and actually become more self-sufficient based upon the 
success that they have had in the program?
    Mr. Largent. Actually, sitting right behind me, and I 
believe you will hear testimony a little later from former 
Secretary Neal McCaleb, Chickasaw Nation is a wonderful 
example. At one point I believe they had 12 Tribal 8[a]s. I 
think five have graduated. They employ over 2,000 people, have 
a very diversified economy and a far better quality of life 
than they had 20 years ago because of 8[a]. S&K Technologies, 
Kootenai and Salish Reservation is another example, but there 
are few. There are few Tribes that have been able to enjoy any 
real benefits from the 8[a] program, and we are working 
feverishly to change that.
    Mr. Shuler. Very good. I commend all of you for your 
service, and Mr. Chairman, I yield back.
    The Chairman. Mr. Cole.
    Mr. Cole. Thank you very much, Mr. Chairman, and thank each 
of you for your testimony. I only have a few questions. Let me 
begin by picking up where Mr. Shuler left off.
    I would ask you just to elaborate going forward. We have 
some examples of Tribes, Mr. Largent, obviously that have been 
successful in taking 8[a] contracting and moving out more 
broadly. What are the things you think we can do to make sure 
that that success is shared by more Tribes?
    Mr. Largent. Congressman, I would defer to the specifics on 
that to the actual Tribes and Native villages, but I will tell 
you that I travel extensively. I have been to remote Alaskan 
villages, spent the night there, been to a number of 
reservations, attend regular conferences, host meetings in my 
office, and with the Administrator with Tribal delegations, and 
I cannot recall one meeting where the issue and the importance 
of 8[a] has not come up.
    Mr. Cole. So this is a pretty important tool in a lot of 
different Tribal toolboxes in terms of making their people 
self-sufficient and providing opportunities that simply haven't 
been there in the past?
    Mr. Largent. That is the message that is delivered to me 
and that I deliver to the Administrator.
    Mr. Cole. Mr. Middleton, we have a lot of interesting ideas 
in the broader society about the nature of Native economies, 
and most people I run into be outside that universe quite often 
think that all Tribes are now rich due to gaming. Could you 
comment on how accurate that is or how much that might reflect 
the reality?
    Mr. Middleton. Well, actually, I, in talking to non-native 
citizens of the United States, I have them relay that exact 
message to me also, and it is absolutely not true as evident by 
the unemployment rates that are currently out there in a number 
of reservations. It is true that some Tribes in fact have been 
fortunate, that gaming has contributed significantly to their 
well being, but there are many Tribes out there that may in 
fact that have gaming but are not doing as well or just barely 
breaking even, or in fact not have gaming, and they are in 
remote locations.
    So any way that we can enhance the economies of those areas 
absent having gaming opportunities allows the Tribes to in fact 
enjoy a better life. I will give you one example.
    I was traveling to Duck Valley, which is on the Idaho/
Nevada border, recently, and had a chance to go to a computer 
center where some local Tribal members were there, and a young 
man was there sitting at the computer. And I struck up a 
conversation with him, and they are desperate to have some sort 
of economic development opportunities in Duck Valley. We are 
working closely with them to try and make that happen. But I 
talked to him. I said, well, what are you doing now? And he 
said he graduated from high school about a year ago. And I 
said, well, you know, what is happening? And he just said, I am 
just bored, there is nothing to do, there is no jobs, no job 
opportunities, and so he will come to the computer center and 
sit there and get on the computer and look at the outside 
world, and not be able to participate, and those are the type 
of things that we need to change.
    Mr. Cole. Appreciate that. Ms. Schinasi, and I hope I 
pronounced it right, you did mention, and I want to go back to 
this point about the trend line, the growth. Is there anything 
that would surprise you about that particularly? Given the fact 
that we sort of set this policy out, and people have taken 
advantage of it, and I would expect in the early stages if you 
start at zero or a relatively low number, the numbers look 
pretty dramatic if you talk in terms of percentage increases. 
But is there anything that is alarming or surprising about the 
speed with which people have taken advantage of the opportunity 
or Tribes have taken advantage of the opportunity?
    Ms. Schinasi. The trends that we see here, interestingly 
enough, parallel the trends that we see in government 
contracting as a whole, and I talk about that not because there 
is anything in the absolute dollar value that has any value in 
and of itself in that number, but what we look at that for is 
whether or not there are risks from a management perspective. 
And so we have taken a very similar positions when we look at 
service contracting as a whole.
    When you have rapid growth and you have at the same time 
cuts in your workforce, and you have more complicated contract 
vehicles, then the agencies need to be paying more attention to 
what is going on.
    Mr. Cole. But just for the record, there is no reason to 
think that it is any different than any other phase of 
government contracting, no reason to particularly single out 
this particular area of Federal contracting?
    Ms. Schinasi. Not in terms of the dollars spent. No, sir.
    Mr. Cole. Thank you very much. Thank you, Mr. Chairman.
    The Chairman. Gentlelady from California, Ms. Napolitano.
    Ms. Napolitano. Thank you, Mr. Chair, and this is really an 
interesting conversation, but I am trying to find out, Mr. 
Largent, whether--because I sat on the Small Business Committee 
for six years, and I learned a lot about what agencies, Federal 
agencies are not doing, because I have known contractors that 
have been 8[a] certified, this is minorities, and never got a 
contract once for years.
    So are we having SBA work with the Federal agencies to 
change their mindset in terms of being able to assist minority 
outreach? Because it is all well and good that your agency may 
be focusing on that, but if you don't change the mindset of the 
procurement officers in the Federal agencies, it is not going 
to help you increase at the way it should be.
    Then the second question would be are you looking at 
diverse areas of the United States where you have your Tribal 
groups in the area? Because I know you have talked about the 
ones that have gaming, some of them are doing very well, and 
they have done outreach to help other tribes, but you need to 
start teaching the young people at the school level and 
advising them where they can begin to look for getting into the 
economy, getting into business, being able to be--how would I 
say--successful in business enterprises, and I don't hear any 
of that. Sir?
    Mr. Largent. With respect to your first question, in 
general terms I can tell you that, yes, I know that the Office 
of Advocacy works specifically on this issue. I have had the 
opportunity to accompany Tribal delegations to other agencies 
to talk about opportunity.
    With respect to specific methodology, I would prefer to get 
back in writing from the program office that is responsible for 
that because my focus is very, very narrow. I work with 
Indians, Native Hawaiians, Alaska Natives and the Islands of 
Guam and American Samoa, and probably won't get there. So if 
that is OK, I would prefer to get back in greater detail with 
people that can give you that answer.
    With respect to your second question, absolutely, and this 
is one of the reasons that we travel so much. We have put 
together a team of people to help us develop a tool that is 
both diverse from a business and educational background and 
also diverse from a geographic background.
    I cannot emphasize enough the challenge that Tribal leaders 
have in trying to build economies. It is more than just access 
to capital or better education or access to markets. I recently 
had an opportunity to travel to a reservation and was touring 
one of their facilities, a very nice facility, and they were 
explaining to me because of the high incidence of diabetes in 
the community that they have to schedule their workforce 
because every two or three days people need to leave for three 
hours for treatment. Factor that into a competitive business 
analysis and you see the challenge, and that is one component.
    So developing this tool that I keep talking about, we have 
identified 130 separate components at this point that we 
believe are instrumental or integral to developing sustainable 
economies, things from as broad and powerful and well known as 
Tribal governance structure to things as nuanced as bereavement 
policy. It is a very complicated mix and we are working very, 
very hard.
    This past Sunday I flew to San Francisco to meet with Wilma 
Mankiller, former Cherokee chief, to get her insights as to how 
we can roll this out. A lot of people are working very hard to 
address that issue.
    Ms. Napolitano. Do you work in California?
    Mr. Largent. No, I work here. I live in Michigan. I fly in 
on Mondays. I fly home on Fridays.
    Ms. Napolitano. So your outreach is not into the Western--
--
    Mr. Largent. I go everywhere. I go everywhere. I was in San 
Francisco. I have been to Alaska.
    Ms. Napolitano. OK.
    Mr. Largent. We are in the process right now of trying to 
finalize an inner-tribal in Oklahoma, Nevada, New Mexico, 
California, and somewhere else where we will sit down with 
broad delegations of Tribal leadership to say here is what we 
are doing, what do you need.
    Ms. Napolitano. I hate to stop you but my time will be very 
limited, and that is, do you actually have the ability to do 
other outreach through new technologies such as video 
conferencing so you don't have to travel?
    Mr. Largent. Yes, although it is difficult to effect the 
trust and the nuance, the understanding. But the tool that we 
are building is on a sheer point platform where more and more 
people can access it from remote locations and provide their 
insights, yes.
    Ms. Napolitano. OK. The other question would be the Small 
Business Committee under former Chairman Donald Manzullo had 
begun establishing a one-stop shop for small business. Are you 
aware? Do you work with that? Because they were going to be 
able to try to hone in on assisting small business, that is any 
small business.
    Mr. Largent. Are you referring specifically to Indian 
reservations?
    Ms. Napolitano. No. Generally small business that could be 
useful in being able to use this tool to further some of the 
contacts of some of the Tribes.
    Mr. Largent. If we can draw a distinction, Congresswoman, 
there is a unique distinct set of circumstances between 
individual Indians and Tribes. So for individual entrepreneurs 
such as myself, I have been self-employed for 30 years, being 
able to access the resources of the Small Business 
Administration or other Federal programs are available to them 
like they would be anybody.
    But for developing sustainable economies on reservations, 
that is an entirely different matter, and I believe that one-
stop shops would have limited, if any, value in that particular 
context.
    Ms. Napolitano. Well, that may be so for some, but others 
may be in a position to be able to have some benefit from that.
    Mr. Largent. If you could elaborate.
    Ms. Napolitano. Some may already be in business and may be 
able to expand and being able to access information available 
on that one-stop shop.
    Mr. Largent. Agreed, and again those resources are already 
available and we are trying to direct individuals and Tribes to 
those resources where appropriate. But in remote locations, 
such as the villages of Alaska, or the big land mass Tribes out 
West, we have not had a great deal of success because it is 
just a unique circumstance to work in. Accessing capital is 
very difficult, for example. Pretty hard to start a business 
without money.
    Ms. Napolitano. Thank you, Mr. Chair. I would like to go 
for a second round, if available.
    The Chairman. Sure. The gentleman from Puerto Rico, Mr. 
Fortuno? Next on our side is the gentleman from California, Mr. 
Baca.
    Mr. Baca. Thank you very much, Mr. Chairman, and I want to 
thank the panelists for coming and giving their insight, and I 
guess we have heard a lot of positive things, but I want to 
continue to hear. What can be done to improve the current 
system that we have right now in doing the outreach in 
reference to the 8[a] programs, and what kind of educational 
programs are we developing in conjunction with our K through 
12, our community colleges or state colleges to make a lot of 
the people aware of the programs that are available for them? 
Any one of you can elaborate on that in terms of what can be 
done to improve what we are doing now, and if there is any 
changes or corrections that we need to do to make sure that we 
do the outreach too as well and letting many individuals that 
they have an opportunity to apply to create, not only diversify 
themselves and jobs and opportunities within the area.
    Mr. Middleton. I will let Mr. Largent speak toward ongoing 
improvements of the 8[a] program. I would like to speak to the 
educational opportunities that Congresswoman Napolitano also 
raised.
    It is important for us to get out and talk with Indian 
youth at an early period in their educational process. We have 
gone out and found that many Indian youth really need to have 
an understanding of what entrepreneurship is, what small 
business development is. I think, as this committee is aware, 
small businesses create well over 50 percent of the jobs in the 
United States, and we need to promote more small business 
development in Indian Country.
    We have started an initiative in the Department of Interior 
in conjunction with a financial education nonprofit to do a 
demonstration project with six of our schools to, in fact, 
start teaching entrepreneurship. We think this is going to be a 
successful program, and one that we can expand to the other 
schools that we have in place.
    We are also looking to reach out to youth through some of 
our conferences that we are putting on across country to talk 
about business development and providing them the tools and 
skills and financial expertise they need, in fact a step in the 
small business development as tribes start developing their 
economies. How do you fill in with some of those on-location 
businesses that in fact could be supporting services for some 
of the other businesses that are in place.
    In addition, both Mr. Largent and I sit in on a monthly 
meeting at the White House. We have a work group that includes 
all of the agencies across Federal government that have Indian 
programs and are dealing with Indian issues, and through that 
meeting and that committee that we sit on we provide a lot of 
cross-fertilization across information across agencies so that 
we in fact are trying to leverage our programs as best we can 
so that we are not stove-piped, and we think that has shown 
some success on a number of occasions.
    Mr. Baca. Mr. Largent, can you elaborate a little bit more?
    Mr. Largent. In addition, the Office of Native American 
Affairs in partnership with the Small Business Training 
Network, which is an office inside the SBA that develops online 
training materials, last year we partnered to link some of 
those materials to the Tribal colleges and universities, which 
are managed under the White House Initiative of Tribal Colleges 
and Universities, and this year we are in the process of 
developing a Native-specific curriculum for entrepreneurial 
development, basically a first step of what it means to be an 
entrepreneur, and again I can't overstate the importance and 
the difference in the way that Indian people look at business 
and economic development.
    I was in a meeting last week and I had a conversation with 
a Tribal leader who said to me, what is economic development? 
He said, to us, our festivals are so important that we take 
part time and seasonal work because it is more important to be 
at a festival with our people, celebrating who we are, than to 
be working five days a week. So these are cultural differences 
and trying to create training programs and making technical 
resources available that will have meaning is a difficult thing 
to do.
    I had one other thing I wanted to tell you and it slipped 
my mind, so if I can tap dance for a minute and come back to 
it.
    Mr. Middleton. And I would be glad to fill in a little more 
on this also. For small business development, actually one of 
the hindrances of small business development is getting capital 
to be able to start small businesses, and Congress last year 
passed an amendment to the Indian Finance Act, in fact, is 
going to provide us some very useful tools for providing 
capital investment out to Indian Country for small business 
development. It is going to allow the guaranteed loan program 
of the Department of the Interior to provide guaranteed loans 
to 501[c][3]s, which includes community development financial 
institutions.
    Currently, our program typically makes loans on the order 
of $250,000 to our largest is about $18 million, and because we 
work with the lenders, lenders typically don't want to deal 
with smaller business loans because it is the same amount of 
paperwork for them. By allowing us to do guaranteed loans to 
some of these 501[c][3]s, it is going to allow us to set up a 
revolving guaranteed loan account there that can meet the needs 
of let us say a mechanic who wants to start a mechanic 
business, needs to buy tools, needs to buy equipment, needs to 
set up a shop in the $80,000 to $100,000 range, and we think 
this is going to show some great benefits in future years.
    Mr. Baca. I know that my time has expired but, Mr. Chair, 
if I may ask my final question. Just a quick yes answer would 
be to the question.
    Is it true that because of these programs have come into 
existence and not only in small business development and 
creating opportunities and jobs, that these jobs are truly 
created here in the United States and they are given 
opportunities to individuals to obtain jobs here comparison to 
every other corporation that is out-sourcing Native American 
Indians and Indian Country are creating jobs right here in the 
United States for the American people, is that true?
    Mr. Largent. That is absolutely true, and if I can take 
more than a couple of words just to give you an example. I am 
working with a group of Tribes and a private sector company to 
put together call center operations off a central node located 
in the urban environment.
    Mr. Baca. Thank you.
    The Chairman. Gentleman from Utah, Mr. Bishop.
    Mr. Bishop. Thank you, Mr. Chairman. I apologize for being 
here late, but I realize that no well-run institution would 
there ever be three hearings and a markup scheduled at the same 
time in the morning.
    [Laughter.]
    Mr. Bishop. But since Mr. Kildee was able to do it, I am 
appreciative that I was able to join him. And by the way, Mr. 
Kildee, happy birthday on Sunday.
    I am glad I was able to catch Dr. Middleton here, and I 
appreciate the approach they have taken in realizing the 
diversity amongst our Native American Bands and Tribes so that 
multiple approaches have to take place so that one size just 
doesn't fit all. We can't be stereotypical with that. I am 
especially grateful for the 8[a] program under Dr. Middleton's 
direction.
    The Northwest Shoshone Band is based in my home city of 
Brigham City, and they have used this program very effectively 
in a number of projects and an ever-increasing expansion of 
projects that have added toward their economic benefit and the 
benefit not only of this particular Band but also the area.
    I would ask unanimous consent, Mr. Chairman, to have a 
statement added to the record.
    The Chairman. Without objection.
    [The prepared statement of Mr. Bishop follows:]

  Statement of The Honorable Rob Bishop, a Representative in Congress 
                         from the State of Utah

    The Northwestern Band of Shoshone Nation, based in Brigham City, 
Utah, started their Economic Development Corporation three years ago. 
With $10,000 borrowed from the Tribe and no employees, they were able 
to start a company that took advantage of the 8(a) program. Now the 
Company performs contracts for the Intelligence Community (translation 
services, intelligence analysis and Information Technology) and 
construction (over 60 projects throughout the country). The tribal 
company has over 100 employees, and is still 100% owned and run by the 
Tribe.
    Half of the Company's profits go to tribal infrastructure--the 
Tribe built a new housing development (10 house subdivision in Ogden), 
new tribal offices (in Brigham City) and reacquired the site where the 
Tribe was massacred by federal troops (33 acres NW of Preston, Idaho). 
The Tribe continues to open new offices throughout Utah, and has 
extended employment opportunities not only to Shoshones, but also 
member of other Tribes (Navajo, Sioux, Cherokee, etc.).
    Taking the Harvard Project for American Indian Economic Development 
to heart, the Tribe follows ``Nation-building'' principles. Tribal 
representatives run the businesses without interference from politics. 
Now other tribes, including gaming tribes, are turning to the 
Northwestern Shoshone to diversify economic development through joint 
ventures with the Tribe to promote 8(a) work.
                                 ______
                                 
    The Chairman. The gentleman from American Samoa, Mr. 
Faleomavaega.
    Mr. Faleomavaega. Thank you, Mr. Chairman. Not only do I 
want to wish the gentleman from Michigan a very happy birthday, 
but I do want to personally commend him for his authorship of 
the legislation that was recently passed by the House of 
Representatives concerning giving greater assistance to the 
housing needs of our Native American community, and I do want 
to personally commend him for that and for you too, Mr. 
Chairman, coming from Alaska, and Mr. Cole, this was a 
bipartisan effort, and I am just so happy that this legislation 
went through.
    I just want to commend the members of the panel for their 
excellent statements. I do have a couple of questions. I am not 
a very good mathematician. If I read this correctly that here 
we have a pot of $378 billion, and out of this whole thing we 
are talking about--is it five-tenth of 1 percent that has been 
used for our Native American community? Five-tenths of 1 
percent of $378 billion.
    I was just wondering with this $378 billion pot, how about 
maybe earmarking $5 billion as--well, maybe I had better not 
use the word.
    [Laughter.]
    Mr. Faleomavaega. Let us earmark it or set it aside or 
allocate it or appropriate. Yes, I would be the first one to 
volunteer to earmark $5 billion out of this $378 billion pot 
that we are talking about.
    You know, with 38 percent unemployment, 56 percent of the 
minimum wages of household goods, the highest rate of diabetes, 
the health conditions that our Native American community are 
experiencing, and it is just nice to give out the money. I 
mean, this is the way to do it. Encourage them to do business, 
but I am very concerned that we haven't really got to the very 
root of the problems.
    As you had indicated earlier, Mr. Largent, that it is not 
just say, OK, let us start a business. Are the people educated 
enough to do a business? What kind of an educational system or 
educational facilities even that a Native American community 
has been given?
    We have some 24 Tribal colleges all over the country, and 
maybe this is another area that we need to focus on, not just 
to say do business, but we haven't really started from the 
roots on how we can better prepare our Native American 
community, not only through education, through providing better 
health, infrastructure, and I honestly believe that what--what 
is your response? Do you think $5 billion may be a help in that 
direction if we can find some way or some how?
    I am just throwing out a number. If I see five-tenths of 1 
percent of the $378 billion pot, and we are only giving 1.7 
billion to the Native American community, somehow it just 
doesn't seem to jive with me on that. Can you comment on that?
    Mr. Largent. No.
    [Laughter.]
    Mr. Largent. But I can say that as Tribes and Alaska Native 
Corporations and Native Hawaiians and individuals wade in----
    Mr. Faleomavaega. By the way, I am a member of the Samoan 
Tribe. Is there any hope for me?
    Mr. Largent. We can talk afterwards.
    As they wade into business the capacity and capability gets 
broader and stronger every year. I mentioned an organization 
earlier in my testimony called ``NABA'', Native American 
Business Alliance, and NABA was formed, I had left the 
reservation after I sold my company in 1986, and NABA was 
formed by urban Indians to do business in the private sector. 
And when I introduced the idea that our credibility was at 
stake without the support of Tribes, it was a very heated 
debate that lasted for a year before we finally decided to 
shift our mission. And as I said in my testimony, there was 
very little understanding of how business works, how 
competitive it is.
    Today, we are seeing improvements and it is my belief that 
as Tribes get a better understanding of what makes sense for 
them, because of their internal capabilities, their culture, 
the resources that are available to them, they will be able to 
excel in the private sector, and I think we are going to see 
that kind of diversification as time goes on, but we need some 
time because we are dealing with a 250-year legacy of not just 
neutral activity but in many cases harmful activity to Native 
concerns.
    Mr. Faleomavaega. Just a real quick question to Ms. 
Schinasi. It sounds like you are either Navajo or Pueblo or 
Comanche. Schinasi sounds very much southwestern.
    I was listening to your testimony and other than greater 
oversight and all of this, but do you have any recommendations 
on how we can even amend the law to make it even better for the 
needs, to provide for the needs of your Native American 
community?
    Ms. Schinasi. I think most of what needs to be done can be 
done without legislative change, and I would offer that our 
recommendations to SBA were at some level generally to protect 
the taxpayer dollars, but also at some level to protect the 
firms who are participating in these programs, because when you 
don't have an idea of what joint ventures look like or whether 
or not contracts are let based on pass-through contracts and 
things like that, it can be the firms themselves who can suffer 
in an arrangement like that. So I think better oversight is in 
fact one way to help the ANC 8[a] corporations.
    Mr. Faleomavaega. Thank you, Mr. Chairman. My time is up.
    The Chairman. Gentlelady from the Virgin Islands, Ms. 
Christensen.
    Ms. Christensen. Thank you, Mr. Chairman. I wondered, 
because most of the discussion was around reservations, as I 
understand it, and I realize I did have to step out, but how 
are you reaching the urban Indian populations, and is the 
situation there any different? Anybody or all could answer.
    Mr. Largent. The Small Business Administration has 
significant presence in urban and suburban areas. I recently 
had the opportunity to address the Wisconsin American Indian 
Chamber of Commerce in Milwaukee where they recently received a 
grant to become a lending entity to small businesses in urban 
areas as well as Tribal areas. So we have a plethora of 
programs on technical assistance, access. One of the businesses 
I have owned in my career, I got an SBA loan. So there is 
plenty of assistance from my agency for urban Indians, and that 
is why the focus of my office is exclusively on remote 
locations, Alaskan villages and Tribes that are in remote 
geographic areas, as well as Hawaii.
    Ms. Christensen. Anyone else?
    Have any specific areas of economic activity or any 
specific types of businesses been identified? Has there been 
any kind of study to see what kind of businesses might be most 
profitable or have the most opportunity for creating businesses 
in Indian communities and Alaskan Native?
    Mr. Middleton. I can speak a little bit to that. Absent 
having gaming opportunities, probably one of the largest 
opportunities for Tribes, particularly in the lower 48, is 
energy and mineral development. There is a significant amount 
of energy and mineral development on Tribal lands that has been 
unexplored. As a matter of fact, I think some of the estimates 
that we have in place are fairly conservative simply because we 
don't have enough data, seismic data or geological data to be 
able to determine what the extent of the resources are.
    A number of tribes are starting to take advantage of this, 
the Crow Tribe in Montana, for example, which has large land 
base and significant coal, natural gas, and other mineral 
resources.
    But I have to speak a little bit toward the development of 
these energy and mineral resources because our philosophy on 
this is that we would like to see Tribes get away from this 
landlord/lessee arrangement of just leasing the lands and just 
leasing the resource capacity to outside companies. We would 
like to see Tribes start their own companies. For example, if 
they have gypsum deposit, as many Tribes do, rather than just 
selling it off at a cents per ton manner, we would like to see 
them think about setting up a wallboard plant, which is what--
gypsum is made into wallboard, set up a wallboard plant and 
actually capture that value added, capture those jobs rather 
than moving those jobs off a reservation.
    So that is the approach we are taking, but we think there 
are significant opportunities in energy and mineral 
development.
    Mr. Largent. And Dr. Middleton raises a good point, and my 
agency is working in concert with them. As we travel around and 
find Tribes that think they have a business idea because of a 
resource, whether it be alternative energy like ethanol or 
biomass or wind, or manufacturing, or niche IT, we look to work 
with them both to help them find the capital and the expertise 
and the education to make this a reality, and that is really 
what I was referring to when I said it will be an evolutionary 
process, much like gaming.
    When gaming first came, and my Tribe was one of the first 
in the country to have gaming, we imported non-Native gaming 
managers to come in and run our operations for us. Now we are 
pretty much self-sufficient in that area.
    So given the opportunity over time, we will find additional 
value add opportunities in the various natural resources or 
other assets that we have to work with
    Ms. Christensen. OK. Is that it?
    Is it your birthday today? Oh, we share a birthday. OK. 
Happy birthday.
    Mr. Largent. And as a fellow Michigander, Congressman, I 
wanted to say happy birthday too.
    The Chairman. The gentleman from Michigan is now 
recognized, Mr. Kildee.
    Mr. Kildee. Thank you very much. It is my privilege to 
welcome a fellow Michigander today.
    I have been involved in Indian matters since my election to 
the state legislature in 1965. One of the first bills I 
introduced was the Indian Tuition Waiver Act in Michigan. Any 
Michigan Indian can go to a public college in Michigan and the 
state pays the tuition. I introduced that because I read the 
Treaty of Detroit, and treaties are very, very important, and 
we have moral and legal obligations to those treaties.
    So I met many a Indian from Michigan who went to college 
because of that Michigan Indian Tuition Waiver Act, and I also 
introduced the bill back in 1966, I think, to establish the 
Michigan Indian Commission, because many agencies in Michigan 
had no idea what the responsibilities were, so they advise the 
other agencies of government.
    But on this bill here, very often we find what is supposed 
to be a solution to what is not a problem, and I worked with 
Mr. Waxman, because he had rather Draconian language in the 
bill, which would have put limits of an $8 million cap on 
services and $10 million on goods, and I put some place-holder 
language in there which I worked out with the Native American 
community. They would have preferred no language at all, but I 
put some place-holder language in there just to hold things for 
awhile.
    With that in mind, I would like to address a question to 
Ms. Schinasi. You indicated, I think, a couple of times now in 
your testimony that you felt most of this, of not all of this, 
could be handled administratively. Could you elaborate on that, 
the problem that Mr. Waxman was seeking a solution for, and I'm 
not sure there is a problem?
    Ms. Schinasi. The recommendations that we have in our 
report go to the findings that we developed during our review 
that said there was some confusion in who was responsible for 
which piece of managing the 8[a] ANC firms as well as a 
limitation on the information that SBA had in order to carry 
out its responsibilities, and the resources that had been 
devoted, particularly to the part of SBA that was responsible 
for the local monitoring of the ANC 8[a] firms.
    So those recommendations went more to the management of the 
program and really can be accomplished within the statutes that 
are now set out.
    We did not talk about support or challenge for the program 
as a whole, and my understanding is that that legislation had 
to do with what the appropriate level was for contracting 
dollars to go to the ANC 8[a] firms and corporations, and so 
that was not within the scope of our work, and was not 
reflected in any of our recommendations.
    Mr. Kildee. At this point you are not pushing this 
legislation that Mr. Waxman originally had in the bill or even 
the place-holder language that I put in to make it----
    Ms. Schinasi. That is correct. We have no position on that.
    Mr. Kildee. You have no position on that. I appreciate 
that.
    I think in all these things we have to recognize that for 
so many years--when I first started visiting Indian 
reservations in 1965, in Michigan, some of them were like Third 
World countries. The injustice was horrible, and now we are 
finding some sensitivity in government for programs like this, 
but some people think that every Tribal agency has, you know, 
got huge casinos someplace, but the poverty that you still find 
and the need for economic growth in an Indian community and 
Native American community is still great, and I think whenever 
we see legislation that is offering a solution for a problem 
that doesn't exist, we should be very cautious, and probably 
leave it up to you people to try to find how the law should be 
administered if there is some problem there and you feel that 
can be done, I would prefer at this point.
    Of course, I will also keep my options open when the 
administration maybe does do something that we feel is too 
tight, we can come back and try to soften that too. But at this 
point I would trust you to take care of that, but hope that my 
place-holder language, which I worked out with the Native 
American community, could be just dropped from this legislation 
and let you do your job.
    I yield back the balance of my time.
    The Chairman. The Chair thanks the gentleman from Michigan.
    The gentlelady from California, Ms. Napolitano, is 
recognized.
    Ms. Napolitano. Thank you, Mr. Chair.
    A lot of the discussion on the oversight of the Native 8[a] 
program, but Mr. Largent, has there been an increase or a 
decrease, and can you tell us the amount of appropriations 
since 2000? And how has that affected the contracting officers? 
How many contracting officers are there? What is the level of 
training provided to those officers to be able to deal with the 
Native Americans and to the Alaskan Natives? Then, of course, 
the volume of work performed by those officers. Those are all 
questions that come to mind as I hear you speak.
    Mr. Largent. Again, my office is not part of the program 
office that has oversight for the 8[a] program. That would be 
Government Contracting and Business Development. I am generally 
aware that we have increased staff. We have had staff-specific 
training around this issue. As we alluded to earlier----
    Ms. Napolitano. That is very general. Could you put it in 
writing, sir?
    Mr. Largent. I absolutely could. Yes, ma'am.
    Ms. Napolitano. Because that is very general. I could just 
tell you something and not be able to back it up with facts and 
figures.
    It just begs the question because I can't remember the year 
but not too long ago SBA's budget was supposed to be cut by 43 
percent. Now that means a lot across the board. Now, of course, 
that came back because there was a hue of an outcry from the 
small business community, and most of it was put back. I think 
33 percent. But it begs the question of how much is actually 
being put into the SBA programs to help achieve this.
    Then the other issue that came up, you mentioned the fact 
that small business finds it hard to get loans from the lending 
institutions, the ANCs. Have you tried credit unions because 
they have an agreement with SBA to be able to do small loans? 
And I am talking micro 2, I am not sure of the amount, but they 
have done a wonderful job in supplanting the banks' inability 
to do the small loans because they don't want to spend the time 
and the money to do that, and that is a known fact. Have you?
    Mr. Largent. With respect to your first question, I have 
staff right behind me. We will get back to you in detail on 
that question.
    In regards to your second question, the issue is not so 
much the size of packaging a loan, although banks are sensitive 
to that, we have programs such as Community Express which 
require very little documentation. The issue is sovereignty.
    Ms. Napolitano. OK.
    Mr. Largent. Banks have no recourse in the event of 
default. There is no way to go in and recapture any collateral 
because Tribes are sovereign nations.
    Ms. Napolitano. Right.
    Mr. Largent. So we are having extensive conversations not 
only in my agency but Indian Country-wide, and most of the 
people in the room behind me can talk to you in detail about 
this, on how we can address that issue.
    Ms. Napolitano. Is there a possibility then that your 
specific area of expertise might be able to help develop the 
greening of some of the Tribes, the focus on being able to 
learn how to green?
    And you talked about wind turbines and others. What about 
solar panels? That is something that is going to have to be in 
the future for us to save electricity and the energy because we 
are having global warming, and drought in the Western states, 
which means there is not enough water in the rivers and the 
dams to be able to generate the electricity.
    So if we are then able to start a process of teaching them 
where to begin setting up so they can connect to a grid and 
sell their electricity, is that something that you might be 
able to look at and begin to foster?
    Mr. Largent. All of these are under discussion. There is a 
new assistant secretary or deputy assistant secretary, I 
believe, at the Department of Energy who I am in very close 
contact with, and we have regular conversations about this, as 
does most of the Indian Country. So yes, these are all 
opportunities that we are looking at.
    There are fundamental and structural issues that need to be 
dealt with ahead of time. We can't rush head-long into this, 
throw capital at something, and then realize that we missed a 
component. So it is thoughtful and cautious, but there are 
approaches we are looking at.
    And as an aside if I may, I would like to thank Congressman 
Kildee because I am also one of the recipients of the Michigan 
Tuition Waiver Act.
    Ms. Napolitano. I would love to maybe have some 
conversation with both--actually all three--because I am the 
Chair of the Subcommittee on Water and Power, and the grids are 
under the jurisdiction of my subcommittee.
    Mr. Middleton. Congresswoman Napolitano, if I could address 
that. Part of the program that I administer is energy 
development, and we are working closely with a number of tribes 
on energy development, on renewable energy resources, wind, 
solar, biomass, geo-thermal. A number of tribes would like to 
reach out and in fact develop more extensively their 
opportunities for renewable energy development, and are doing 
so.
    So we are working in partnership with the Department of 
Energy, the National Renewable Energy Lab in Golden, Colorado, 
to go out and determine whether in fact they have sufficient 
wind resources to be able to in fact establish wind turbines.
    One of the problems we are running into though is in fact 
that when Tribes determine that they in fact have wind 
resources getting access to turbines has become problematic 
because, as the renewable--I am sorry--the subsidy for 
renewable energy gets renewed every two years, there is a big 
spike on requests from companies that are actually out there 
doing it for a for-profit, and Tribes need to be able to put 
money down to be able to even get in line to be able to gain 
access to the turbine industry, turbines that are being 
developed. So we are working through that with tribes, but we 
think there is a large opportunity for wind development, 
particularly in the northern plains, and getting access to the 
grid through the Western Area Power Administration is a key 
opportunity for us to develop the resource.
    Ms. Napolitano. Thank you. And certainly wind is one of the 
energies that we should be able to develop and foster the 
growth of, but also solar power. The National Electrical 
Contractors are teaming up with the IBEW to do a lot of 
greening of businesses which could be a new way of being able 
to address energy consumption by the business, which is their 
largest portion of expense.
    Thank you, Mr. Chair.
    The Chairman. The gentleman for Puerto Rico, Mr. Fortuno.
    Mr. Fortuno. Thank you, Mr. Chairman, and I commend you for 
this hearing, and I join my colleagues in congratulating Mr. 
Kildee on his birthday, certainly. I also apologize for being 
late, and having to leave also--a number of us are having three 
hearings, including some markups at the same time during this 
morning.
    But this is a topic of interest to me. I believe there are 
some parallel comparisons to the territories, and that is why 
it is of interest to me, and I was wondering if anyone may want 
to comment on I wonder if the programs are in place are doing 
what they are supposed to do. I have read at times the concern 
that there will be a--that anything we may do may be or may 
impact in any way culture or way of doing things for many 
centuries, but by the same token certainly, I believe we have a 
common interest in developing an entrepreneurship amongst 
different Tribes.
    So I am wondering if what we are doing makes sense and 
where are we failing. It is the educational system? Where are 
we failing here. I don't know if you want to comment on that, 
any of the three.
    Mr. Middleton. I think from our department's perspective 
that, although we haven't done as good a job in the past as we 
possibly could have. I think things are changing for the 
better, and the 8[a] program is one of the tools that has been 
in place that is allowing us to make progress, but there are 
other things we are doing such as trying to teach at a young 
age entrepreneurship and the meaning of business development, 
financial education of those types of opportunities.
    In addition, many of the Tribes are recognizing that they 
need to make some changes in order to take advantage of the 
opportunities they have for business development. Many tribes 
looked at changing their constitutions because they realize 
that the constitutions in fact may have been holding them back. 
The Crow Tribes is one example of this. Other Tribes are 
looking at the way their governments are structured, realizing 
that if they have a separate business arm, that they in fact 
can grow their own expertise for developing their business 
opportunities and business resources rather than making 
everything a political decision that is looked at by new 
administrations within the Tribe as being past administration's 
policy.
    In addition, we have a number of tribes, such as the 
Southern Ute, that have done very well in managing their growth 
fund and managing their energy and mineral resources. They 
currently have a AAA bond rating on Wall Street, which is 
significant, and they own partial interests in a number of let 
us say offshore oil and gas wells. So they in fact have grown 
the expertise they need to move forward, and many other Tribes 
are seeing this and taking the examples to heart, and trying to 
decide what they need to do in fact to put them on parallel 
with some of these successful Tribes that have developed 
economically.
    Mr. Largent. I would just say that Dr. Middleton's comments 
are accurate, 100 percent accurate, that economy in the sense 
of the U.S. economy is a new concept to Indian Country. In my 
opening testimony, I talked about forming a company in 1976. 
That was 31 years ago. And people in my community came to me 
and said, what made you think you could do that? They truly 
were perplexed. Where did the idea come from and where did the 
confidence come from that I could actually run a business? That 
was 31 years ago.
    So it was the advent of gaming for some, and I recently 
read a report, and if I am correct, I think it said that 37 
percent of all gaming dollars in Indian Country are controlled 
by 15 Tribes, so it certainly has not been an across-the-board 
distribution. But gaming has given some tribes at least to 
beginning to start the seed capital to go out and now 
diversify, and the Tribes that have had the best leadership, 
the most consistent leadership, well educated workforce, access 
to markets, and a culture that understood the importance of 
this have done very, very well. Chickasaw comes to mind, doing 
a remarkable job. Still a long ways to go, but a remarkable job 
relative to the Tribe's that Congressman Kildee was just 
talking about where you go in, there is just no activity at 
all.
    So I think we are heading in the right direction. We are 
making progress. I think we need some time.
    Mr. Fortuno. Thank you.
    The Chairman. Gentleman from Oklahoma, Mr. Boren.
    Mr. Boren. Thank you, Mr. Chairman. I appreciate--sorry I 
was also late, had several meetings. We have 200 Oklahomans who 
have flown in this week, and so we have a lot of different 
meetings. I am glad to see my good friend Mr. Cole, and also 
our great Oklahoman Neal McCaleb being here today as well.
    We have 39 federally recognized Tribes in Oklahoma. So many 
of them are doing great things, creating small businesses, 
employing a lot of people. In my district, Tribes like the 
Chickasaw Nation, the Choctaw Nation, and others, my concern is 
making sure that we have everyone, all of our smaller Tribes in 
the northeastern part of my state we have Tribes like the 
Quapaws and the Miamis and other tribes who need--we need to 
make sure that everyone has a chance, and I appreciate the 
efforts of the Small Business Administration and also of Tribal 
leaders in making sure that we diversify our economies.
    I want to thank the Chairman for holding this hearing, and 
for letting me be a part of it. Thank you.
    The Chairman. Thank you, Mr. Boren.
    No further questions. We will proceed to our second panel. 
The Chair again thanks the panel for their testimony and 
service.
    Our next panel is composed of The Honorable Tex Hall, 
Chairman and CEO, Inter-Tribal Economic Alliance, Mandaree, 
North Dakota, and speaking of birthdays, just had a birthday 
yesterday so we wish Tex a birthday as well. This seems to be 
happy birthday day; The Honorable Joe Garcia, President, 
National Congress of American Indians, Washington, D.C.; Mr. 
Greg DuMontier, Chairman of the Native American Contractors 
Association, Washington, D.C., and Ms. Julie Kitka, President, 
Alaska Federation of Natives from Anchorage, Alaska.
    Lady and gentlemen, we have your prepared testimony. It 
will be made part of the record as actually read, and Tex, we 
will start with you, and just a warning, we are expecting three 
roll call votes shortly on the Floor of the House so we may be 
having to recess during this panel's testimony. Tex, welcome.

 STATEMENT OF THE HONORABLE TEX HALL, CHAIRMAN AND CEO, INTER-
        TRIBAL ECONOMIC ALLIANCE, MANDAREE, NORTH DAKOTA

    Mr. Hall. Thank you, Chairman Rahall, and Ranking Member 
Young, and Members of the Committee, Co-Chair Kildee and Co-
Chair Cole, thank you for your service to Indian Country. It is 
a great honor, Chairman Rahall, to speak to the Committee on 
this topic of diversifying Native American economies.
    I want to make sure the Committee knows that this is one of 
the hot topics in Indian Country today, is diversifying the 
economies. So you are right on target, Chairman Rahall.
    I do want to say that I am grateful to you and your staff 
for the outstanding work that you have done on behalf of Indian 
Country, and the Committee. Twelve hearingss, 12 issues, 
critical issues, you have already marked up 12 Native American 
bills that include the Indian Health Improvement Act, and the 
Native Hawaiian Government Reorganization Act, and today's 
hearing on economic development is just an extension of the 
work and the commitment that you have shown to Indian Country, 
so thank you, Chairman Rahall, for your work on that.
    Today I am here as the Chairman of the Inter-Tribal 
Economic Alliance, which I helped co-found in 2001. When I 
first became National Congress of American Indians' president, 
the topic of economic development, high unemployment, high 
poverty rates was discussed at that time and long before that. 
So we thought a need for an economic development organization 
like the ITEA was needed to really create jobs, and we put a 
goal out there of 200,000 jobs because of the high unemployment 
and high poverty on the reservation, on the Native Alaska 
villages, and the homelands, so we thought creating new 
businesses is critical and key to putting a dent on this 
poverty.
    So experience has taught us that we cannot rely solely on 
the Federal government to win this war on unemployment and 
poverty, and we had to take this challenge in Indian Country up 
ourselves, and so we have. And so ITEA has created new 
businesses since 2001 in energy. We have created a private 
equity fund, a $200 million private equity fund, multi-tribal 
construction, a natural beef and buffalo that is chemical free, 
uses all natural grass fed, telecommunications and also we are 
managing a contract with the Marine Corps, an $80 million 
contract for digitization and document conversion for military 
manuals.
    Nonetheless, as we heard today, poverty is still 
widespread. It is still over 31 percent, and that is almost a 
third of our Native families, and today Native American 
households report a median income of over $33,000. We must 
simply do better than that.
    As we know, the United States has a treaty-backed trust 
responsibility to Indian Tribes, and that responsibility must 
extend to economic development because you understand just how 
important diverse Native economies are. We are certain that we 
use the full power and jurisdiction of this committee to 
protect and defend the programs such as the Native 8[a] 
programs that are working in Indian Country, and have created 
new jobs and economic opportunities.
    So the 8[a] is a prime example of the Federal initiative 
that created these real benefits. It is working. I wish, as Eni 
was talking about, Congressman, that it should do more, and I 
think we really should be talking about those discussions about 
how to improve. As we all heard, it is less than 1 percent of 
all procurements set aside for Native businesses.
    So I think there is many new Native businesses that are 
just starting. Some haven't got contracts. And there is many 
that are back logged in the application process, waiting to get 
SBA certified. So we somehow have to address those that are not 
even certified that haven't got the opportunity, Mr. Chairman.
    But I do want to focus on the last few comments, as I know 
my time is short, and that is, the proceeds from the Native 
businesses, the Native Tribal businesses go back into the 
community, there is no question about that, and I think that is 
a huge misunderstanding when you have individual entrepreneurs 
and companies that are looking at the profit and the bottom 
line that are benefitting for their company versus a Native 
Tribal company, and that is part of the culture of Native 
America, I mean, that the benefits go back into the Tribal 
community.
    So I have never heard that discussion talked about from any 
of the discussions, and I have been around for awhile, Mr. 
Chairman, as you know, and I haven't heard that discussion at 
the table about what is the difference between Native 
businesses and individually owned corporate businesses where 
those benefit that individual.
    So I think that was the reasons that Congress created the 
Native 8[a] program in the early 1980s or late 1970s or 
thereabouts, and so it is troubling to now, 2007, and it 
appears that some Members of Congress still do not have that 
understanding that that is the major differences.
    Health care, we know that it is less than 50 percent 
funded, so we know that new diabetes equipment will be 
purchased by some companies with those profits. We know that 
eye glasses, dentures for the elderly program, a ramp so they 
can at least get up their stairs into their house are many 
examples of how these profits benefit the elders and then the 
head starts and the playground equipment. That is a lot 
different scenario than what is being portrayed on many of 
these Native businesses that are supposedly taking advantage 
and getting billions and billions of dollars. It is simply not 
the case, Mr. Chairman and Members of the Committee.
    And here at ITEA, we created six companies in the last few 
years. Because we are about 400 miles from the closest BIA 
regional office, we are 400 miles from the SBA office, we are 
in the middle of North Dakota and South Dakota, and so we have 
to find a table somewhere and say let us look at our ideas, and 
let us try to create something here based on what we have in 
front of us. And we had grass, so we said beef and buffalo. We 
have wind and solar. I am glad Congresswoman, you really 
stressed that. Getting access to the grid though is really 
critical. We can put all of the wind turbines we want, but if 
we don't have access to the grid it is just going to sit there.
    There is a book called ``You Damned Indians,'' and that is 
because they dammed us up. They should at least let us get 
access back to that dam transmission if they are going to dam 
us up.
    So in closing, Mr. Chairman, we are really--I must say 
about gaming is that in working with the National Indian Gaming 
Association, they have come a long ways in working with us on a 
potential agreement with the Inter-Tribal Economic Alliance to 
assist us in developing that private equity fund to create--if 
we created a number of small businesses, that 200,000 job 
initiative, putting that war on poverty would--we could 
actually accomplish that. So the gaming Tribes are looking to 
invest in the private equity fund and assist small business 
development.
    So thank you, Mr. Chairman, for allowing me to talk a 
little bit about the Inter-Tribal Economic Alliance.
    [The prepared statement of Mr. Hall follows:]

            Statement of Tex G. Hall, Chairman and C.E.O., 
                   The Inter-Tribal Economic Alliance

    Dosha! Good morning Chairman Rahall, Ranking Member Young and 
distinguished members of the U.S. House Committee on Natural Resources. 
Thank you for your invitation to appear before the Committee on Natural 
Resources, particularly on the topic of Diversifying Native Economies. 
This is a powerful subject and one that we in Indian Country, our 
leaders and our communities are talking about all across our great 
country. We are grateful to the Committee for its remarkable record of 
activity which shows just how seriously the Chairman cares about the 
needs of Indian Country.
    My name is Tex Hall and I am Hidatsa and Mandan. I served two terms 
as the President of the National Congress of American Indians and eight 
years as Chairman of the Mandan, Hidatsa, and Arikara Nation in North 
Dakota.
    I am here today as Chairman of the Inter-Tribal Economic Alliance 
(ITEA), a national engine of economic development whose mission is to 
create communities of hope on American Indian reservations, Alaska 
Native villages and Native Hawaiian homelands. The ITEA was formed in 
2001 by Native leaders hailing from many states across the nation and 
we are a tribally-driven business. We work day-in and day-out to fight 
poverty by creating new business opportunities and new jobs in diverse 
industries such as information technology, private equity, energy 
development, natural beef and buffalo, and call center operations.
    Poverty remains widespread across Indian Country. According to the 
2000 census, the poverty rate on reservations is 31.2 percent while 
nationally 24.3 percent of American Indians and Alaska Natives live in 
poverty, a rate more than twice that of Whites and Asians. Native 
American households report a median income of only $33,132.
    While Native Americans are making progress in pockets around the 
country, the big picture remains that we lag well behind the rest of 
the nation. We can and must do better. The condition and state of 
Indian country, however, has many fathers. Over the last 200 years, our 
federal and state governments, whether legislative bodies like Congress 
or various government agencies, have all played a role in landing us in 
the condition we find ourselves in today. Nevertheless, those same 
actors can make amends and help us in forging a bright future ahead of 
us. All we ask is that the United States acknowledge its treaty-backed 
trust responsibility to the first peoples of this nation and support, 
strengthen and protect programs that have successfully advanced our 
economic well-being.
    Chairman Rahall, Committee members, your call for a hearing on the 
topic of Diversifying Native Economies is a good beginning to work 
together. We welcome the dialogue and being asked to the table to 
create a new future for our people, for Indian Country.
Native Communal Commerce
    We believe that native communal commerce works. It is what Native 
governments believe in and it has worked for them for thousands of 
years. Native communal commerce is very different, in fact it is the 
opposite, of what the United States government has been trying to force 
on Native peoples through federal policies for the past two hundred 
years. The ITEA itself is a model of communal commerce.
    In native economies, the benefits and profits of work and industry 
flow back to the community. They do not flow back to individual 
business owners. For instance, the ITEA is structured so the profits of 
all of our ventures flow back to tribes. The profits from our 
businesses, for instance, go back to a tribe and are used to invest in 
health care, housing, and schools. This is a profoundly different model 
than say, IBM or even Univision, where corporate profits are 
distributed to individual owners or investors.
    Indian Country believes that the Native communal model works well 
and better than any of the failed models of commerce--the General 
Allotment Act program or the Indian Reorganization Act--forced upon us 
by the BIA or the Interior Department and the Congress. And with the 
Committee's support of the ITEA's efforts and federal programs that 
actually do work, together we can start jump-start a period of 
unprecedented economic growth.
    That growth is the point of having Diversified Native Economies. We 
ought to have federal policies and programs that do not measure our 
tribal enterprises against individually-owned businesses or 
stockholder-owned corporations. Doing so entirely misses the tremendous 
gifts our communities have to offer the marketplace--an untapped and 
unified resource of labor in some of the most remote and rural 
communities in the country. Our Tribal governments and business 
enterprises are located in 35 of 50 states, with 56 million acres of 
trust lands and a million plus man and woman work force, a large 
portion of which is either underemployed or unemployed.
    While Native peoples and our federal government share a tragic 
history together, we have the power to change the course of that 
relationship. But it will require the federal government to support 
policies that have worked and embrace economic strategies that 
guarantee the growth of our native communal businesses into the larger 
marketplace.
Small Business Administration
    The Small Business Administration now runs a solid program to 
diversify our Native economies. The SBA 8(a) program, specifically the 
provision for Native 8(a) firms that consist of Tribal and community 
owned firms is in its infancy, yet from a policy approach and 
understanding of the communal nature of our enterprises, this program 
got it exactly right. The Native 8(a) program embraces our communal 
approach to commerce, encouraging our Tribal and Native corporations 
that are owned by entire communities to enter the federal government 
contracting industry.
    The ITEA strongly believes that the Native 8(a) program works. The 
program recognizes that Native 8(a) firms are not investor-owned like 
other conventional businesses. Instead, it recognizes that Native firms 
are community-owned, and that they use revenues to address the social, 
economic and cultural well-being of communities--truly a double bottom 
line. And the 8(a) program does not require a single appropriation of 
federal funds, but rather the inclusion of the unique enterprises of 
Native communities in providing quality product to our federal 
government, while serving the social good.
    The ITEA is been troubled by the statements of some that would 
frame the tiny 0.2% awarding of all federal contracts to Native 8(a) 
firms, and in particular, Alaska Native Corporations, as a threat 
rather than a success that should be nurtured. Some members in this 
Congress have even gone so far as to criticize Alaska Native 
enterprises for doing government work outside of the state of Alaska. 
The Committee should make it unacceptable to carry the failed policies 
of the early part of the last century into the present and into our 
future. Our tribal enterprises must be encouraged to grow beyond our 
reservation and village boundaries and be allowed to participate 
nationally, and indeed, globally.
IITC--A Tribal 8(a)
    At ITEA, one of our first initiatives to diversify our Native 
economy based on the communal commerce approach is the Intertribal 
Information Technology Company (IITC). It is the first Tribal 8(a) 
government contractor owned by the three indigenous groups of our great 
country, consisting of nine federally recognized Indian Tribes; two 
federally recognized Alaska Native Corporations and one Native Hawaiian 
nonprofit. There are no individual investors, ensuring that the profits 
of this Tribal 8(a) are returned to the social, economic and cultural 
mission of our respective communities.
    IITC owner firms are located in eight states: Montana, Wyoming, 
Hawaii, North Dakota, Alaska, Oklahoma, New Mexico and South Dakota. 
Under the SBA Native 8(a) program, we have forged ahead to make a 
national impact and also serve our nation's men and women that are 
serving our country in the military. IITC is providing the Department 
of Defense with digitized versions of maintenance manuals for aircraft, 
ships, vehicles and a variety of equipment used every day on the ground 
by our troops. We have digitized hundreds of thousands of pages, 
including maintenance manuals for the Apache Helicopter, Armored 
Utility Trucks, Landing Crafts and Fire Fighting Vehicles. We are proud 
to be working on a project that we know helps to keep our troops safe.
    Tapping into our national labor pool, IITC created over 300 jobs 
directly inside rural Native American communities, from as far north 
above the arctic circle in Barrow, Alaska to as far west as Anahola, 
Hawaii, as far east as Parshall, North Dakota on the Fort Berthold 
Indian Reservation and as far south as the Zuni Indian Reservation in 
New Mexico. IITC, like every Tribal or ANC 8(a), has become a part of 
our national economy and is creating jobs in eight states in the 
country. It is one small example of the good the Native 8(a) program 
has done and is an example of what can be accomplished when a federal 
program embraces our communal approach to business.
Non-Gaming Business that In-Sources to Rural America
    There is no question that Indian Gaming has had an unprecedented 
economic impact in Indian Country. Yet, as we all know, the vast 
majority of tribes do not benefit from gaming. So, while we know that 
gaming tribes have generously shared their wealth with the non-Native 
communities around them, and with many other tribes, the fact is that 
gaming cannot, and will not, be the end-all to the socio-economic 
problems of Indian Country.
    In other words, we must diversify and strengthen the foundation of 
commerce across Indian Country, by embracing our best business tools of 
Tribal and community enterprises. We can then produce opportunities to 
in-source jobs and impact local and rural economies inside our country 
versus overseas. But, we have learned that if we want it done, we are 
going to have to do it ourselves. And that is what the ITEA brings to 
the table--initiative.
    The ITEA has taken a new step to build even further on the IITC 
technology company ability to tap into a national labor pool for data 
conversion. The ITEA is now finalizing a business plan to add call 
centers in partnership with various Tribes and Tribal firms. Call 
centers have the potential of employing thousands, and establishing our 
rural communities as hubs for national and international commerce. And 
what we are doing is truly patriotic. Instead of outsourcing jobs to 
third world countries, we are keeping those jobs, benefits, and 
spending money in the United States. We believe in-sourcing to American 
Indians works not just for Indian Country, but for America.
    Another ITEA project is the first-ever national tribally-run 
private equity fund. As you know, the world of private equity brings 
significant investment opportunities for tribes. The ITEA is taking 
advantage of this opportunity by partnering with major Wall Street 
firms and advisors to open a private equity fund that will invest large 
sums of money in Native start up businesses, energy projects, real 
estate as well as traditional securities and bonds. With the support of 
major gaming tribes, we are positioning ourselves to make sure that 
wealth from gaming reaches all of Indian Country.
    Another sector worthy of our attention for diversification and 
expansion is in energy resources, and making good use of our Tribal 
lands and locations around the country. Whether oil and gas, or solar 
and wind development, Indian Country must be part of the conversation 
and policy making decisions to encourage investments and partnerships 
that include our Tribal and Native corporations in the development of 
cleaner and alternative energy sources.
    The ITEA is also partnering with the National Indian Gaming 
Association to create a Native Business Process Outsourcing company 
that matches Native suppliers and services with Indian gaming 
enterprises so that the good and services of Indian gaming are supplied 
by Indian businesses.
    The ITEA is also working with Native cattle and buffalo ranchers to 
identify and overcome the barriers to bringing the hundreds of 
thousands of grass fed cattle to market. There are 1.5 million head of 
cattle raised naturally on 40 million acres of tribal lands across the 
country. We are bringing the unique all-natural, all-American, 
reservation-bred product of Native ranchers to the national 
marketplace.
Summary
    In closing, first urge the Committee to enact and support policies 
that strengthen our communal tribal and Alaska Native corporate status 
and that eliminate barriers and obstacles. For instance, we ask the 
Committee to strengthen, and fight against legislation that would 
restrict, the Native 8(a) program which has allowed Native 8(a) firms 
to succeed in government contracting. Native 8(a) contractors deliver a 
valuable product for the Nation, and use their revenues on the social, 
economic and educational needs of entire Native communities. Native 
8(a) businesses are community enterprises and cannot be judged by the 
same standards as individually-owned businesses.
    Second, we ask the Committee to focus its economic development 
efforts on those industry sectors that yield the greatest 
diversification and impact in our communities. We suggest the 
following: energy and access to the electrical grid, information 
technology and manufacturing, call centers, tourism, fine arts, 
ranching and farming, and, most importantly, the support of government 
contracting.
    Third, we ask the Committee to invest in the economic 
infrastructure of Indian Country and Alaska by investing in workforce 
development and job training that matches the jobs we are seeking to 
create, and by investing in telecommunication and internet 
connectivity. The Committee should also ensure that Natives have the 
access to capital in order to build that infrastructure and thus we ask 
the Committee to double the ceilings of the guaranteed loan programs of 
the BIA and USDA.
    There is no question that America is stronger when its citizens 
actively participate in our local, national and global economies. At 
ITEA, we believe that Native Americans for too long have been prevented 
from fully participating by a lack of understanding of the strengths, 
talent, and value in our communities. Chairman Rahall, Diversifying 
Native Economies is the right discussion and mirrors the conversations 
and work taking place all over Indian Country.
    We can forge a new future by continuing this dialogue and working 
together. Our past tells a story of what has been good for America has 
not always been good for Indian Country. This need not be the case--
what is good for Indian Country, is good for America. In closing, the 
ITEA would like to offer to partner with the Committee and assist the 
Committee in developing a report on Native American economic 
development that includes goals and timelines.
    Thank You.
                                 ______
                                 
    The Chairman. Thank you very much, Tex. Joe?

       STATEMENT OF THE HONORABLE JOE GARCIA, PRESIDENT, 
    NATIONAL CONGRESS OF AMERICAN INDIANS, WASHINGTON, D.C.

    Mr. Garcia. Singatama. Good morning, everyone. Greetings 
from New Mexico. Good morning, Chairman Hall, and Members of 
the Committee. I am honored to be here today on behalf of the 
National Congress of American Indians, the nation's oldest and 
largest national organization of Tribal governments.
    We hope this is just the first in a series of important 
conversations on economic development, and diversification of 
economic development in the Indian Country, and we are looking 
forward to concrete recommendations and actions as a result.
    Although there are examples of Tribes around the country 
who have prospered, hundreds more are struggling to preserve 
their reservations, their culture, their language, and their 
sovereignty, and economic development is one of those ways that 
these preservations and security can happen, so I am glad that 
the hearings are being held.
    To address these economic challenges, NCAI has held a 
series of meetings with Tribal leaders, including at the recent 
National Economic Policy Summit held in Phoenix, and this was 
in partnership with the DOI to explore the best ideas to move 
Indian economic development forward.
    During these meetings, it has become clear that Tribes have 
recommended in four key areas:
    Number one, the need to improve and strengthen Tribal 
government institutions, the codes and basically capacity of 
those governments; number two, the need to give Tribal 
governments access to traditional governmental tools, like tax-
exempt financing and tax credits; number three, the improvement 
of tribal fiscal and human infrastructure, things like roads 
and telecommunications; number four, capacity building means 
the skills to conduct comprehensive planning to integrate all 
of these components.
    True economic development, it must be said that it is not 
just one area of work. 8[a] is one of those areas. 8[a] is one 
of those tools. When you talk about economic development, it 
transpires all--it is a big umbrella, and a comprehensive 
approach is the best approach that we can implement and we can 
plan for.
    These are examples of things that are not working, the 
things that I just mentioned, so we have included more 
information on them in our written testimony. But an example of 
something that does work is the 8[a] program.
    During these meetings, one thing that Tribal leaders made 
clear was that the government contracting program was one of 
the few things that is actually working in Indian Country.
    Because the Tribal governments do not have the same 
abilities to raise traditional tax revenue, they must turn to 
Tribal government enterprises to provide the revenue to support 
services to their citizens. The government contracting program 
is considered one of the most effective means for generating 
revenue and creating local economy for Tribal governments 
regardless of their geographic location or size.
    Over the past two years, NCAI, NACA, and NCAIED have hosted 
numerous forums throughout Indian Country to develop joint 
recommendations for improvement to this program. These draft 
recommendations were recently refined and we are continuing to 
work on the refinement process.
    Our draft recommendations include the following small 
business government contracting improvements: one, expand small 
business participation for all participants; two, increase the 
oversight; three, provide assistance to small businesses as 
prime contractors, subcontractors or joint venture partners.
    In reauthorizing the Small Business Act's contracting 
programs, Congress should include stronger provisions to ensure 
that small business actually receive the Federal contract 
support that has been required by law for many decades. While 
the Federal contracting market has doubled in size since 2000, 
small business percentage of that market has declined 
significantly.
    To enable small businesses, particularly 8[a] firms, to 
compete for a larger share of government contracts, these 
things need to happen: expand the pie; modernize the program; 
include increased net worth thresholds; increase caps on 
individual 8[a]; find a way to unbundle contracts; increase 
small business goals to 30 percent; and also maybe 
demonstration projects; set aside larger contracts to a team of 
small business contracts.
    Increased oversight enforcement by SBA and other Federal 
contracting agencies of exiting requirements would verify that 
Native enterprises and other 8[a] and small business concerns 
are good stewards of taxpayer funds. In order to promote better 
SBA administration oversight the Federal government should 
provide support and resources to train SBA staff and authorize 
an assistant administrator for Native American affairs to 
oversee and support the program.
    While Tribes represent a small percentage of the nation's 
population, and receive an even smaller percentage of Federal 
contracts, this program makes a big impact to our local 
communities. Tribal leaders have told us time and time again 
over numerous years that this is one of the few economic 
development tools that actually works in Indian Country.
    We want to thank you for giving us the opportunity to speak 
today. We look forward to continued support of our self-
determination efforts and our use of effective economic tools. 
Thank you so much and blessings be with you and the Committee.
    [The prepared statement of Mr. Garcia follows:]

                  Statement of Joe Garcia, President, 
                 National Congress of American Indians

Introduction
    Good morning Chairman Rahall and members of the Committee. My name 
is Joe Garcia, and I am Governor of Ohkay Owingeh, formerly known as 
San Juan Pueblo, in the State of New Mexico, and President of the 
National Congress of American Indians (NCAI).
    On behalf of the National Congress of American Indians, the 
nation's oldest and largest organization of American Indian and Alaska 
Native tribal governments, thank you for giving me the opportunity to 
testify before you today on the important and timely topic of 
diversifying our Native economies. I would also like to take this 
opportunity to thank you for your ongoing commitment to building 
healthy and sustainable local economies in Indian Country. It is our 
pleasure to be here today to continue what has been an ongoing 
discussion about how the federal government can best support tribes in 
our efforts to achieve self-reliance, prosperity, and economic parity 
through economic development.
    NCAI is fully committed to working with our federal partners in 
supporting existing federal economic development programs that have led 
to greater tribal and village sovereignty and self sufficiency. We 
welcome the opportunity today to discuss the current successful 
components of economic development, suggested improvements, and the 
need for continued support for the programs that have led to greater 
local economic diversity and individual opportunity.
    We are well positioned to address the challenges and barriers 
tribal governments encounter when trying to develop their local 
economies and more important understanding opportunities for positive 
change. NCAI partnered with the Department of Interior to host the 
National Native American Policy Summit (Summit) this past may to sort 
through he challenges and solutions needed to create healthy and 
vibrant local economies. Vested participants from tribal governments, 
the federal government, academic community, and the private sector 
gathered over 3 days to discuss challenges and offer solutions.
    In addition to the 300 plus recommendations received from 
participants for improving access to capital, business development and 
infrastructure, the Summit identified the overall need for tribal 
governments to strengthen governing institutions and create effective 
legal codes for business development. It also revealed the need for 
comprehensive tribal community planning and the need to improve inter-
governmental relationships as key components for proactive economic 
growth.
    Today we will be addressing some of the successful components of 
tribal government economic development, however, there has been a real 
and compelling need established at the Summit and in other NCAI venues 
to continue this discussion to address other challenges and 
opportunities.
Native Economies--Success
    The vast majority of tribes remain in desperate need of meaningful, 
diversified economic development opportunities. There are a few high-
profile examples of tribes around the country who have prospered 
economically. However, there are hundreds more who remain nearly 
invisible, who are struggling to preserve their reservations, their 
culture, and their sovereignty. The social and economic conditions in 
many Indian communities are comparable to those in developing nations 
around the world. According to recent federal reports 1, an 
astounding 9 of the 11 poorest counties in the nation, based on per 
capita income, are home to Indian reservations.
---------------------------------------------------------------------------
    \1\ Statistics derived from U.S. Census Bureau data; U.S. 
Department of Commerce, Bureau of Economic Analysis, Survey of Current 
Business; and DataQuick Information Systems, a public records database 
company located in La Jolla, San Diego, CA.
---------------------------------------------------------------------------
    Conventional thought has often dismissed the feasibility of 
American Indian economic development. Too often we hear that there is 
little incentive for investment, either public or private, on Indian 
lands; that many tribal institutions are too unstable or too weak to 
sustain development; that the location of many Indian lands are too 
remote for many types of business; or that the lack of infrastructure 
prohibits the establishment of businesses on tribal lands. These lines 
of thinking leads to the conclusion that the only option for Indian 
nations is continued dependence on the federal government.
    Over the past few decades, many tribes and villages, by exercising 
sovereignty and self determination, utilizing natural resources and 
taking advantage of existing federal incentives, have begun building 
successful government enterprises and are participating in the American 
economy.
    It is imperative to note this accomplishment has coincided with the 
rise of self determination. As the Harvard Project on American Indian 
Economic Development 2 has confirmed, across a number of 
indicators, socio-economic conditions are improving in Indian country 
and tribal economies are becoming more robust. From 1990 to 2000, 
family poverty rates decreased, real median income went up, housing 
overcrowding dropped, and more Indians were living in homes with 
adequate plumbing. Significantly, the Harvard Project discovered that 
these improvements are found in both non-gaming and gaming communities 
alike and credits self-determination policies for the progress.
---------------------------------------------------------------------------
    \2\ Joe Kalt & Jonathan Taylor, Harvard Project on American Indian 
Economic Development, ``American Indians on Reservations: A Databook of 
Socioeconomic Change Between the 1990 and 2000 Censuses,'' (2005).
---------------------------------------------------------------------------
    Tribes have been able to produce improvements in their local 
communities and generate sustainable tribal government enterprises, in 
large part, by taking greater control of decision making, utilizing 
available tools, and strengthening governing institutions.
    Success for tribal government enterprises differs from traditional 
corporations that are only responsible for creating a profit for 
shareholders or from other governments that provide services largely 
based on tax revenue. Since tribes have limited ability to raise tax 
revenue and, as responsible governments, they look to create tribal 
enterprises to produce revenue that is either reinvested to ensure 
sustainability or used to develop or supplement much-needed programs 
and services for their citizens'. Congress, in recognition of this 
unique tribal responsibility and in an effort to fulfill its federal 
trust responsibilities, has created various tools over the years that 
have allowed tribes to better serve their citizens' needs and become 
more self-sufficient.
    Not surprisingly, the tools that have proven most effective over 
the years are those provide an incentive for tribes to pursue self 
determination. Providing tools and incentives has historically been 
proven a successful means of positively effecting decisions in the 
general population. This is apparent when Congress continues to support 
tax incentives for citizens to own homes and for businesses that 
provide health insurance for employees. There has also been success 
when Congress, in honoring our government-to-government relationship, 
establishes and supports the development of Native economies and 
fosters government stability through various incentives. As we have 
learned over the years creating a healthy economy and a stable 
government are not exclusive but inter-dependent.
    Tribes, villages and communities have been successful in three 
primary government enterprise areas--natural resource management, 
gaming and hospitality, and government contracting.
Natural Resource Management
    Tribes have always utilized the management and development of 
territorial natural resources to serve their populations. Longstanding 
subsistence activities like fishing and farming, once taken for granted 
by tribes, were diminished with encroachment and resettlement. The 
federal government, through the ratification and enforcement of 
treaties and various acts, have severely limited a tribal government's 
ability to remain self sufficient by redefining tribal territories and 
tribal structures--most recently with the Alaska Native Claims 
Settlement Act of 1971(ANCSA) 3.
---------------------------------------------------------------------------
    \3\ Alaska Native Claims Settlement Act, 43 USC Sec. 1601 et seq.
---------------------------------------------------------------------------
    With these treaties and acts, the federal government has 
dramatically reduced tribes' ability to utilize their natural 
resources, including their land base, to serve their populations' 
needs. More recently, however, the federal government has supported 
tribal self determination and a tribal government's right to serve 
their members needs by supporting those treaties and acts and providing 
tools and incentives for tribes to continue to utilize the remaining 
natural resources for the benefit of their members. For example;
      Water rights in the southwest enable Native farmers to 
continue to use agriculture to support tribal programs and individual 
self sufficiency.
      Treaty rights, reaffirmed by federal courts as recently 
as last month 4, allow northwest tribes the ability to 
continue traditional fishing and ensure the natural resource will be 
available for the next generation.
---------------------------------------------------------------------------
    \4\ United States District Court, Western District of Washington at 
Seattle, US, et al., v. State of Washington, et al., C70-9213, August 
22, 2007
---------------------------------------------------------------------------
      Self determination policies in the form of land 
management, rights-of-way and market-based land valuation have 
permitted tribes to go from passive participants to effective 
competitors in America's natural resource industries with energy being 
the most notable enterprise.
    As this Committee is aware, 10% of the nation's energy natural 
resources are on Indian lands; and, Indian tribes are willing partners 
in natural resource development. Tribes have made decisions to manage 
and oversee their energy resources such as coal and natural gas found 
within their lands. And today, with tribes exercising self 
determination by securing the right to manage their own lands and 
resources, natural resource management serves as an effective industry 
and economic tool for tribes and villages. Harvesting timber, mining 
coal, farming, and turning limestone into cement have all been 
effective means for tribal governments to meet the program and service 
needs of its citizens.
    Success, however, in the form of natural resource management, can 
be found in a relatively small number of tribes who have managed to 
hold on to large land bases or have managed to remain in areas with 
resources to manage. The vast majority of tribes do not benefit from 
this economic tool and remain in desperate need of economic stimulus.
Gaming and Hospitality
    Indian gaming has grown over the past two decades from an uncertain 
start-up industry for tribal governments to an established, mature 
hospitality industry with tribes creating competitive destination 
resorts. Tribes, when given the support to exercise their sovereignty 
as governments, have managed to build an industry that has allowed them 
to not only serve their members' program and service needs, but become 
revenue generators for other governments--all in one generation.
    Gaming and hospitality has been an effective tool and a successful 
industry for those tribes that are located near large population 
centers and have partner states in the same industry. Although the 
media focuses on gaming as the face of Native government enterprises, 
the gaming and hospitality industry has not been a successful economic 
alternative for most tribes and villages. Just as natural resources as 
a government enterprise only is successful to a small number of tribes, 
over half of all recognized tribes have no gaming whatsoever 
5, and of those that do, some are not highly profitable and 
many serve to create local jobs for tribal citizens--especially for 
those tribes located in rural and remote areas.
---------------------------------------------------------------------------
    \5\ NIGA, Indian Gaming Facts, 2006 (www.indiangaming.org)
---------------------------------------------------------------------------
Government Contracting
    Government contracting has gradually begun to emerge as viable 
industry for successful tribal enterprise development. Successful 
contracting proves that, with the proper incentives, tribal enterprises 
can generate revenues to help achieve greater self determination and 
offers the potential of allowing all tribes to participate in the 
American economy regardless of a tribe's geographic proximity near a 
population center or its land-based resources.
    Economic self-sufficiency is the goal of tribal government entities 
using existing economic tools or when exerting rights of sovereignty 
and self determination. This goal can be achieved only through active 
participation in the U.S. and world economy. In fulfilling the United 
States' trust responsibility and in promoting self sufficiency among 
Native American governments, the federal government has provided an 
economic tool for tribes and villages (through federally mandated 
Alaska Native Corporations (ANCs 6)) to access the largest 
purchaser of goods and services in the world--the federal government.
---------------------------------------------------------------------------
    \6\ Federal Contracting Support for Alaska Natives' Integration 
into the Market Economy, Professor Duane Champagne (Sociology), 
Professor Carole Goldberg (Law) Native Nations Law & Policy Center, 
UCLA School of Law, Los Angeles, CA--``Alaska Native Claims Settlement 
Act of 1971(ANCSA) has been modified numerous times by Congress, 
including an amendment in 1988 designating ANCs as minority business 
enterprises and Congressional language in 1992 designating ANCs as 
``economically disadvantaged'' enterprises. Through this legislation, 
ANCs and their qualifying subsidiaries have been enabled to qualify for 
federal contracting and subcontracting, including SBA 8(a) and 
Department of Defense Small and Disadvantaged Business programs. The 
purpose of ANC status from the Alaska Native point of view is to assist 
ANCs in gaining competitive access and capabilities to successfully 
generate economic growth within the market economy.''
---------------------------------------------------------------------------
    The federal government spent $377 billion on goods and services in 
2005. 7 American Indian tribes and Alaska Native 
Corporations access the federal market through participation in the 
Small Business Administration's 8(a) program with the added incentive 
of allowing tribal and ANCs to utilize negotiated sole source 
contracting. The Department of Defense accurately justified the 
incentive by confirming it as ``...further[ing] the federal policy of 
Indian self-determination, the United States' trust responsibility, and 
the promotion of economic self-sufficiency among Native American 
communities.'' 8
---------------------------------------------------------------------------
    \7\ Source: Eagle Eye, Inc
    \8\ See AFGE v. United States, 95 F. Supp. 2d 4, 36 (D.D.C. 2002), 
aff'd 330 F.3d 513 (D.C. Cir. 2003) Federal Contracting Support for 
Alaska Natives' Integration into the Market Economy, Professor Duane 
Champagne (Sociology), Professor Carole Goldberg (Law) Native Nations 
Law & Policy Center, UCLA School of Law, Los Angeles, CA
[GRAPHIC] [TIFF OMITTED] T7848.003

    Although Native contractors only received less than 1% (.8%) of 
all Federal contract awards, 9 the program has had notable 
success for participating tribal governments. The tribal government 
contracting program has given tribes and villages the ability to create 
local diverse economies which in turn allow tribes to support and 
create tribal citizen programs and offer real and substantial career 
opportunities for members where only limited or no job opportunities 
existed prior.
---------------------------------------------------------------------------
    \9\ Source: Eagle Eye, Inc
---------------------------------------------------------------------------
    Tribes and ANCs, in the spirit of self determination, are offered a 
choice of business opportunities, and today, are providing everything 
from logistic support for our troops abroad to environmental services 
here at home. Tribes and ANCs that are not able to utilize the tribal 
government tool of gaming or leverage their land-based resources, now 
can enter business tracks that were previously the mainstay of 
mainstream corporate America.
    Individuals, who had little opportunity a generation ago, now have 
options. Not just options for jobs, but options for diverse and 
challenging careers. Rural tribal and village members are now choosing 
to enter the engineering field or business administration. Members have 
been able to move up a career path to manage contracts or in some 
cases, entire companies.
    More important for tribal governments and U.S. taxpayers is that 
the program allows tribal governments to build an economy, educate its 
citizens and create tax revenues that are returned to the federal 
coffers. The program has been a proven success in giving tribal 
governments a hand up and not a hand out; meaning our taxpayers are 
receiving far more value. For example,
      A remote village in Alaska, only accessible by car when 
the river freezes, now has a small local economy created from a Native 
Alaskan firm's entry into the highly competitive government contracting 
space. A recent profit was earned by its shareholders, many of whom 
used it to purchase higher-priced diesel fuel needed for the long, 
harsh winters.
      In Montana, Salish & Kootenai represent their values to 
the rest of the world through their successful government contracting 
program at S&K Technologies--a firm initially mentored by another 
tribal enterprise. The Tribe provides information technology and 
network solutions to the federal government that allows the 4,500 
Tribal members residing on the Flathead Indian Reservation the 
opportunity to compete for jobs in software development and technical 
training. The Reservation has struggled with an unemployment rate as 
high as 41% 10 proving the federal government contracting 
program can work in the most economically challenging tribal 
environments.
---------------------------------------------------------------------------
    \10\ DPHHS Survey--February 2002
---------------------------------------------------------------------------
      And, in Maine, a small tribe close to the Canadian border 
manages a border security contract that generates enough revenue for 
the tribe to be able to purchase school clothing for its Tribal youth.
    While this program is just beginning to realize success, it has not 
been an easy path. Most tribal businesses struggle for years with 
losses or marginal revenue. The government contracting businesses, even 
with the ability to utilize negotiated sole-source contracts, is an 
industry noted for its complexity and thin margins. The net revenues 
that are generated are often routed back into the business to ensure 
on-going success and the net revenue that is realized as profit is 
returned to the tribal members and village corporation shareholders in 
the form of citizen programs. Some tribal governments have been able to 
use funds for various programs including;
      Scholarship funds established to give tribal members the 
chance at higher education and fulfilling careers.
      Cultural centers built as a tribute to each tribe or 
village contribution to their local community and history, and
      Elder programs established to honor and care for those 
who paved the way.
    Tribes realize that economic development, while serving as a key 
component toward self determination, is a part of their responsibly as 
a government and a key component to being able to serve the interests 
of their citizens.
    We feel it is important for this Committee and Congress to know 
that these tools, created to promote self sufficiency in Native 
communities, are working as the federal government intended. The 
government contracting program is still a long way from universally 
building local tribal economies and offering hope to tribal citizens, 
but in its infancy it already has proved to be an effective tool for 
those tribes and ANCs who have had the tenacity to compete and profit 
in the federal marketplace.
    Our member tribes, ANCs, villages and Native communities have all 
given us input on this issue and the message has been simple and 
clear--keep this program in place, it is working [See Resolution 
Attached].
    With a directive from our members, NCAI set out to evaluate the 
program, listen to those who have had concerns, and try to understand 
misperceptions. We heard from our members about economic challenges and 
opportunities during a national summit help jointly with the Department 
of Interior. In addition, a joint working group was formed consisting 
of NCAI, Native American Contractors Association (NACA) and National 
Center for American Indian Enterprise Development (NCAIED) to ensure we 
were representing the vested American Indian entities and speaking with 
a unified voice. In March of this year at the 2007 Reservation Economic 
Summit hosted by NCAIED, our three organizations developed a joint 
statement on contracting issues [see Joint Statement attached].
    Evaluating concerns meant meeting with and carefully reviewing the 
report and recommendations contained in the April 2006 Government 
Accountability Office (GAO) report on ANC 8(a) contracting. 
11 The GAO recommendations centered on the need for greater 
oversight activities by the Small Business Administration (SBA) and 
federal agencies. To evaluate potential program improvements, we also 
met with the SBA to discuss and jointly develop proposals to address 
the GAO's recommendations as well as its own.
---------------------------------------------------------------------------
    \11\ United States Government Accountability Office, Increased Use 
of Alaska Native Corporations' Special 8(a) Provisions Calls for 
Tailored Oversight, April 2006 Report to Congressional Requesters--GAO 
06-399.
---------------------------------------------------------------------------
    We listened to other SBA 8(a) participants and worked with various 
organizations like the Minority Business Roundtable. We have been 
trying to dispel program misperceptions that often arose from the 
statements or actions of a single entity striving to promote a 
universal viewpoint without giving voice to alternative perspectives.
    As a result of the joint efforts of NCAI, NACA and NCAIED, we 
respectfully submit that Congress should consider the following small 
business government contracting improvements that would expand small 
business participation for all participants, increase oversight and 
provide assistance to small businesses as prime contractors, 
subcontractors or joint venture partners.
A. Expand Small Business Contracting Opportunities
    In reauthorizing the Small Business Act's contracting programs, 
Congress should include stronger provisions to ensure that small 
businesses actually receive the federal contract support that has been 
required by law for many decades. While the federal contracting market 
has doubled in size since 2000, small businesses' percentage share of 
that market has declined significantly. This is a result of a limited 
procurement workforce in the federal government, an increase in 
overseas contracts, lax compliance with subcontracting plans, and 
barriers that would allow small businesses to compete for larger 
contracts.
    To enable small businesses, particularly 8(a) firms, to compete for 
a larger share of government contracts, the federal government should 
take immediate actions to reverse these trends, including enhancing 
incentives for contracting officers to increase awards to 8(a) and 
other small businesses. In considering small business contracting 
legislation, Congress should adopt provisions to:
      Support tighter limits on bundling and consolidation of 
contracts, break up such contracts for award to small businesses, or 
employ procurement procedures to enable teams of Native enterprises and 
other small businesses to pursue larger contracts, such as contracting 
agencies issuing a Request For Information (RFI) to small businesses so 
they have a chance to form teams to pursue these larger contracting 
opportunities;
      Increase the Government-wide contracting goals for awards 
to small business of up to 30% of total contract awards to small 
business, and not less than 8% of total contract and subcontract awards 
to small disadvantaged business concerns;
      Include overseas contracts within the Government-wide 
contracting goals and require reporting of awards to small businesses 
as prime or subcontractors performing contracts overseas;
      Ease or increase the thresholds on individual net worth 
and on competition, including annual inflationary adjustments, for 
individuals seeking to qualify and retain eligibility for 8(a) program 
participation;
      Encourage small businesses with larger contracts to 
implement subcontracting plans to develop stronger business alliances 
among all types of small business contractors, including 8(a) and other 
small disadvantaged concerns, HUBZone, service disabled veteran-owned, 
women-owned and other small businesses; and
    Revisit size standards, including indexing them for inflation.
B. Improve Administrative Oversight and Enforcement
    Increased oversight and enforcement by SBA and other federal 
contracting agencies of existing requirements would verify that Native 
enterprises and other 8(a) and small business concerns are good 
stewards of taxpayer funds. To foster better SBA administrative 
oversight:
      Improve SBA's implementation of the 8(a) provisions 
applicable to Native enterprises by authorizing an Assistant 
Administrator for Native American Affairs to access all the SBA 
programs to improve the support provided to Native enterprises through 
contractual, financial and technical assistance;
      Strengthen SBA's authority to negotiate higher goals with 
individual contracting agencies, and require them to be more 
accountable for their past performance and future plans for making more 
small business awards so as to meet their goals in each subcategory of 
small business contracting;
      Support provisions to reinforce SBA's and other 
contracting agencies' efforts to track, monitor and enforce anti-
bundling requirements, and set aside and other procedures (including 
subcontracting plan compliance) to ensure that small business and small 
disadvantaged business contracting goals are met or exceeded; and
      Afford SBA sufficient resources to rebuild and train its 
staff to improve implementation of the 8(a) and other programs to 
assist all small business contractors in accessing the tools necessary 
to compete successfully and receive a fair share of federal contracting 
opportunities.
Conclusion
    A few in Congress have suggested fixes to the government 
contracting program that would disproportionately affect tribal 
governments and ANC enterprises by limiting or removing incentives. The 
program, while in need of some improvements, is not broken and major 
fixes are unnecessary. This same conclusion was confirmed by the GAO in 
their recommending only administrative, not legislative, proposals for 
improvement.
    Limiting tribal government enterprises' access to the federal 
market place will have distressing effects to Native communities. 
Tribal governments will need to look to Congress to establish a 
additional tools to deal with the critical need to strengthen local 
tribal and village economies so that tribal governments will have 
more--not fewer--resources and opportunities to provide programs and 
services for their citizens.
    With high rates of poverty, low per capita incomes, lower levels of 
education, many health problems, many social problems including high 
suicide rates, high rates of crime and incarceration 12, we 
all should be looking to improve programs that work like the tribal 
government contracting
---------------------------------------------------------------------------
    \12\ Federal Contracting Support for Alaska Natives' Integration 
into the Market Economy, Professor Duane Champagne (Sociology), 
Professor Carole Goldberg (Law) Native Nations Law & Policy Center, 
UCLA School of Law, Los Angeles, CA Sourced as: Scott Goldsmith, Jane 
Angvik, Lance Howe, Alexandra Hill, and Linda Leask Status of Alaska 
Natives 2004 (Anchorage, AK: Institute for Social and Economic 
Research, University of Alaska, Anchorage, 2004), pp. 2-14, 3-2 to 3-
39, 4-2 to 4-14, 5-2, 6-2 to 6-6; Alaska Native Policy Center, Our 
Choices, Our Future: Analysis of the Status of Alaska Natives Report 
2004 (Anchorage, AK: Alaska Native Policy Center, 2004); The Harvard 
Project on American Indian Economic Development, Native Nations, pp. 
326- 329.
---------------------------------------------------------------------------
    We want to thank you for giving us the opportunity to speak today 
on diversifying our economies. We look forward to your continued 
support of our self determination efforts and our use of effective 
economic tools.
                                 ______
                                 
    The Chairman. Thank you, President Garcia.
    Mr. DuMontier.

    STATEMENT OF GREG DUMONTIER, CHAIRMAN, NATIVE AMERICAN 
           CONTRACTORS ASSOCIATION, WASHINGTON, D.C.

    Mr. DuMontier. Thank you, Chairman Rahall and Ranking 
Member Young. Thank you for this opportunity to testify before 
the House Natural Resources Committee to create a strong native 
economies.
    My name is Greg DuMontier. I am the Chief Executive officer 
of S&K Technologies. We are an information technology firm 
owned by the Confederated Salish and Kootenai Tribes in western 
Montana, of which I am a member. I am also the Chairman of the 
Native American Contractors Association, NACA, and I am here to 
speak on behalf of NACA.
    As you know, Congress has focused on a lot of Federal 
procurement reform and oversight of government contracting 
practices and sole source awards. These reform initiatives have 
had already a significant and disproportionate impact on Native 
communities. We are but a sliver of Federal contracting, as we 
have discussed. Yet we face proposals to eliminate or diminish 
our contracting preferences.
    The record simply doesn't support these types of proposals. 
The GAO, as you have heard, studied ANC participation in the 
8[a], and didn't recommend any legislative change to the 
program. They did recommend administrative actions to improve 
oversight.
    We are just now getting a foothold in the marketplace after 
being left out, locked out, or elbowed out for decades. With 
some modest success, we now represent that very small slice of 
the pie, the less than 1 percent that we have talked about. 
However small that that might be, it is beginning to have a 
huge impact in Native communities.
    The benefits and services that Native communities receive 
result directly from the profits that our Native enterprises 
realize from government contracts. It is a win/win for the 
Federal/tribal relationship.
    Many of the witnesses today have provided different 
examples of our success, but I would like to focus on one of 
the biggest misconceptions or misperceptions that has been out 
there, and that is that Native enterprises somehow are awarded 
contracts and then simply subcontract all of the work to 
subcontractors in violation of SBA's limitations on 
subcontracting regulations. This criticism is flat wrong. The 
SBA's regulations require 50 percent of personnel costs to be 
borne by any 8[a] performing a service contract, and we support 
this regulation and comply with it. To improve the transparency 
and compliance with this requirement, NACA developed a best 
practices guide which recommends that Native enterprises 
develop a mechanism for tracking compliance of this 
requirement.
    My company, S&K Technologies, has already created a senior-
level management office whose responsibility it is to monitor 
and track compliance with all SBA 8[a] regulatory requirements, 
including the performance of work requirement in each contract.
    Also, through the SBA Tribal consultation process, NACA 
will recommend how reporting on this requirement can be 
improved. Moreover, the Federal procuring agencies are 
responsible for overseeing compliance of this requirement as 
has already been discussed today. The GAO in its report noted 
that procuring agencies are often not aware of this 
responsibility.
    The NACA recommends that the SBA revise its partnership 
agreements so procuring agencies are aware that they are 
responsible for monitoring 8[a] compliance with this 
requirement.
    Let me be clear. Native enterprises do not simply pass 
through work to subcontractors. That would be self-defeating 
because it wouldn't provide long-term revenue streams which 
Native communities need to provide basic services and Native 
enterprises would miss the opportunity to develop new 
capabilities. It just doesn't happen.
    In conclusion, there is still tremendous work that needs to 
be done to effect positive and sustainable benefits in Native 
community participation in the 8[a] program. Remarkably, this 
is already being done by providing access to the private sector 
market, building technical expertise to the Mentor-Protege and 
teaming arrangements, and providing access to a market with 
relatively low capital costs. The continued economic success 
and well being of Native communities depends on the combined 
and sustained efforts of Indian Tribes and the ANCs, the 
Federal government, and the private sector. We are counting on 
you to help continuing this progress.
    The Native 8[a] program offers the Federal government great 
returns and great value with little Federal investment. NACA 
would like to offer the following recommendations:
    First, this committee should play a proactive role in any 
future attempts to restrict or eliminate the Native 8[a] 
program. We need your help in educating others in the 
importance of this program.
    The second recommendation is that this committee should 
support and facilitate the efforts of NACA, the National 
Congress of American Indians, and the National Center for 
American Indian Enterprise Development in taking actions to 
enhance contracting opportunities for all small business 
contractors as well as our ability to work together.
    This could involve facilitating meetings and discussions 
with other committee, such as the House Small Business 
Committee, or the House leadership, and certainly with the 
administration.
    I thank the Chairman for the opportunity to speak before 
the Committee today, and I certainly look forward to your 
questions. I would much rather talk with you than to you. Thank 
you.
    [The prepared statement of Mr. DuMontier follows:]

                     Statement of Greg DuMontier, 
                Native American Contractors Association

    Good Afternoon Chairman Rahall and Ranking Member Young. Thank you 
for this opportunity to testify before the House Natural Resources 
Committee about the growing success of the Small Business Act's 8(a) 
program in advancing the economic self sufficiency of Native Americans. 
My name is Greg DuMontier, and I am the President and Chief Executive 
Officer of S & K Technologies, Inc., a tribally-owned Information 
Technology firm. I am also a member of the Confederated Salish and 
Kootenai Tribes (CSKT) of the Flathead Reservation in Western Montana, 
and the Chairman of the Native American Contractors Association, NACA. 
I am here before your committee speaking on behalf of NACA.
    NACA was formed in 2003 as a voice for Alaskan Native Corporations, 
Indian Tribes and Native Hawaiian Organizations (``Native 
Enterprises''). Our mission is to enhance self-determination through 
preservation and enhancement of government contracting participation 
based on the unique relationship between Native Americans and the 
federal government. NACA represents 19 ANC, Tribal, and NHO 
Enterprises.
Introduction
    In the 110th Congress there has been a significant focus on federal 
procurement reform largely in response to contracts awarded for the 
Iraq war, Afghanistan and Katrina resulting in intense scrutiny on 
investigations and oversight of government contracting practices and 
non-competitive awards. These reform initiatives could have a 
significant and disproportionate impact on Native communities. 
Notwithstanding the fact that we are but a sliver of federal 
contracting, we face several proposals to eliminate or diminish the 
Native 8(a) contracting preferences.
    The record does not support these proposals:
      The GAO studied ANC participation in the 8(a) program and 
did not recommend any legislation change to the program. Rather, the 
GAO recommended that the SBA and procuring agencies take a number of 
administrative actions to improve oversight.
      The SBA has initiated a tribal consultation to address 
these GAO recommendations.
      The Native American Contractors Association (NACA), the 
National Congress of American Indians (NCAI), and the National Center 
for American Indian Enterprise Development (NCAIED) are working 
together to provide recommendations on how 8(a) regulatory compliance 
can be improved to increase transparency and accountability and to 
provide legislative recommendations to enhance the ability of all small 
businesses to have a larger share of contract awards.
    Over the past 500 years, Native Americans have suffered from the 
loss of their land, economic assets and culture. These changes have 
resulted in the breakdown of many tribal systems, families and 
communities. By most social and economic indicators, Native Americans 
are at the lowest rung, struggling with the legacy of rural isolation 
and stagnant local economies. Nationwide, American Indian and Alaska 
Natives have suffered from decades of poverty and neglect. The 25.7% 
poverty rate in Indian Country exceeds that of all other race 
categories, and exceeded twice the national average of 12.4%, this 
contributes to the 40% unemployment rate and exceeded eight times the 
national average. Native communities experience many of the social ills 
associated with poverty: Inadequate health care resulting in a rate of 
suicide double the national average, and suffering from other disorders 
such as alcohol and drug abuse, diabetes, and obesity. Heart disease is 
the number one cause of death among American Indians with a 71% rate 
higher than the U.S. average. To top it off, American Indians have a 
life expectancy of 5 years less than the rest of the U.S. population. 
Bottom line: too many Native Americans are without the resources and 
tools to build their communities.
    Remarkably, amid the widespread poverty and social distress found 
in Indian Country, there are increasingly signs of hope and examples of 
Tribes and Alaska Natives making strides in building strong communities 
and economies. For example, there are many stories of struggle, such 
as, the village of Chenega Bay that survived an earthquake and tsunami 
and rebuilt twenty years later only to be devastated by the Exxon 
Valdez oil spill. A village member, said that her generation ``had even 
forgotten the word in their native language for hope.''
    But there is hope now, as Chenega Corporation has a big hand in 
revitalizing this economically and physically distressed community. You 
will hear today of many examples of this success through participation 
in the 8(a) Business Development program.
Small Business Administration Programs
    Recognizing that small businesses are critical to our economy, the 
Small Business Administration (SBA) is charged with assisting and 
protecting their interests. Congress found that by providing access to 
the federal procurement market, the business development of small 
business concerns owned by those who were disadvantaged could be 
achieved. The SBA has created numerous government procurement programs 
for businesses owned by disadvantaged individuals and groups. These 
programs include the 8(a) Business Development program (including 
Community Development Corporations), the Small and Disadvantaged 
Business (``SDB'') program, the Historically Underutilized Business 
Zone (``HUBZone'') program, and the Service-Disabled Veteran-Owned 
(``SDVOB'') program which promote minority and disadvantaged small 
business owners to do business with the federal government.
    To ensure that small businesses have access to the procurement 
market, statutory goals have been established for the federal 
government to contract with small businesses, SDBs, women-owned small 
businesses, HUBZone businesses and SDVOBs. The federal government has a 
23% mandated small business contracting goal and the SBA negotiates 
with procuring federal agencies to establish agency goals to ensure 
that the federal government meets these goals.
    The statutory goals for the federal government are as follows:
      23% of prime contracts for small businesses;
      5% of prime and subcontracts for SDBs;
      5% of prime and subcontracts for women-owned small 
businesses;
      3% of prime contracts for HUBZone small businesses; and
      3% of prime and subcontracts for SDVOBs.
    America has a long history of using its purchasing power as a means 
to further the business development and economic development of various 
individuals and groups who would otherwise be excluded from the huge 
government contracting market. This furthers social goals but more 
importantly it increases competition and expands and diversifies the 
sources of supplies and products for the government. Native Enterprises 
are starting to use these procurement programs just as the government 
intended, to use business approaches and models to further self 
reliance and build strong Native communities. Thereby partially 
fulfilling the federal government's obligations to Native Americans.
Native 8(a) Program
    By creating unique Native 8(a) provisions, Congress recognized the 
special needs and its obligations to Indian Tribes and Alaska Natives. 
Similar to the legitimate policy goals that support business 
development efforts for other 8(a) program participants (as well as 
other small business set-asides for woman-owned businesses and service-
disabled veteran-owned businesses, and small and disadvantaged 
businesses), the Native 8(a) provisions also embody the unique 
relationship between Native Americans and the federal government.
    In fact, hearings held by the Senate Indian Affairs Committee in 
1987 and 1988, found a need to include Indian tribes and Alaska Native-
owned firms in government contracting because President Reagan's 
``Commission on Indian Reservation Economies'' had documented that the 
government's procurement policies were significant obstacles to 
economic development and the committee found that tribally-owned 
companies had a difficult time qualifying for 8(a) program 
certification. The Chairman of the Senate Indian Affairs Committee 
believed that remedial action was necessary to address the low 
participation of American Indian and Alaska Native-owned firms in 
government contracting. During the 1988 hearing, Chairman Inouye stated 
that ``directing the purchasing power of the federal government to 
accomplish social goals such as assisting disadvantaged members of 
society is well established'' and he noted that unfortunately, ``this 
public policy goal has not been achieved with respect to the 
participation of businesses owned by Native Americans.''
    As this committee well knows, the federal government's unique 
obligations to Native Americans are recognized in the Constitution, 
federal laws, and by the Supreme Court, and those obligations empower 
Congress to enact legislation that recognizes the status of First 
Americans. Indeed, in terms of economic development, this special 
relationship is embodied in the Indian Commerce Clause of the United 
States Constitution. In furtherance of this relationship, Congress 
enacted legislation to encourage the participation of Tribally-owned 
and Alaska Native corporations to participate in the 8(a) program in a 
manner that advances the federal government's interest in promoting 
self-sufficiency and economic development in Indian Country.
    The Native 8(a) program was designed to empower Native communities 
to provide for their people, to sustain and expand their economies, and 
to combat the historic economic and social ills these communities face. 
It is also a way for Indian Tribes and ANCs to engage outside 
communities, outside investors, and other expertise in economic 
activities that benefit Native communities. We are just now getting a 
foothold in the federal marketplace after being left out, locked out, 
and elbowed out for decades. With some modest success, we now represent 
a small slice of the total procurement dollars ($1.9 billion). However 
small, it is beginning to have a big impact in Native communities.
    The 8(a) program has fostered a culture of ownership and self-
sufficiency and a path for diversifying and expanding Native economies. 
The benefits and services that Native communities receive result 
directly from the profits that Native Enterprises realize from 
government contracts. It is a hand up--not a hand out. Native 
Enterprises provide benefits in the form of dividends to shareholders, 
scholarships, job training opportunities, and economic stimulus to the 
local community. A 2005 NACA survey of its ANC members shows that ten 
regional and two village corporations paid $33 million in dividends 
attributable to government contracting--these corporations had 86,516 
shareholders among them; $9 million was awarded in scholarships; $12 
million in other shareholder programs and over 31,000 jobs created 
nationwide. These figures show that Native American participation in 
the 8(a) program is enabling them to compete in the American 
marketplace and to become successful and self-reliant, and to act as 
engines of growth in their communities.
    Like other 8(a) firms, Native Enterprises can only participate in 
the 8(a) program through small businesses which are subject to 
stringent program entry eligibility requirements. Native Enterprises 
have two key unique 8(a) provisions:
    1)  The competitive thresholds which limit the amount of sole-
source contract awards do not apply; and
    2)  Native Enterprises can participate in the 8(a) program through 
more than one company.
    This was the intent of Congress, and makes sense in light of the 
economic and social disadvantages with which Native communities must 
contend and the numbers of Native Americans in need. The disadvantages 
suffered by Native Americans encompass entire communities and villages, 
as opposed to individuals who are socially or economically 
disadvantaged. The ability to operate more than one company allows 
Native Enterprises to provide for hundreds or thousands of their 
people.
    Similarly, Native Enterprises are not subject to low caps for a 
reason. Unlike the typical structure of a small business, with one or a 
few owners, Native Enterprises are responsible for combating historical 
disadvantage, rural isolation, and the depressed economies that have 
resulted from a multi-generational dearth of opportunity. The program 
rules were purposely drafted, and Congressionally-mandated, to reflect 
the social and economic obligations Native Enterprises have to their 
communities, the size of these communities, and the immensity of the 
problems we face. The Native 8(a) program is exactly what Congress 
intended: an economic development program to help disadvantaged Native 
American communities, that lifts our people with a hand up--not a hand 
out.
    Native Enterprises provide quality services and cost-effective 
products to the Federal government. It is no secret that the government 
contracting marketplace is highly concentrated and dominated by a few 
very large companies. In 2005, the five largest contractors received 
20% of the total contract dollars awarded. By providing additional 
sources of products and suppliers within the market, Native Enterprises 
give the government alternative procurement vehicles, provide 
competition to the big companies, and give the taxpayers' more value 
for their dollars.
    For example, Integrated Concepts and Research Corporation (ICRC) 
(at the time, a subsidiary of Koniag Development Corporation, an Alaska 
Native Corporation) partnered with Qualis, a woman-owned small 
business, located in Alabama to bid on a NASA contract to provide 
aerospace materials testing. Over the life of the $12.3 million five-
year contract, the ICRC/Qualis team earned 100 percent of its 
performance and cost incentive fees. The ICRC/Qualis team has a 
reputation for consistently running 10 percent under target incentive 
budgets and through other initiatives has saved NASA close to $1 
million in contract costs. Simply put, with more sources of supply and 
services for federal agencies, competition is increased and best value 
is provided.
Issues Raised
    In recent years, there has been a tremendous amount of focus on the 
Native Enterprises that contract with the federal government. This 
increased scrutiny suggests that there is something wrong with the way 
Native Enterprises are doing business. I would like to address these 
issues one by one.
    First Issue: The numbers--Where are contracting dollars going? 
Native Americans represent 4% of the American population. Our 
enterprises today receive less than 1% of the federal procurement 
dollars (but some days it seems that we get 100% of criticism). Again, 
looking at the most recent data available, in 2005 the federal 
government spent a total of $377.5 billion on all contracts. Native 
American contract awards of all types comprised only $3.19 billion, 
less than one percent of (0.8%) of all federal contracting dollars. In 
addition, in 2005, the Federal government awarded $11 billion in 
contracts to 8(a) firms. Of that amount, approximately $1.9 billion, or 
17.2%, was awarded to Native Enterprises through sole source awards. 
Other 8(a) firms received 82.8% of the 8(a) awards. Native Enterprises 
represent approximately 1% of all non-competitive awards government-
wide. We get a very, very small share of all federal contracting 
dollars, and just a fraction of the 8(a) awards.
    Second Issue: Native Enterprises somehow are awarded contracts and 
then subcontract all of the work to subcontractors in violation of the 
SBA's limitations on subcontracting regulations. This criticism is flat 
wrong for several reasons. The SBA's regulations require 50% of 
personnel costs to be borne by any 8(a) firm performing a service 
contract. This performance of work requirement must be met by all 8(a) 
firms, including Native Enterprises. 8(a) firms and Native Enterprises 
can subcontract a portion of work on federal contracts--this practice 
is not exclusive to Native Enterprises. In fact, most federal 
contractors, large and small, do just that for good reasons, most 
likely benefiting local businesses and workers in each one of the 
states represented by members of this committee.
    To improve transparency and compliance with this requirement, NACA 
has developed a Best Practices Guide for its members, ``Guide to 
Industry Best Practices: Ethics and Compliance Programs and 
Establishing Best Business Practices.'' The guide recommends that 
Native Enterprises develop a mechanism for tracking compliance with 
this requirement. For example, SKT has created a senior-level 
management office whose responsibility it is to monitor and track 
compliance with all the SBA 8(a) regulatory requirements including the 
performance of work requirement on each contract. Additionally, NACA 
through the SBA tribal consultation process will make recommendations 
on how reporting on this requirement can be improved to provide more 
transparency and accountability. Moreover, federal procuring agencies 
are responsible for overseeing compliance with this requirement. The 
GAO in its report noted that procuring agency officials are often not 
aware of this responsibility. NACA recommends that the SBA revise its 
partnership agreements so procuring agencies are aware that they are 
responsible for monitoring 8(a) compliance with this requirement.
    Let me be clear: Native Enterprises do not ``pass through'' work to 
subcontractors, as a few erroneously allege. That would be self 
defeating because, it would not provide long-term revenue streams which 
Native Communities need to provide basic services. In fact, teaming 
arrangements enable Native Enterprises to realize profits that are then 
reinvested in their communities. Teaming arrangements also give Native 
Enterprises the added benefit of learning new core competencies and new 
lines of business, giving us more leverage to compete with large 
businesses, benefiting the taxpayer and Indian Country.
    Third Issue: Native Enterprises can form joint ventures with large, 
non-Native companies, and therefore the implication is that Native 
Enterprises are somehow not qualified to do the work or that the large 
companies benefit from the 8(a) program. Again, all 8(a) firms, not 
just Native Enterprises, can form joint ventures with non-small 
business owners. All 8(a) firms can venture with large businesses if 
they are operating under the SBA's Mentor-Protege program. The use of 
teams and joint ventures are encouraged by the federal government as a 
means to stimulate growth, to forge new business relationships, and to 
develop expertise. The SBA's Mentor-Protege program is central to 
business diversification and expansion. The mentor can provide valuable 
technical/management assistance, financial assistance, and sub-contract 
opportunities which enhance the capabilities of the Protege firm.
    For example, Sealaska Environmental Services (SES) is a wholly 
owned 8(a) subsidiary of Sealaska that was started in 2003. In its 
short history, SES has partnered with Tetra Tech, a leader in the 
environmental services industry providing environmental remediation, 
and engineering services. This partnership combines Sealaska's natural 
resource management experience with the proven systems, controls and 
highly trained people of Tetra Tech. SES and Tetra Tech formed a 
Mentor-Protege agreement and a joint venture and have negotiated 
agreements with the Navy to provide environmental remediation services 
at several Navy facilities on the west coast. Through its relationships 
with Tetra Tech, SES continues to build both its environmental 
remediation capacity and capability to help transition SES from a 
start-up 8(a) to a stand-alone company in a highly complex and 
competitive industry.
    Partnering through teaming or joint ventures is also important once 
a Native 8(a) graduates out of the program and must compete with giants 
such as Lockheed Martin, Raytheon and Boeing. The giants of the 
government contracting market have had 60 plus years to create their 
competitive advantages which include the substantial capital needed bid 
on major contracts. Responding to major contract solicitations takes 
expertise and months of manpower costing up to 3 percent of the 
contract award--a $100 million dollar contract may cost upwards of $3 
million dollars to prepare a bid.
    How does a government contractor like Chugach Development 
Corporation (CDC), fresh out of the 8(a) program in 1998, succeed in a 
market dominated by powerful and capital rich companies? In CDC's case, 
the management team made the strategic decision to not go it alone. 
They networked with their competitors convincing government contracting 
giants that CDC could deliver quality, timely, and cost effective work 
in facility maintenance and logistics. Teaming with Bechtel and 
Lockheed Martin, CDC won their first major full and open competitive 
bid contract, and they have never looked back. CDC has the reputation 
of being ``the little company that could!''
    The Mentor-Protege program also is an important way for Native 
8(a)'s to work with and partner with other small businesses. SpecPro, 
Inc., an ANC 8(a), formed a Mentor-Protege relationship with 
TerraHealth, Inc., an 8(a) veteran and minority-owned business and were 
awarded the Department of Defense Nunn-Perry Award for reducing costs 
for DoD and for developing technical capabilities and increasing 
opportunities for another small business. SpecPro and TerraHealth's 
relationship furthers both of their growth, and continues to develop 
and mature as a model for new small businesses to follow.
    Native Enterprises are treated no differently and operate no 
differently than other 8(a) firms in respect to Mentor-Protege 
relationships. Through the tribal consultation process initiated by the 
SBA, NACA will make recommendations on how reporting requirements on 
Mentor-Protege agreements and joint ventures can be made more 
transparent to better demonstrate compliance with the regulatory 
requirements and to demonstrate that mentors are indeed providing 
technical and/or management assistance that increases the contracting 
capabilities of Native 8(a)'s.
    Fourth Issue: executive compensation. To attract the type of talent 
needed to successfully run a business, all businesses must pay what the 
market dictates for experienced executives. The salaries paid to our 
managers are on par with other businesses because we must recruit those 
who have the talent and expertise to manage and oversee companies in a 
complex and competitive procurement market. We are under the gun to 
produce quality services and provide a good return back to the 
taxpayer. Unlike other industries, profit margins in government 
contracting are small and the competition is great, it takes an 
experienced manager to be successful in this industry. Further, unlike 
family-owned or closely-held small businesses, Native Enterprises have 
a fiduciary duty to their communities and shareholders. Native 
Enterprises seek out the best talent we can get to help maximize 
revenues for our owners--Native Americans. These business managers 
oversee the day-to-day operations of the companies and they are subject 
to the control of their Tribal Councils or their Native board of 
directors and shareholders. They are held accountable for the work they 
do and are expected to produce and improve the bottom line.
    Fifth Issue: small business community criticism of the recent 
successes of Native Enterprises. This criticism is misplaced. It 
distracts from the many issues all small business contractors have in 
common. When you get down to it, we are being criticized for finally 
realizing some of the benefits that Congress intended--diversifying our 
economies. While the federal contracting market has doubled in size 
since 2000, many small businesses believe they are locked out of the 
market. While the size of the market has grown, the federal government 
statutory goals which ensure small business participation have remained 
the same. Additionally, the overall small business share has declined 
due to a number of reasons, such as bundling/consolidating contracts 
beyond the reach of many small business capabilities and barriers to 
growth that make it more difficult for small businesses to compete for 
larger contracts. The federal procurement market is huge, there is 
plenty of room for Native Enterprises and other small businesses to 
participate. From a policy standpoint, all small businesses stand to 
gain by advocating with a unified voice on issues like increasing 
agency contracting goals and size standards for small businesses, as 
well as increasing the thresholds for individually owned 8(a) firms.
    We are working hard to strengthen the relationships between Native 
Enterprises and other small business. NACA has formed strategic 
alliances with other small business trade associations, these alliances 
serve to facilitate relationships with groups that may not have worked 
with Native Enterprises in the past. These alliances also broaden 
contractor access and create productive networks among various small 
business contractors.
    In recent years, Native Enterprises have been able to diversify and 
expand into new markets. Last summer, the DOD office of Small Business 
hosted a small business roundtable with NACA and other small business 
trade associations. This has resulted in several productive working 
relationships. For example, NACA and WIPP (Women Impacting Public 
Policy) held a workshop on how to form small business teams and 
provided opportunity for Native contractors and women-owned businesses 
to meet and exchange information on their capabilities. This has 
resulted in productive teaming arrangements among a number of the 
companies that participated. By teaming and partnering with Native 
Enterprises, other small business owners can also expand the services 
they offer and enter into new markets. Since some Native Enterprises 
have performed numerous federal contracts, they have an impressive past 
performance record which they can contribute to contracting teams. 
Native Enterprises welcome partnering with those in other small 
business communities who have similar goals and common interests.
    The non-native communities in which Native Enterprises are working 
and operating also see the benefits of increased opportunities. We know 
there are concentrations of Native 8(a)'s working in Alaska, New 
Mexico, Washington, Oklahoma, Alabama, Florida, Virginia and Maryland; 
some of these are states with predominate Native American populations 
other are not. With the expansion of Native Enterprises comes increased 
employment in the local communities.
    The small business community as a whole can benefit from focusing 
on the areas of government contracting that can be improved for 
everyone, and Native Enterprises in particular are advocating ways to 
ameliorate some of the adverse effects of the current procurement 
market. For example, speaking on behalf of its members, NACA supports 
initiatives that would increase awards to small businesses and decrease 
the amount of bundled contracts. Also, NACA supports increases in 
agency goals for contracting with small businesses and set-asides for 
small businesses. In addition, to partnering with other small 
businesses, NACA through an agreement with NCAIED, and through other 
efforts, is working to develop inter-tribal business opportunities by 
providing training workshops and networking opportunities among Native-
owned enterprises.
Conclusion
    In sum, the communities which Native Enterprises serve remain some 
of the poorest and most under-employed groups in America. There is 
still tremendous work to be done in effecting positive and sustainable 
benefits for these communities. The less than 1% of the federal 
contracting that Native communities now receive is enabling Native 
8(a)s to create jobs and opportunities desperately needed by their 
communities. Through our self-reliance and business ingenuity, Native 
peoples are starting to provide for the sufficiencies of our 
communities thanks to the business development opportunities provided 
by Congress. Native participation in the 8(a) program has helped 
Congress further two important goals: economic self-sufficiency and 
self-determination. Remarkably, this is being done by providing access 
to the private sector market, building technical expertise through 
Mentor-Protege and teaming arrangements, and providing access to a 
market with relatively low capital costs. The continued economic 
success and well being of Native communities depends on the combined 
and sustained efforts of Indian tribes and ANC's, the federal 
government, and the private sector.
Great Returns and Great Value with Little Federal Investment
    To build upon this progress, NACA offers the following points and 
recommendations:
    1.  The Native 8(a) program has resulted in just what Congress 
intended--building stronger Native communities that have been 
devastated by economic distress. The Native 8(a) program is a rare 
federal program that works by providing incentives that stimulate 
economic development in Native communities, diversifying Native 
economies, and providing revenue for scholarships, training and 
encourages entrepreneurship in Native communities.
          Recommendation: The House Resource Committee, as the 
        committee with jurisdiction over federal Indian policy issues, 
        should play a proactive role in future Congressional processes 
        involving the Native 8(a) program and help educate others of 
        the importance of the Native 8(a) program and the federal 
        government's unique relationship with Native Americans. This 
        hearing is a great beginning.
    2.  While the federal contracting market has increased 
significantly, the small business share of that market has declined 
significantly due to bundling/consolidation of contracts beyond the 
capabilities of most small businesses and current barriers to growth 
that make it difficult for small contractors to compete for larger 
contracts.
          Recommendation: The House Resource Committee should support 
        and facilitate the efforts of NACA, NCAI, and NCAIED and other 
        disadvantaged groups in taking actions to enhance contracting 
        opportunities for all small business contractors, and our 
        ability to work together. This could involve facilitating 
        meetings and discussions with other committees and with the 
        administration.
    I thank the Chairman for the opportunity to speak before the 
Committee today, and welcome any questions your Committee may have.
                                 ______
                                 
    NOTE: The ``Guide to Industry Best Practices: Ethics and 
Compliance Programs and Establishing Best Business Practices'' 
and ``Policy Statement on Small Business Contracting'' 
submitted for the record have been retained in the Committee's 
official files.

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                                ------                                



             POLICY STATEMENT ON SMALL BUSINESS CONTRACTING


                               March 2007

    To ensure that small businesses can access its fair share 
of the over $370 billion federal procurement market, the 
Federal Government set a goal of awarding 23% of all federal 
contract dollars to small businesses and 5% to small 
disadvantaged businesses. Prominent among the several federal 
programs designed to stimulate small business contracting is 
the Small Business Administration (SBA) Section 8(a) Business 
Development Program to enhance the competitive viability of 
firms owned by socially and economically disadvantaged 
individuals through the provision of contractual, financial and 
technical assistance. The purpose of these federal goals and 
programs has always been to ensure the maximum practicable 
utilization of these underrepresented firms, and to expand the 
base of suppliers to the federal government.
    Congress originally based eligibility for the 8(a) program, 
in part, on whether the applicant is an individual of certain 
racial or ethnic heritage, or is a member of a group indigenous 
to this country. In later reforms of the 8(a) program. Congress 
extended eligibility to Indian Tribes, Alaska Native 
Corporations (ANCs) and Native Hawaiian Organizations (NHOs) 
representing those indigenous peoples who have a time-honored 
special trust relationship with the federal government that 
obligates the government to implement policies to facilitate 
self-determination and self-sufficiency within Native 
communities.
    For many individual entrepreneurs, the 8(a) program has 
helped them grow their business successfully and benefit 
personally from that growth. For Indian Country, the 8(a) 
provisions applicable to Tribes, ANCs and NHOs have enabled the 
Native enterprises they own to generate revenues and create 
jobs that benefit their entire Native communities. Despite the 
success of many 8(a) companies, many more still struggle to 
break into the highly concentrated federal procurement market 
that is dominated by much larger companies, including the five 
largest contractors that alone hold 20% of all federal contract 
award dollars.
    To expand the contracting opportunities for all small 
business contractors, our organizations pledge to work together 
to broaden the base of 8(a) and other small business suppliers 
and service providers available to the federal government by: 
1) developing innovative incentives for agencies to award more 
and larger contracts to 8(a) and other small business 
contractors; and 2) advocating for the use these incentives and 
other procedures that will ensure that the SBA and other 
federal contracting agencies ramp up their award of contracts 
so as to meet and exceed their small and minority business 
contracting goals every year.

Policy Positions

    For the foregoing reasons, our organizations pledge our 
support for the initiatives outlined in the attached document..

A. Expand Small Business Contracting Opportunities.

    The SBA's regulations and policies have not kept pace with 
changes in the federal contracting market, such as increases in 
the average size of contracts often exceeding the capacity of 
small firms, the prevalence of teaming arrangements and joint 
ventures, the bundling and consolidation of contracts, and the 
consolidation of government contractors to perform larger 
contracts. These changes have made it harder for small 
businesses, particularly 8(a) firms, to compete for government 
contracts. Consequently, there have been steep declines in the 
total value of contracts awarded to 8(a) companies in 
particular and to all small businesses in general. The federal 
government must take immediate actions to reverse these trends, 
including retaining some incentives and enhancing other 
incentives for contracting officers to award to 8(a) and other 
small businesses, such as:
    1.  Fulfill Congressional intent to provide important 
incentives for agencies to contract with underrepresented 
Native community-based enterprises without diminishing or 
eliminating the 8(a) provisions applicable to these enterprises 
owned by Tribes, ANCs or NHOs that help build stronger, more 
self-sufficient Native economies.
    2.  Enhance the ability of individuals to qualify for 
certification as 8(a) program participants and to pursue larger 
contracts on a competitive or non-competitive basis.
    3.  Support agency efforts to track and monitor federal 
agencies' achievement of their 23% small business and 5% 
minority business contracting goals, and advocate for approval 
of increases in these two goals, and/or a new goal for 8(a) 
contract awards.
    4.  Identify new ways to participate in the concentrated 
federal procurement market, including innovative teaming 
arrangements for Native enterprises and other small businesses 
to pursue larger contracts in teams, such bundled contracts set 
aside for competition among teams of small businesses.
    5.  Encourage small businesses with larger contracts to 
implement subcontracting plans to develop stronger business 
alliances among all types of small business contractors. 
Currently subcontracting plan requirements apply only to large 
prime contractors and describe how they will subcontract a 
portion of the prime contract work to 8(a), small 
disadvantaged, service disabled veteran-owned, HubZone, women-
owned and other small businesses.

B. Administrative Oversight and Monitoring.

    Scrutiny of government contractors, whether excessive or 
not, will continue. Even permissible relationships, such as a 
mentor-protege agreement with a large business, can be cast as 
improper, and suspicion thrives on the scarcity of accurate 
data. Increased SBA and other agencies' oversight of existing 
requirements would verify that Native enterprises and other 
8(a) companies are good stewards of taxpayer funds. The 
following steps can foster better administrative oversight:
    1.  Improve SBA's implementation of the 8(a) provisions 
applicable to Tribes, ANCs and NHOs by: a) enhancing existing 
policies and procedures to improve outreach and assistance to, 
and oversight of, Native enterprises; b) redesigning and 
improving the Tribal 8(a) certification process to reflect the 
unique nature of Tribal enterprises; and c) authorizing an 
Assistant Administrator for Native American Affairs to access 
the various programs of the SBA to improve the support provided 
to Native enterprises through contractual, financial and 
technical assistance.
    2.  Afford the SBA with sufficient resources to rebuild and 
train its staff to improve implementation of the 8(a) and other 
programs to assist all small business contractors in accessing 
the tools necessary to compete successfully and receive a fair 
share of federal contracting opportunities.
    3.  Design a method to identify and track contract awards 
to Native enterprises owned by Tribes in federal procurement 
data systems.
    4.  Establish a small business 8(a) training program to 
provide annual training sessions for both 8(a) contractors and 
contracting officers.
                                ------                                

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[GRAPHIC] [TIFF OMITTED] T7848.016

    The Chairman. Thank you. In order to give our final 
witness appropriate time, the Chair is going to recess for 
approximately a half-hour so we can answer roll call votes on 
the Floor of the House at this time, and we shall return.
    [Recess.]
    The Chairman. The Committee on Natural Resources will 
resume its sitting, and for purposes of introducing the next 
panelist, the Chair will yield to the Ranking Member from 
Alaska, Mr. Young.
    Mr. Young. Thank you, Mr. Chairman, and again it is my 
privilege and honor to introduce our next witness, Julie Kitka, 
who has been President of the Alaska Federation of Natives for 
how many years, Julie?
    Ms. Kitka. Seventeen years.
    Mr. Young. Seventeen years, and watch it grow from a 
fledgling operation to a very viable unit within the State of 
Alaska, conveying the thoughts and beliefs of the Alaska 
Natives, and I believe one of the greatest supporters of the 
8[a] contracting program that we have.
    So with that, I would like to yield this time to Ms. Kitka 
for her testimony.

             STATEMENT OF JULIE KITKA, PRESIDENT, 
        ALASKA FEDERATION OF NATIVES, ANCHORAGE, ALASKA

    Ms. Kitka. Thank you, Mr. Chairman, and thank you Vice 
Chairman Young.
    First of all, I wanted to thank you personally as well as 
members of the Committee for the important role your committee 
has had over the years for the Native people of Alaska and 
other Native Americans, and I want you to understand that the 
work that you do and that the decisions you make have real 
impacts on the ground, and we are very grateful for you and 
your staff's dedicated work over the years. Because of your 
work, I can say our people have greater opportunities, our 
elders are living longer, healthier lives, our children are 
receiving better educations, and our people are living in safer 
homes. The improvements are real and immeasurable, and we are 
very grateful, and I just have to say that right from the start 
because it is important that you understand that.
    Again, I am the President of the Alaska Federation of 
Natives, which is the largest statewide Native organization in 
Alaska, representing more than 130,000 Alaska Natives.
    I wanted to also mention we recently over the last year and 
a half had the chance to meet and have serious conversations 
with the renowned Peruvian economist by the name of Hernando De 
Soto, who wrote the international best seller on the mystery of 
capital, and I wanted to share a comment with you that he made 
in regard to the Native people in Alaska to give you an idea of 
what is going on in our state.
    Mr. De Soto said that what he sees going on in Alaska with 
Alaska Natives is ``living proof that life is not a roll of the 
dice, harsh and brutal; that government can work with people to 
set up systems where people can make a difference and improve 
their lives.''
    I think that is an absolutely powerful statement that life 
is not a roll of the dice, harsh and brutal, and so it is not 
just by chance that things are happening, and I just wanted to 
convey to you the partnership that we have had over the years 
with this committee and with the committees that have taken 
jurisdiction over Native issues on that have really made a 
difference, and our Native people in Alaska are living proof of 
what can be done if we have the appropriate tools and 
structures, and we are very proud of the accomplishments that 
we have had since our land claim settlement, and growing our 
Native corporations, growing our Native entities, and making a 
difference in the lives of our people and other citizens in our 
state.
    One of the points I made in our testimony is the great 
diversity among our people in the state. We have Yupik, Cupik, 
Inupiat Eskimos, Athabascan, Tlingit, Haida and Tsimshian 
Indian peoples, so we are not all the same in the state. There 
is great diversity across generations, across geographies, and 
across gender among our people, and because of these 
differences and diversities we feel very strongly that there is 
no one solution that fits all. There is no one economic tool 
that meets the needs of all the people, and we really encourage 
you to take a look at economic development and initiatives as a 
whole cluster of economic health and educational initiatives as 
opposed to just one initiative.
    Basically, the current situation, we believe, is, and as 
has been told out by the Secretary of Treasury and other very 
distinguished branches of the government, is that the U.S. 
economy is strong and growing stronger, and it is expanding, 
and what we feel that, and other people have said that as the 
United States economy grows and expands, that there is still 
pockets in our country which are not sharing in the tremendous 
economic growth that is going on, and Native American 
communities are among those pockets that still aren't getting 
the full measure of the strong U.S. economy and the growth.
    We feel strongly that what needs to happen in order for us 
to share more fully in the economy is that we need additional 
targeted assistance to, one, keep up with changing technology, 
there is a lot of rapid change in technology, and to ensure 
that the economic pie continues to expand, and that the 
committees don't look at ways to constrict and limit 
participation in economic opportunities, but how can we make 
the pie bigger and grow participation in many ways.
    Like I said, that said the remainder of my testimony is 
going to cover two things. One is the 8[a] government 
contracting in which we feel unequivocally has been a success, 
and it is something that our regional and village corporations 
and Tribes in Alaska have participated and they have worked 
very hard providing value and quality work for the government. 
This is not a hand out. This is delivering work for the 
government that the government wants and needs and doing it at 
a value.
    In our testimony, we have given specific examples of our 
participation in the 8[a] program and how the work that has 
been provided by our people that are contracting meets and 
exceeds government standards in so many ways. There is just 
stacks and stacks of commendations that our companies have 
gotten from the Federal agencies on that, commending our people 
for the quality work that has been done.
    I really want to encourage this committee to stay engaged 
in the 8[a] contracting issue as it surfaces in the various 
committees, and please assert your jurisdiction to the fullest 
extent to protect our interests as Native Americans. It is just 
vitally important that people understand the trust 
responsibility between the government and Native Americans that 
understand our history and background to be able to judge the 
issues all around the 8[a] program, and it is very important 
that this committee stays engaged.
    I want to also bring up quickly another economic 
initiative, H.R. 3351, which is sponsored by you, Vice Chairman 
Young, a demonstration project of a domestic version of 
Millennium Challenge Account. That I will just bring briefly 
because, as I mentioned, not all solutions fit all groups of 
people in all circumstances, and we have 87 villages in our 
state that want to be part of this demonstration project, a 
pilot if you will, with representatives in Hawaii and 
reservation states, and we are very excited about the potential 
of what this demonstration project can do, and it is basically 
a domestic version of the Millennium Challenge Corporation, 
which the United States set up, and Members of Congress 
supported, creating a Federally chartered corporation to 
provide the assistance.
    We are not asking for a Federally chartered corporation. We 
are just asking for the models of results-based management and 
accountability, and that whole unique compacting model to be 
tested within our communities to see if that model which is 
just being used internationally can have some measures of 
success with some of the real intractable areas of poverty in 
our communities.
    I am very proud to say that has been introduced, and we 
anxiously await consideration by this committee, and hopefully 
passage of that and that demonstration pilot to go forward.
    In our testimony, we have also included quite a number of 
other recommendations in the economic arena. We feel very 
strongly that there has been a lot of rapid change happening in 
the economy and the economies that our businesses participate 
in, and we feel very strongly that the U.S. Congress and the 
government needs to protect U.S. businesses, including Native 
businesses, so that we can be competitive in the global 
economy, and as this rapid change in globalization occurs we 
really think there is new tools that need to be added to the 
toolbox for companies to depend on, and that it is vitally 
important that American companies are able to be competitive 
and that Native companies and our business enterprise can be 
among the best in the country and protect jobs and 
opportunities for our people.
    I include nine recommendations in there, and I won't cover 
them because of the time restraints on that, but I urge your 
consideration of them, and want to firmly put our organization 
on record in support of the wonderful work that is being done 
by Native contractors under the 8[a] program and urge your 
continued support of that program.
    Thank you.
    [The prepared statement of Ms. Kitka follows:]

                Statement of Julie E. Kitka, President, 
                      Alaska Federation of Natives

    Chairman Rahall, Ranking member Young and distinguished members of 
the committee, thank you for the opportunity to appear before you today 
on behalf of the Alaska Federation of Natives (AFN) to talk about the 
importance of diversifying Native economies, the Small Business 
Administration's 8(a) program to the Native people of Alaska and other 
important considerations.
    My name is Julie Kitka. I am testifying today in my capacity as 
President of the Alaska Federation of Natives (AFN), a position I have 
held for seventeen years.
    First, on behalf of the Native people of Alaska, thank you for your 
many years of service in the Congress, in the House of Representatives, 
and on this Committee. We are grateful for you and your dedicated 
staff's hard work over the years. On the ground, at home, your work has 
made a difference. Our people have greater opportunities. Our Elders 
live longer, healthier lives. Our children receive better education. 
Our people live in safer homes. The improvements in our lives are real 
and measurable. We are grateful.
    By way of background, AFN is the largest statewide Native 
organization in Alaska representing more than 130,000 Alaska Natives. 
We are a young, growing population--projected to double in size every 
23 years and so our need for a solid economic base is absolutely 
essential.
    The Alaska Native population, although united in AFN, are a very 
diverse group. We have Yupik, Cupik, and Inupiat Eskimo peoples; 
Athabascan, Tlingit, Haida and Tsimshian Indian peoples; and Aleuts. 
Our Native cultures are land-based, and our occupation and use of our 
land predates Plymouth Rock and the pyramids. And within each cultural 
group, there is diversity--across generations, across geography, and 
across gender. Because of this great diversity, there is no ``one 
solution fits all''. We need a cluster of economic, health and 
educational initiatives which empowers our Native people to be able to 
maintain our unique land-based cultures and participate fully in the 
larger society.
Background:
    AFN was organized in 1966 to facilitate bringing the various 
regional and village associations together, to advocate with one voice 
for a fair settlement of our aboriginal land claims.
    With the discovery of oil in Prudhoe Bay-and the need for clear 
title in order to build a pipeline to bring that world-class discovery 
on line in order to provide for the energy needs of our country--a 
sense of urgency created an historic opportunity for the settlement of 
our land claims. In December 1971, after years of effort by Members of 
the U.S. Congress and Alaska's Native leadership, the Alaska Native 
Claims Settlement Act, (ANCSA), P.L. 92-203 was signed into law by 
President Richard Nixon. In extinguishing aboriginal claims, Alaska 
Natives were compensated with fee simple title to 44 million acres of 
land and $962.5 million for lands lost to state, federal and private 
interests. The Act created 13 regional for-profit corporations and more 
than 200 village corporations to receive and oversee the land and 
monetary entitlements.
Native Corporations--Value-based Entities
    We have now had thirty-six years working in corporate structures, 
modifying them over time with your help, to better meet the aspirations 
of our people. Our corporations continue to be value-driven entities--
let me share one small example: NANA Regional Corporation, representing 
the Inupiat people in Northwest Alaska has as its corporate values the 
following statements:
Honesty and integrity will govern all activities
All individuals treated with respect
Commitments made will be fulfilled.
    This is what the NANA leaders say and believe. This is what they 
instill in all their employees and strive to be. Other Native 
corporations have similar statements of values, and they are not just 
on paper. We are deeply influenced by our cultural values as we go 
about the hard work of building sustainable economies. It makes for 
high standards, but in respect for our Elders, we can do nothing less 
than our very best.
Current Situation: The U.S. Economy is Strong and Expanding, but 
        pockets in the U.S. are still excluded from the economic growth
    As Americans, we are fortunate in the last few years to be living 
within a strong U.S. economy, which continues to expand. But we know 
this strong U.S. economy is not shared throughout the country and there 
are pockets of communities still struggling. We in Alaska, live in a 
homeland full of potential. We need your continued attention and 
support to ensure that all our Native people have the opportunity to 
fulfill the promises of both our land settlement and as citizens of the 
United States, living in the strongest, most powerful country in the 
world.
    The rapid pace of change with technology and globalization requires 
the United States to look closely at the regional economies in our 
country. The Congress must provide targeted assistance, as necessary, 
so we may have access to, and keep up with changing technology, and 
ensure that the ``economic pie'' continues to expand, rather than 
constrict. We need a level playing field and a hand up, to allow Native 
entities to participate fully and keep the United States competitive in 
the world economy.
The remainder of my testimony will cover the following areas:
    1.  8a Government Contracting and the Special Trust Relationship
    2.  Alaska Native Participation in the 8a Program--Part of the 
Solution
    3.  Other Economic Initiatives--Applying Fifty Years of U.S. 
Development Experience--A New Demonstration Project (H.R.3351)
    4.  Recommendations and conclusion.
8(a) Government Contracting and the Special Trust Relationship
    Over the years since ANCSA was passed, Congress has enacted many 
laws to foster self-sufficiency and economic development in Native 
communities. Among the most successful of these laws are the special 
provisions implementing Section 8(a) of the Small Business Act. The 
contracting status offered by the 8(a) program is based on the trust 
and statutory relationship between Native Americans and the federal 
government. As you are well aware, there is a special legal and 
political relationship between the United States and Indian and Alaska 
Native Tribes, and that special legal and political relationship is 
grounded in treaties, the United States Constitution, federal statutes, 
court decisions and a history of negotiations. We also note that this 
special legal and political relationship between the United States and 
Native American tribes includes Alaska Natives. Although the legal 
status of Alaska Native corporations is different than that of Tribes, 
it has long been recognized that a special legal and political 
relationship exists between the United States and Alaska Natives.
    The federal government has an obligation to foster self-sufficiency 
and economic development in Native communities. Congress amended ANCSA 
to help Alaska Natives overcome barriers to economic development in 
rural Alaska by allowing them to be eligible to participate in the 8(a) 
program. We consider this an integral part of the original ANCSA 
economic settlement.
    The ANCSA regional and village corporations and tribes in Alaska 
that have participated in the 8(a) SBA program have achieved success by 
providing real value and quality work for the government at a fair 
price. By paying attention to detail, and by being careful stewards of 
the responsibility entrusted to us by the government, we have delivered 
a needed service to the government while at the same time providing job 
opportunities and economic upward mobility opportunities for our Native 
people.
    Since our land base and resources are held by our Native 
corporations, and are not trust lands held by tribes with reservation 
status, the financial health of our Native corporations is extremely 
important to our continued existence as distinct, land-based cultures 
and peoples living in the United States. Contracting opportunities have 
allowed us to contribute to our country, gain experience, continue to 
build capacity, and reinvest profits back into our corporations and 
people for the future.
    As First Americans who have used and occupied our homelands in 
Alaska for over 10,000 years, and who continue to live in the farthest 
Northern corner of the United States, we are here to stay. We have a 
land base, are building our capacity in the use of corporations, and 
are modifying the corporate structure with the help of the Congress to 
better meet the needs of our people. Every Congress since 1971 has had 
a package of technical amendments to fine-tune various aspects of the 
original settlement.
    As I said, we have 36 plus years enmeshed in capitalism as a result 
of our 1971 land claims settlement in which you--the Congress--chose 
the corporate form of governance for our people. We have had a steep 
learning curve.
    Participation in the 8(a) program has enabled our Native-owned 
businesses to develop the experience, skill and expertise necessary to 
succeed in the competitive business market. The 8(a) program has helped 
Alaska Native entities overcome significant economic barriers, create 
and expand competitive businesses in the private and federal markets, 
create new business opportunities in remote rural areas of our state 
and return profits to our communities.
Alaska Native Participation in the 8(a) Program--Part of the Solution
    One of the reasons we are here today, with a united voice, is to 
tell you that we need this program for our people. It is an exceedingly 
rare example of federal Indian policy that successfully promotes 
economic development and self-sustainability without large direct 
federal appropriations.
    There have been many examples stated earlier in this hearing from 
Native participation in the SBA 8a program. Others at this hearing will 
place into the record statistics and concrete examples. I would like to 
highlight several areas: capacity building, improving productivity, 
learning from mistakes and shared best practices.
    In my view, participation in the 8a program builds capacity in our 
people to contribute to U.S. competitiveness in the global economy. 
This is not a hand-out. We are helping the government by providing 
quality services which the government wants and needs. It is not all 
about us and what we want. It is about what the government wants and 
how we can help.
    Participation in the SBA 8a program forces us to be as productive 
with our resources and manpower as possible. We make improvements 
continually and this makes for tighter operations and less waste. This 
makes the government more productive and it builds work practices which 
are superior and strives to be nothing short of excellence.
    Participation in the SBA 8a program and government contracting in 
general will never be free of errors or mistakes. When we identify 
areas of improvement, or errors we have systems for self-correcting. 
This is an important capacity and bodes well for the future. You can 
look at stacks and stacks of letters of commendation that Native 
contractors have received for improving services on specific jobs for 
the government. We are very proud of this.
    Participation in the SBA 8a program allows us to learn. We have 
opportunities to identify and share best practices--basically the 
unlimited opportunity to marry best practices learned to other 
endeavors within our Native communities. Incentives must be put in 
place to drive this experience to other sectors within our communities. 
For example: our experiences in logistics in contracting should carry 
over to our housing and health systems; our experience in growing 
Native managers and professionals--carry over to governance and not-
for-profit sectors; and accountability--applies to all we do. For 
example, one of the best things I have felt personally about the SBA 8a 
experience, especially with Department of Defense contracts, is the 
need for Native leadership and managers to go through the government 
security process and obtain top security clearances. Nothing tells a 
Native leader or manager more about the importance of the contracting 
work than to know your federal government depends on you. You rise to 
the challenge.
    Lastly, the program is the cornerstone of our future and we need to 
strengthen it for the benefit of all Alaska Natives and American 
Indians. As less and less funding is available for Indian concerns 
including health and social benefits, Congress should look more closely 
at programs like this one that benefit both Alaska Natives and American 
Indians by helping them attain economic independence.
Other Economic Initiatives: Applying 50 Years of U.S. Development 
        Experience, A Demonstration Project (H.R. 3351)
    Earlier in my testimony, I spoke of the diversity within the Native 
people of Alaska. I also mentioned that no one solution fits all. An 
exciting new initiative, outlined in H.R. 3351 speaks to testing out 
another model of building Native economies. H.R. 3351, the ``Native 
American Challenge Demonstration Project Act'' has been introduced by 
Congressman Young and is pending in this Congress. The Alaska 
Federation of Natives is very supportive of this bill, which we believe 
represents a welcome paradigm shift in the way the federal government 
promotes economic development in Native America. It also represents the 
fruition of several years of intense discussion within parts of the 
Alaska Native community on how we can meet the challenge of reducing 
poverty and promoting sustainable economic growth in our rural 
villages.
    Briefly, the underlying concept of the bill is to apply the lessons 
learned from decades of American experience in providing foreign aid in 
the developing world, and applying those lessons domestically in remote 
parts of Native America. The bill builds heavily on the approach used 
by the Millennium Challenge Corporation, in that it uses a compacting 
model to channel a significant amount of development funds for 
implementing locally designed economic development strategies. As 
introduced, the bill would authorize $100 million over five years, for 
disbursement in five pilot projects nationally, one in Alaska, one in 
Hawaii, and three in the Lower 48 States.
    For the Alaska component, AFN has worked closely with two Native 
regional organizations in southwest Alaska, the Association of Village 
Council Presidents and the Bristol Bay Native Association. Together 
these adjacent Native regions span 96,000 square miles, and contain 87 
Native villages and one-quarter of the Native population of Alaska. 
These regions have a rich cultural heritage, and truly incredible 
natural resources, yet paradoxically have among the highest poverty and 
unemployment rates in the state, and in the country.
    We believe that these regions are ripe for this demonstration 
project. Both regional organizations are experienced with operating 
federal programs under Indian Self-Determination Act compacts, have a 
history of collaboration, and have done much of the planning legwork 
for undertaking economic development using this model.
    The experience of the AFN, BBNA and AVCP and others, is that many 
federal programs that should foster economic development are 
splintered, suffer from lack of coordination between federal agencies, 
are often poorly timed, and are complex and poorly understood by their 
intended beneficiaries. They thus remain under-utilized, as was borne 
out by the 2001 General Accounting Office report, GAO-12-193, which 
reviewed the effectiveness of some 100 federal programs that serve 
Native Americans.
    The Alaska Federation of Natives urges Congress to take self-
determination to the next level, and to foster--and adequately fund--
locally created strategies for reducing poverty and fostering economic 
growth. H.R. 3351 will do this.
Recommendations and Conclusion:
    The following recommendations are offered in the spirit of positive 
dialogue on the role of the federal government to constantly seek to 
expand the ``economic pie,'' and to share the prosperity of our growing 
economy to the pockets of people within the United States that are 
often left out, and left behind.
    1.  We ask the Committee to closely follow the SBA Administration's 
8a consultation process and support administrative recommendations to 
strengthen the program. There is no need to enact legislation now. 
Let's let the administrative process proceed. AFN, together with the 
National Congress of American Indians and others are assisting in the 
consultation process. In fact, the first Alaska meeting is on October 
24th in Fairbanks, prior to our Annual AFN Convention. AFN would be 
pleased to provide the Committee a detailed report and our 
recommendations following all the consultation meetings.
    2.  Congress should support and enact this year, H.R. 3351, a 
demonstration project applying fifty years of U.S. development 
experience to Native American communities. Give our project a chance 
for success.
    3.  Recognizing that U.S. businesses, including Alaska Native 
corporations, are not just competing with other states for jobs, but 
are also competing with China, India, Korea and other countries for the 
capital to build businesses, and recognizing that the jobs go where the 
businesses go, Congress should make high-speed telecommunications a 
national priority to help drive up our country's productivity and 
potential for economic growth. We need fast, accurate communication 
networks to stay competitive in the global economy. Given the 
geographic breadth of Alaska, and its strategic location in the growing 
East-West sphere, we need the most advanced telecommunications services 
in order to continue to build our capacity and to compete for jobs and 
capital.
    4.  Congress should enact legislation to change the investment 
climate in rural Alaska and within reservation economies across the 
country. The Congress should support economic development by creating 
investment guarantees by expanding current U.S. economic policy to 
offer domestically the same incentives that are offered to investors in 
China, India and Brazil.
    5.  Congress should authorize a feasibility study of a 
demonstration project in Alaska to be the first outsource free trade 
zone in the United States. Similar feasibility studies should be 
authorized for other Native American communities, if there is interest. 
In order for the U.S. to compete worldwide for jobs and capital, we 
must offer business advantages that can compete with other major out-
source suppliers in China, India, and now Dubai in the United Arab 
Emirates. Recent reports indicate that Dubai is looking at a targeted 
share of 5 percent of the global outsourcing industry in five years. 
Dubai has set up a trade zone that offers advantages such as 
streamlined bureaucratic processes, zero corporate income tax, and zero 
personal and sales taxes. The country is also funneling a large amount 
of funds into construction and diversification plans. A feasibility 
study of a demonstration project in Alaska, and within other Native 
American communities, would examine the pros and cons of such an 
approach in the United States, and tell us whether or not it makes 
sense. If Congress decided to authorize such a feasibility study, the 
AFN would like to be a part of it.
    6.  Congress can enact legislation to create ``knowledge economy 
ecosystems'' designed to support the business and government needs of 
information and communications technology and include other sectors. 
Congress is aware that knowledge is the most valuable commodity in the 
economy of the post-industrial world. Congress can ensure that Alaska 
Natives are able to participate in the global economy, even among 
business giants that have tremendous wealth and the ability to innovate 
beyond what we can now imagine. Congress should note that Dubai is 
setting up what is called the Dubai Knowledge Village--described as a 
vibrant, connected learning community that will develop the region's 
talent pool and accelerate its move into the knowledge economy. 
Congress must not allow U.S. businesses to fall behind or be hobbled in 
their drives to be competitive entities in the global economy.
    7.  Congress can support multiple demonstration projects on 
workforce development for the knowledge economy, including one in 
Alaska. A multi-department initiative including the U.S. Departments of 
Labor, Education and Commerce is needed immediately.
    8.  Congress should authorize and fund a knowledge-management/
financial entity to capture best practices in government contracting. 
This entity would foster innovation in developing the capacity of 
Alaska Native peoples and their organizations. It would identify 
strategic drivers, forecast various economic scenarios and trends, and 
review developing models for promising practices in the delivery of 
services for both the government and private sector. Most importantly, 
it would help facilitate expanding mentorship opportunities and breathe 
fresh air into technical assistance efforts. A focus on improved 
productivity and best practices would equal savings to the government 
and improved services. Again, a similar entity to focus on reservation 
specific contexts should be considered if there is interest.
    9.  Congress should establish two different financial funds, a 
Native American Economies Diagnostic Studies Fund and a Native American 
Incubation Center Fund. The first fund--the Native American Economies 
Diagnostic Studies Fund--would be designed to provide comprehensive 
economic analyses of Native economies and, in turn, offer 
recommendations to remove or ameliorate inhibitors to greater 
investment and job creation. AFN has recently created an Economic 
Diagnostic Fund, which is a public-private partnership to begin this 
needed effort. The support of this Committee, and action by the 
Congress to ramp up this effort would be very helpful. The second 
development fund--the Native American Incubation Center Fund--would be 
designed to encourage the design and implementation of pro-growth 
economic policies to help stimulate Native economies. AFN strongly 
supports the underlying rationale behind the establishment of funds 
designated for these purposes and believes they would assist economic 
development throughout Alaska, and within other Native American 
communities, if they were enacted into law.
    In closing, I would like to commend the committee for their 
commitment to the issue of economic development and for looking at 
strategies for building healthy Native economies and stronger Native 
communities. I ask you on behalf of the Alaska Native people to 
consider the enormous benefits the 8(a) program has provided to Alaska 
Natives and the role it plays in fulfilling the federal government's 
obligation to foster self-sufficiency and economic development for our 
people. The continuation of the program is essential in helping Native 
people gain control over our future, over our lives, and over our 
destinies. It is also equally important to support a cluster of new 
economic initiatives which fosters innovation, economic growth and 
shared prosperity.
    Thank you for the invitation to testify, and I welcome any 
questions you might have.
Attachments:
    1.  Matrix of Alaska Native Organizations and State and Local 
Governments
    2.  Matrix on Native Peoples and Languages of Alaska
    3.  Several maps of Alaska for comparison purposes
                                 ______
                                 

                 Native Peoples and Languages of Alaska

    The aboriginal affiliation of Alaska Natives is derived from 
ancestral linguistic groups. The two major Alaska Native language 
families are the Eska-Aleutian and Na-Dene. Eska-Aleutian languages are 
further divided into Aleut and Eskimo--the two major languages in 
Eskimo are Yupik and Inupiaq. The Na-Dene family language includes the 
Athabaskan languages, Eyak and Tlingit. Other language families in 
Alaska are Tsimshian and Haida.

[GRAPHIC] [TIFF OMITTED] T7848.006

    Geographic Divisions: The Inupiat live in North Alaska, along 
the Beaufort and Chukchi Sea coasts (and inland), along the Kotzebue 
Sound, and down to Unalakleet in the Norton Sound. The Siberian Yupik 
(Eskimos) live on St. Lawrence Island, while the Central Yupik can be 
found along the coast (and inland) of Norton Sound from Unalakleet to 
Egegik in Bristol Bay. The Alutiiq (Eskimos) are found primarily on the 
Alaska Peninsula, Kodiak Island, and along the coast into Prince 
William Sound up to Eyak. The Aleuts live primarily on the Aleutian 
Islands. Athabaskans (Tanaina, Ahtna, Ingalik, Upper Kuskokwim, 
Holikachuk, Koyukon, Tanacross, Upper Tanana, Han, and Gwich'in) are 
found in Interior Alaska. The Eyak, Tlingit, Haida and Tsimshian live 
primarily in southeast Alaska.

[GRAPHIC] [TIFF OMITTED] T7848.007

[GRAPHIC] [TIFF OMITTED] T7848.008

    Background: To gain perspective, it is helpful to realize that 
the United States is about half the size of Russia, about 3/10th the 
size of Africa, about 1/2 the size of South America, or slightly larger 
than Brazil, slightly larger than China and about 2 1/2 times the size 
of Western Europe. Within the United States, Alaska is the largest 
state, about 2.3 times the size of Texas and about 1/5th the size of 
the lower 48 states.
[GRAPHIC] [TIFF OMITTED] T7848.009

    Alaska has one of the largest Native populations in the United 
States. Our people make up about 22 percent of the total population in 
Alaska and our people are scattered across the entire breadth of the 
state. Our Native cultures are land-based, and our occupation and use 
of our land predates Plymouth Rock and the pyramids.
    For comparison purposes, the next map is created by overlaying the 
boundaries of the State of Alaska over Europe. As you study the 
overlay, you will see how many countries of Europe are totally 
engulfed, or touched within the boundaries. They include Portugal, 
Spain, Germany, France, Switzerland, Italy, Austria, Slovenia, 
Macedonia, Bulgaria, Romania, Ukraine, Hungary, Belarus, Slovakia, and 
the Czech Republic. If you stop and think about this for a minute, you 
will understand how large Alaska is as a land mass and how great the 
logistics and infrastructure needs are in terms of building sustainable 
economies. To survive and prosper in such an environment requires 
tremendous effort and supportive government policies.

[GRAPHIC] [TIFF OMITTED] T7848.010

                                 
    The Chairman. The Chair thanks the panel for their 
testimony, and travel sacrifices to be with us today.
    The Chair will recognize first the Ranking Member from 
Alaska, Mr. Young.
    Mr. Young. Thank you, Mr. Chairman. Sorry. I hit the 
jackpot.
    The Chairman. Yes, and you didn't know it.
    Mr. Young. Before I ask a couple of questions, thanks to 
the panel for your presentation. I would like to see everybody 
involved in this activity, and your recognition of how good the 
8[a] contracts have worked.
    But it hasn't been brought up, Mr. Chairman, I want to make 
it clear because this whole interest in the other committee has 
been on our 8[a]s in Alaska, Alaska Native Corporations, and 
for some reason they are saying that only they can have 
multiple contracts, and large contracts, that is not true. All 
Tribes are eligible for that, and that is why I would like to 
see you gentlemen at the table specifically because this is a 
nation issue. It is not just Alaska. Alaska is sort of in the 
forefront because they have been attacked, and I hope you 
encourage your tribes and your reservations, everybody to get 
involved because it is a great program. The government has been 
very successful.
    Along those lines, Ms. Kitka, the Alaskan 8[a] programs 
have or are eligible for unlimited negotiated direct award or 
sole source contracts from the Federal government when 
individuals have dollar thresholds or capped amounts. The 
criticism I mentioned about this perceived disparity has 
plagued Alaska Native contractors.
    Why do you think the structure is fair?
    Ms. Kitka. Why do I think that the structure is fair?
    Mr. Young. As it is done today.
    Ms. Kitka. Well, I think that the structure is fair because 
of the nature of our business enterprises and our corporations. 
In our land claim settlement in 1971, our land and resources 
were put into corporate structures, not the reservation 
economy. So our Native people are shareholders in these 
corporations, and so it is not one person that is benefitting 
in the 8[a]. Many of our corporations have thousands of 
shareholders, and so the beneficiaries of the work and the 
small return from the work on that is shared among a very large 
group of people.
    Mr. Young. That is what I wanted you to say because there 
has been some perception that because it is a Native 
corporation, or Alaska corporation or any other Native 
corporation, that those dollars are going to an individual when 
it is really being spread out in shareholder payments, and it 
is not one contractor which under the 8[a] program it goes 
directly to the benefit of that one person. But in reality, as 
we will hear from another witness today, the corporation, small 
village, Afognak, for instance, has 240 people. Any monies that 
is generated by a contract is dispersed between the 240 people, 
not just one person.
    Ms. Kitka. Yes, Congressman Young, and in fact many of our 
corporations are expanding their shareholder roles, including 
the younger generation. Sealaska Corporation just voted to open 
up their rolls to expand to increase their shareholders, Arctic 
Slope, Nana, Inc., Doyon Limited, and others. So our 
corporations are growing in membership as our population 
increases. So the number of beneficiaries on that actually 
increases the Alaska Natives as more people are born.
    Mr. Young. Good. Again, though, Tex, I liked your comment 
too about there is a different culture. There is a sharing 
concept, and this program has been very successful in sharing 
any gains that were gotten, and it is again a classic example 
of a success story, and I just hope more people participate in 
it.
    You mentioned, you know, added value products. The Alaskan 
and American Indian lands, native lands have huge possibilities 
of wealth of all types, and it should be used to create 
entrepreneurship by those shareholders and not just farmed out. 
I am talking about natural resources of all types, renewable 
and new. I just think it is a good program.
    Anyone want to comment on that, and then I am through with 
my comments.
    Mr. Hall. Congressman, just a brief comment. I appreciate 
your questions and your advocacy, but I guess my point is, to 
follow what you are saying, ITEA is multi-tribally owned by 15 
Tribes that have an 8[a] contract with the SBA and the Marine 
Corps. So that is an example of more than one Tribe. And we 
started a beef and buffalo and foods, so we are going to need 
salmon. You know, we are going to need buffalo. We are going to 
need beef to enter into a DOD contract. I mean, one Tribe 
cannot supply. You need a multitude of Tribes and Native 
Alaskans, and we also have Native Hawaiians as part of our 
consortium. They might have some good fish there too.
    So the bottom line is we can fulfill a contract if we have 
a consortium, so you are absolutely right, and that is the 
direction we are going.
    Mr. Young. One thing you have to keep in mind, we don't say 
``might'' in Alaska. We have good fish in Alaska.
    [Laughter.]
    Mr. Hall. Got it.
    Mr. Young. Thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Young.
    Tex, let me ask you my first question. Do the different 
regulatory criteria for ANCs and Tribal 8[a] and Native 
Hawaiian organization affect the operation of ITEA? You know, 
ITEA is a component of each.
    Mr. Hall. Not at all, Mr. Chairman. Not at all. And ITEA is 
multi-tribally chartered. We have a for-profit--well, ITEA is a 
nonprofit, but has six for-profit companies, and with the 8[a] 
my understanding in talking with the SBA, and I think I 
mentioned it to Bill Largent as well when they hosted a 
meeting, ITEA is the only multi-tribally owned 8[a] contractor 
that has an 8[a] contract, but it just goes to show that if it 
is Tribal, lower 48 Tribes, Alaska Natives, or Native 
Hawaiians, the way the government is treating us is that we are 
a Tribal 8[a], and we have the same access that a Tribe in 
Sisseton, South Dakota, has as an 8[a] company. So there is no 
difference in the way that we are being treated by the SBA.
    The Chairman. So as a holding company then, ITEA is not 
subject to the same nonFederal contracting requirements as 
other 8[a] companies?
    Mr. Hall. Yes, that is correct.
    The Chairman. OK. President Garcia, let me ask you. At the 
end of your testimony NCAI makes several recommendations on how 
to improve the 8[a] program. Do Alaskan Native and Native 
Hawaiians agree with your recommendations, and have you shared 
these recommendations with the SBA? If so, what are their 
responses to all above?
    Mr. Garcia. Yes. I think, Mr. Chairman, the most important 
thing to acknowledge is the fact that we have not worked in a 
bubble ourselves as NCAI or NACA or any of the other alliances. 
We have shared and we have held summits. There has been a lot 
of discussions about what factors might be the most feasible to 
push forward, and all of the recommendations that we made have 
been shared with the entities that you ask of, and so the 
recommendations have been put forth with that light, and with 
that in mind, so that we have more flexibility, we have strong 
partnerships, and that if we work together we solve the right 
problems. If Mr. Kildee was here, I think he would appreciate 
that we are solving the right problems, and so there are two 
partnerships in the discussions and the effort that we have put 
forth.
    The Chairman. What can this committee do to help preserve 
these programs and expand the opportunities for those that are 
not participating therein?
    Mr. Garcia. One of the most important things I think that 
would be helpful is for this committee to use their judicial 
strength or their jurisdiction strength for also working with 
other entities within Congress or within other funding sources, 
funding mechanisms, projects, and grants that are available, 
and help promote that and support the efforts that we put 
forth, but as well, I think, to help the other agencies in the 
Federal government to understand from this level perspective, 
from a congressional and a committee perspective that there are 
these good solutions, and Indian Country is a good risk for 
economic development.
    To give you one prime example is that energy is a big issue 
in this country, and part of the solutions that this country 
ought to have is to go and work with the Native American 
community because the energy resides naturally in those regions 
and areas. And so if we partner up, then we have found partial 
solutions, not completely solution, but partial solution for 
the energy in this case, but there are numerous other areas 
that we can continue to work on like education, like housing, 
like infrastructure development, and those kind of things.
    So I think that it would be very, very, very beneficial to 
all of us in terms of the country and what we can provide doing 
partnerships.
    The Chairman. Great. Thank you.
    Chairman DuMontier, how do you respond to those that claim 
that the Native 8[a] provisions give Native contractors an 
unfair advantage over other minority contractors?
    Mr. DuMontier. I have a difficult time with the term 
``unfair'' as a Tribal person, especially when it comes to 
economic development. I am certainly not going to lecture to 
this committee about the history of the Federal Tribal 
relationship or the fact that the United States Constitution 
has in it the Indian commerce clause that some 200 years later 
we are just getting around to doing something about.
    What I do want to say is it is not unfair what Tribal 
people and Tribal businesses are doing. What is unfair is how 
we are being judged. The lack of information that goes with 
that judgment, the concerns that are being raised by opposing 
parties are not founded in fact. They are not founded with an 
understanding of what is happening in Indian Country, and that 
is the unfairness or the injustice that we are dealing with 
here, not the 8[a] program.
    The Chairman. Beautiful response. Thank you.
    My time is up. Let me yield to the gentlelady from 
California, Ms. Napolitano.
    Ms. Napolitano. You have heard some of the questions that I 
have had to the prior panel in regard to the funding that has 
been put in for assistance to minorities, especially Native 
Americans. Do you have any comments or any assistance that we 
can begin to focus on to be able to expand that assistance for 
economic development for training and education of the Tribe 
youngsters for a whole host of things?
    I would like your comments, sir, Mr. DuMontier, in regard 
to it has been in the act for many years and we are just now 
moving forward. How can we not only accelerate it but put the 
emphasis on without having legislative mandate, which is 
ignored half the time?
    Mr. DuMontier. I thank you, Congresswoman, for that 
question. I began my Tribal career over 30 years ago in Tribal 
education. So dealing with youth is near and dear to my heart.
    What I do want to say is this. If we want to build Tribal 
entrepreneurs out of this current generation for the future, 
then what we have to do is support the Tribal entrepreneurs 
that we have in this generation. And if we want to support the 
Tribal entrepreneurs that we have in this generation, then we 
also need to take a look at the Tribal entrepreneurs that have 
succeeded over the last 20 some years, and I am referring to 
our friends to the North, the Alaska Native Corporations.
    We talk in terms of the ANC problem or we talk in terms of 
the 8[a] problem, but the reality here is what we are talking 
about is Tribal business success. If we are going to build a 
good future, we have to not penalize those who are 
demonstrating the success and give our children something to 
look forward to, something that we can encourage them with.
    Ms. Napolitano. Explain penalize.
    Mr. DuMontier. To date, even though there have been no 
regulatory nor legislative changes to the 8[a], it has been 
referred to at one point in time about five years ago by the 
Department of Defense as ``bullet proof acquisition strategy 
for the war fighter.'' Today, it is referred to as a ``loophole 
gone wild.'' There is a great deal of fear about using the 8[a] 
contracting tool because of all of the chatter and the noise 
that has been created around the very marginal successes the 
Tribal people are just beginning to demonstrate in this area.
    So if a little bit of success is going to be met with 
opposition and fear, then what are our children going to learn 
from that, and what type of economy are the going to have to 
work and to build upon in the years to come?
    We need to solve this problem now and embrace what is 
happening instead of fearing it.
    Ms. Napolitano. Could part of the solution to being able to 
develop strategy to help those economies be part of teaching, 
and I am talking in terms of teaching then health issue, how to 
address the alcohol issue, how to address all those issues, and 
have that be part of something that we can begin to not 
legislatively but through the administration, the agencies 
themselves be able to infuse more attention and funding toward 
that?
    Mr. Garcia. I would like to answer that if I may. The first 
thing is that when we talk about economic development there are 
assumptions in the country about infrastructure already exists, 
and when you talk about Indian Country that is so far from the 
truth. So I think it is important to realize that. If we are 
going to start projects, if we are going to start programs and 
grants, that is just a step in the right direction, but we have 
to realize that the infrastructure needs to be in place. That 
is the prerequisite of any business.
    So if you talk about an infrastructure, infrastructure, I 
am a strong believer that the human infrastructure has to be in 
place because if you don't have the human infrastructure, then 
we are looking for people coming onto the businesses that we 
have to hire from elsewhere, and so what better protocol, 
should we have our own protocol about building and growing our 
own, and that means talking about all of the opportunities that 
our children could have, but they have to be educated and we 
have to continue to promote that.
    So in the bigger picture as I always say, we have to look 
at the educational process and build our own and grow our own 
so that they have opportunities, but also promote that if you 
have economic development, if you have diversity in your 
economic development, then our children can come back and they 
can help, and they will then build their own, and that is part 
of self-determination.
    So I am proposing that that is where the partnerships 
within the other entities, Federal agencies, and any other 
program, that there ought to be a lot more flexibility when we 
develop grants and funding sources and other things, that the 
flexibility ought to be there so that we can integrate, and 
that is going to be the primary solution, otherwise it is a 
piecemeal approach which is the piece that we have been doing 
and it hasn't worked. Thank you.
    Ms. Napolitano. I believe Mr. Hall can answer that, please.
    Mr. Hall. Madam Congresswoman, we, at ITEA, made an 
assumption that if we are going to create a couple hundred 
thousand jobs that there would have to be training dollars to 
go along with it. You just can't create that many jobs or 
25,000 businesses with 100 employees each equals that, you just 
can't do that without training dollars.
    So I just don't think that there are set aside that kind of 
dollars for the initiative that we at ITEA are talking about, 
but you are totally on point. When I was principal back in 
1995, I don't even know if it still exists, it was called 
School to Work Program in Education, I got talked out of 
education because we would get them into grade 9 or grade 10, 
and then they would have to do job shadowing. Well, there were 
no jobs on the reservation, so that program kind of went to the 
side.
    But now that jobs are really being focused on and being 
created in Indian Country, I think the training and those 
dollars have not come with it. So I really think there needs to 
be a special initiative that is discussed about the amount of 
dollars that are needed to create these amount of businesses 
and these amount of jobs. It is just not there.
    Ms. Napolitano. Thank you. Thank you, Mr. Chair.
    The Chairman. The gentleman from American Samoa, Mr. 
Faleomavaega.
    Mr. Faleomavaega. Thank you, Mr. Chairman. It is always a 
pleasure to see our dear and close friends, Tex Hall and Mr. 
Garcia, to testify, and Mr. DuMontier, I didn't have a chance 
to get to know you, and as the gentleman from Alaska had 
indicated earlier, always a real pleasure to welcome Julie 
Kitka to testify this morning.
    I would be remiss if I did not also recognize the presence 
of a dear friend, a former member of the staff of this 
committee, say a fond ``ya'ah'teeh'` (hello) to Chris Sterns. 
Chris, are you there? I thought it was you. You picked up a 
little weight, but don't hide from us, Chris. Good to see you.
    I am really torn by so much information and also for 
something that--I am torn by the fact of what can we do. Now, I 
know it sounds like a dreamy idea on my part to suggest that 
the very bill that the gentleman from Alaska introduced 
earlier, a domestic version of the Millennium Account. I think 
it is an excellent idea, and my question is why can't we have a 
domestic version of the Marshall Plan? Why can't we have a 
domestic version of the free trade agreements that we have with 
all other countries of the world? I mean, why can't we do that, 
Mr. Chairman?
    The Chairman. Why can't we do here what we are doing in 
Iraq?
    [Laughter.]
    Mr. Faleomavaega. Only $3 billion a week, we have already 
expended $600 billion. Anyway, I sit on the House Foreign 
Affairs Committee, and there is a program that I want to bring 
to the attention of our good leaders here and put it out in 
Indian Country. It is called the Overseas Private Investment 
Corporation. They sit on a $6.2 billion pot to allow American 
companies or to encourage American companies and businesses to 
set up shop in a foreign country, and in return you provide 
jobs for those, especially Third World countries, jobs, 
employment, business opportunities, and I just wanted to share 
that with our friends here. It is out there, and please, if I 
could be of any help, why can't we do that? There is a pot in 
that little program that we have there.
    I wanted to ask Mr. DuMontier, you noted quite well the 
fact that our friend from GAO really didn't have any more than 
just to suggest that we do more oversight of the 8[a] program. 
Could we put a little more teeth or maybe even more substance 
by way of amending the current law to satisfy some of the 
concerns that you raised here?
    Mr. DuMontier. To satisfy the concerns that I have, all 
that needs to be done is for the program as it currently exists 
be given an opportunity or given the time to work. We don't 
need any regulatory or legislative changes to the existing 
tools that are in place. The successes that you have heard 
about today are a direct result of the tool that is in our 
place.
    Our problem here is that there are those who now want to 
remove that tool or diminish that tool. All we are arguing for 
is an opportunity to continue the track that we have 
demonstrated some success on.
    Mr. Faleomavaega. Can you share with us who are those who 
are trying to destroy the program? Is that a better term, 
destroy the program?
    Mr. DuMontier. There are political leaders in the Congress 
that have gone on the record as indicating that the sole source 
provisions of the 8[a] program, combined with the inadequate 
oversight of the SBA, is a very dangerous tool to have in 
place.
    We are Tribal people. We are first Americans. We understand 
working with the Federal government better than most people do. 
We would not do anything to harm it. We would not do anything 
to hurt the future of our children or what it is that we are 
trying to achieve with today's businesses. We are first 
American. We are putting America first, and those people who 
don't understand that need to learn about what we are here for.
    Mr. Faleomavaega. Mr. DuMontier, I could not say more than 
what you have suggested here after 250 years, unfortunately, 
because every two years we have new members who have no 
concept, no understanding, no appreciation of the problems with 
our first Americans. It is sad but that is the reality of the--
--
    Mr. Young. Would the gentleman yield?
    Mr. Faleomavaega. I would gladly yield.
    Mr. Young. Would you please go back to my state and tell 
them that they need somebody with knowledge, and that type of 
thing. I would really appreciate it.
    [Laughter.]
    Mr. Faleomavaega. And taking my time back, I want to say to 
the gentleman from Alaska, and I really mean, sincerely mean 
what I say, I am not trying to comb his hair or whatever is 
left of his hair.
    [Laughter.]
    Mr. Faleomavaega. This is our saying in my culture. When 
you are trying to pat someone on the back don't comb his hair. 
OK. And I am not combing his hair. I really truly, truly of the 
years that this gentleman has served, and the 20 years that I 
have served on this committee, I cannot think of a person who 
is more committed to the needs of the Native Alaskan people, 
and Alaska, and should be because that is the people he 
represents, and by all means. So I won't say a White man. I am 
saying a human being, and I say this sincerely because, you 
know, when I saw the movie ``Dances with Wolves'' and the dream 
of the medicine man as he is taking Costner somewhere along the 
river, and you know what it seemed, the highest tribute of a 
Native American to live as a true human being, and I think that 
is something that we here in America should learn a lot more, 
and unfortunately, like you said, Mr. DuMontier, it is just 
really sad that not many of our fellow Americans know enough 
about the plight, the sufferings and the problems that our 
Native American community have had to endure.
    Now, our African American brothers say ``We shall 
overcome.'' You know what I say about our Native Americans? 
``We shall endure.'' This is after 500 years, and you are still 
enduring.
    Julie, I am sorry, I didn't mean to put you out. I just 
wanted to say thank you, this proposed bill and what you are 
trying to do, and my good friend from Alaska is trying to do. I 
hope that every member of this committee should co-sponsor this 
legislation because it is an excellent pilot project of being 
more self-sufficient economically, and I want to say to the 
members of the panel, I always say this to my own people, 
education is the salvation to our Native American people. That 
is the bottom line. I don't care how you cut it. We have to 
focus on the fact that we need education for our Native 
American community. That is my humble opinion.
    I am sorry, Mr. Chairman, I have taken too much of the 
time, but again I want to commend an excellent panel for 
bringing all of this, and my good friend from Alaska.
    Mr. DuMontier. Sir, if I may address a portion of the 
question----
    Mr. Faleomavaega. Sure.
    Mr. DuMontier.--about what can you do. We talked about 
oversight, and part of the oversight issues have been raised 
because there is no real office or person designated at SBA to 
provide that oversight, and the questions you asked earlier 
about data. You know, there is no data that is categorically 
the Native American side or 8[a], if you will, and I think that 
if the office was in place there would be plenty of opportunity 
to decipher and look at that data, gather the data, number one, 
and then to use the data to then further enhance all of the 
things that are happening in Indian Country relative to not 
just 8[a], but how it then helps economic development overall.
    Mr. Faleomavaega. And if we do that, then they will say, 
well, this is race preference. I mean, I get hit with that all 
the time too. Every time we try to help our Native Americans, 
they say, oh, it is race preference. It is unconstitutional.
    Mr. DuMontier. But there are other offices established in 
other entities like the Department of Energy. We just heard a 
confirmation about a person appointed to the Indian Office at 
the Department of Energy, and there are other agencies that 
have that same level of leadership, if you will. So it would be 
just a--I don't know if it requires legislation, but if it 
does, maybe that would be one thing, but if it can be done 
administratively, so be it. That would be more power to us. 
Thank you.
    Mr. Faleomavaega. Thank you. Thank you, Mr. Chairman.
    The Chairman. Thank you, Eni. And I would say the words you 
had to say about our Ranking Member where appropriate, and most 
of them true only because of the strong women that has always 
stood behind him.
    [Laughter.]
    The Chairman. In this case, sitting behind him, and that is 
his wife, Lou.
    Mr. Faleomavaega. Mr. Chairman, I second that.
    [Laughter.]
    [Applause.]
    The Chairman. The gentlelady from South Dakota, Ms. 
Herseth-Sandlin is recognized.
    Ms. Herseth-Sandlin. Thank you, Mr. Chairman and the 
Ranking Member. It is a pleasure to see our guests here today. 
I do want to commend all of the folks on the panel here, and 
say to the Chairman how much I appreciate the priorities he is 
giving these issues, and the importance of economic 
development, and the diversity of our economies in Indian 
Country to give our young people hope because, as you know and 
as Mr. Hall states in his testimony, as we all know, the vast 
majority of Tribes do not benefit from gaming. I would agree 
that we all know that sitting in this room, but I don't know 
that some of our colleagues and some of the other folks 
throughout the Executive Branch of government know that.
    When I have my constituents come back from Washington and 
tell me that it seems like they think we can solve all of these 
problems without the obligations and commitment to the treaties 
because they think that the gaming facility we have in a remote 
part of south-central South Dakota is as lucrative as gaming 
facilities elsewhere in the country, and that is what leads to 
epidemics of teen suicide throughout Indian Country for young 
people who feel they have no hope.
    So I think we have to tear down these barriers and these 
walls. We have to work more effectively to help inform and 
educate our colleagues and others across the country who are 
spinning and spreading misinformation about the 8[a] program 
and how it has been used, spreading misinformation about the 
relative wealth of Native Americans in different parts of the 
country, and the culture, and the importance of community, and 
the misunderstanding that has been with us since the country 
began, of the culture and the sense of community and how you 
structured Tribal enterprises, and the importance of what that 
gives to individual members of a certain Tribe or, as Mr. Hall 
was telling us, all of the different Tribes that are 
participating in the Inter-Tribal Economic Alliance.
    I just have a couple of questions on energy. Mr. Hall, 
could you explain further to the Committee the issues and the 
challenges that we are having in access to the electrical grid, 
especially as it relates to the Western Area Power Association?
    Mr. Hall. Thank you, Congresswoman. Good to see you. I 
really appreciate that question.
    At ITEA, we formed MTEC, Multi-Tribal Energy Consortium, a 
for-profit consortium, to follow what ICU, Bob Goff and Pat 
Speers have done with ICU on doing all of the feasibilities and 
the wind studies, now they are ready for development, but the 
number one problem is not having access to that grid in 
addition to the turbines.
    Turbines, you know, that is another issue, but you can 
always find or manufacture or create a manufacturing company on 
a reservation to manufacture turbines, but getting access to 
the grid, when it runs through many reservations, it is really 
disheartening.
    And so working through these initiatives through the 
Western Area Power Administration, I mean, I wish I could say 
it was better, but a lot of lip service, and I have wrote a 
letter to Senator Dorgan, who is the Chair on the Senate side 
on the energy, water and power, to look at legislation, and I 
would ask the Committee to consider that as well, that says 
that Native wind power will have preferential access to the 
transmission to the WAPA grid. Then we can truly help with 
other--Congresswoman Napolitano was talking about blackouts in 
California. We can't take the wind power from South Dakota or 
North Dakota or Montana, Wyoming, wherever in Indian Country 
because that is what MTEC was created for, to get to the 
development side, and then be able to wheel that power out to 
help those states and who are in a drought as well. Then, of 
course, we are in that. So we can't depend on the same types of 
energy sources.
    But in order to really take advantage of this wind, and I 
think it is going to be--if not bigger than gaming, just as 
big, and gaming is a $25 billion industry--we are not going to 
get there unless we have access to that grid. In my opinion, 
Congresswoman Herseth, is to have legislation, to have priority 
and preference to that grid.
    Ms. Herseth-Sandlin. Thank you, Mr. Hall, and I would just 
ask my colleagues. You know, there is access, or excuse me, 
there is room on the grid. Oftentimes when you talk about the 
wind resource in the Great Plains there is the issue of 
transmission that comes up, and the lack of transmission 
capacity to get it to the West coast or the East coast. There 
is room on grid. It is just that we have these barriers, and 
the focus on hydropower, which we in no way want to neglect, 
but we have to develop further this tremendous wind resource 
that can be beneficial not only to those who live in the Great 
Plains, but those in every part of the country if we break down 
this barrier.
    Again, I appreciate, and would just suggest, in light of 
the comments that were made earlier about working with other 
committees of jurisdiction, other agencies, that clearly there 
is, given the number of veterans, Native American veterans, the 
highest number per capita of any minority group in the country 
that serves in the Armed Services, that there clearly are 
opportunities as well through programs that benefit veterans in 
particular to continue to find partnership where they are 
actively involved across Tribes, building on the model that ITA 
has used.
    So thank you, Mr. Chairman. Again, I appreciate the 
hearing.
    The Chairman. Thank you.
    Mr. Garcia. Mr. Chairman, if I may add just a note.
    The Chairman. Yes.
    Mr. Garcia. I think there is already Federal law that 
exists that says that if you generate energy or power within 
whatever location, that it is law that the power companies have 
to buy that power from you. First you serve your community 
initial lower power needs. But any left over if you generate a 
lot of power, you can sell that back to the power company and 
the power companies are obligated to buy that power. It is 
just, I think, a more technical issue about interfacing where 
that power comes into the grid.
    And if interface is a problem, that is something that can 
be solved technically. I mean, its capabilities is already 
there. It is just a matter of forking up the dollars to make 
that interface happen.
    The Chairman. Thank you. The gentleman from Arizona, Mr. 
Grijalva.
    Mr. Grijalva. Thank you, Mr. Chairman. Just brief comments 
and one question/example.
    I appreciate the comments, Mr. Garcia's comments about 
there has to be human infrastructure along with the capital 
infrastructure. That is the whole strategic way to deal with 
it.
    I am a member of the Small Business Administration, and the 
8[a] provision that we are talking about, sole source, I 
believe very strongly is a necessary mechanism to assure 
fairness and opportunity for all peoples, and I continue to 
believe that.
    I think also, as pointed out by one of the witnesses, that 
we have had--in my four years there we have had no oversight 
hearings at SBA relative to things that are going on within the 
agency, let alone this provision. So nevertheless, I really 
feel that the oversight hearings that need to happen there on 
this issue can be of great benefit in strengthening it, 
strengthening the office that is responsible for this, and 
doing away with a lot of misconceptions and misunderstandings 
that are occurring about that. Then I think the Small Business 
Administration Committee needs to pursue that as well.
    I want to use an example. I think, as we talk about a 
comprehensive approach to economic development in Indian 
Country, which is vital, that involves the human and the 
capital infrastructure, one of the things, Mr. Chairman, that I 
think this committee needs to look at as well, and we have 
tried to correct it in some of the appropriations process, is 
the issue of our tax code and what it does and doesn't do for 
Indian Country in terms of providing opportunity.
    On the issue of renewable energy, alternative energy, one 
foot outside the reservation that is 100 percent credit, tax 
credit. Inside the reservation, it is 50 percent tax credit. I 
think those are the kinds of adjustments that I think go a long 
ways to making Indian Country competitive in joint ventures 
with a private entity. If the private entity can go to a 
municipality and get 100 percent tax credit, they are going to 
go there. It is their pocketbook.
    So those are the kinds of adjustments and a comprehensive 
look at economic development, which is the tax code as well, I 
think could be beneficial.
    With that, Mr. Chairman, I really don't have any questions 
unless any of the witnesses would like to comment.
    Mr. Garcia. I have a simple comment. Thank you for the 
suggestions, and I think that was one of the other things that 
asking what can this committee do is to use your influence to 
hold the SBA oversight hearings or other hearings, if you will, 
and so thank you for that.
    In terms of renewable energy or tax credit, there is a 
gasoline tax credit in place in the State of New Mexico, and it 
has to do with the fuel tax. Now, if a Tribe owns a gas 
station, it used to be that the 17 cents tax that was collected 
used to be paid to the state. Well, we have mustered up enough 
political clout, I guess, and wherewithal to say that it can be 
a joint powers agreement that the 17 cents tax on Tribal lands 
goes to the Tribe. It doesn't go to the state, and it is not 
even channeled to the state and then get reimbursed. It goes 
directly to the Tribal entities, and I think it would be the 
same thing in terms of energy if that becomes law. I don't know 
that there needs to be a Federal law. If it could be part of a 
state, then that would be just as well, but I think those 
credits are workable, and I don't really remember what the 
Federal law says about tax credit, but it ought to be offered.
    Mr. Grijalva. Thank you.
    Ms. Kitka. Mr. Chairman, could I respond to that?
    I think that the issue of the investment climate in our 
country needs to be revisited regularly because of all the 
overseas competition and what other countries are doing to 
incentivize business going to their area. I would be happy if 
the United States provided to Native Americans the incentives 
that we as a country provide to China, India, and Brazil.
    I think that one of the biggest things that we can do to 
increase economic development to benefit Native Americans is to 
change the investment climate and incentivize business creation 
and opportunities. In our testimony, we have outlined a number 
of things that could be done, and we would be pleased to 
provide legislative language for consideration of ideas and 
work with the Committee further on that, but we feel very 
strongly that the economic climate in the world changes so 
rapidly that in order to keep Native American businesses 
competitive with all the other global competition, we have just 
got to keep paying attention to that and focus, and create 
those opportunities and support our businesses. Like I said, we 
would be delighted to provide any backup or further work on 
that.
    The Chairman. Thank you. Yes, Tex.
    Mr. Hall. Mr. Chairman, I just have one final thought and 
recommendation, and it kind of goes back to what everybody was 
talking about, more of a bigger, broader report, but this is 
the language that Congressman Kildee was talking about with the 
small business bill I passed, and it is talking about a report 
on the 8[a], and it is due December 31, 2007.
    But I think my recommendation is that the Committee should 
consider a report on what we talked about. I mean, I learned 
from the lady at GAO that no legislation is needed, and I think 
that is why Congressman Kildee said what he said, and then with 
the tax codes that the Congressman from Arizona was talking 
about, the tax codes, he is absolutely right. There is a 
difference, and so that is why there is part of the problem 
there is a lack of development from the renewable side of it 
because you don't get the same equal tax credit, and lack of 
training and more education.
    We also talked about there is misunderstandings from other 
Americans, I will just say that, that not all Tribes are rich 
from gaming, and that Tribes and the Federal contracts are less 
than 1 percent. So I think a report would go a long ways toward 
really helping in that matter, Mr. Chairman, so I would 
encourage. And I know that I and our staff, and I am sure 
everybody else that testified here today and their staffs would 
be happy to help, and then you have the SBA, the BIA would help 
the Committee to put forward such a report about the real 
status of the economy in Indian Country. So I would encourage 
that, Mr. Chairman.
    The Chairman. Thank you very much.
    Lady and gentlemen, we thank you very much for your 
testimony today. Very interesting. Very helpful to us.
    Our third panel compose the following individuals: First, 
Ms. Sarah Lukin, Director of External Relations, Afognak Native 
Corporation and Alutiiq, LLC, from Anchorage, Alaska; Mr. Neal 
McCaleb, McCaleb, sorry.
    Mr. McCaleb. McCaleb.
    The Chairman. McCaleb, thank you. Chairman of the Board of 
Directors, Chickasaw Nation Industries, Incorporated, Ada, 
Oklahoma; and Mr. Jonathan Taylor, Research Associate, The 
Harvard Project on American Indian Economic Development, 
Harvard University, Cambridge, Massachusetts, and Senior Policy 
Associate, Native Nations Institute, University of Arizona, 
Tucson, Arizona, and President of The Taylor Policy Group, 
Incorporated, Cambridge, Massachusetts. Wow, speaking of 
wearing several different hats.
    The Chair will recognize the Ranking Member to introduce 
our first panelist.
    Mr. Young. Thank you, Mr. Chairman, and it is my pleasure 
again to introduce a lovely lady that is a classic example of 
how successful 8[a] programs have been in Alaska from a small 
village, and the results, and I think her testimony will be 
very telling of how important this is to this area, and it is 
Ms. Sarah Lukin, who is a little bit nervous now, but she is 
doing a great job. She didn't expect to be first, but we 
decided to put the lady first this time and the gentlemen 
second.
    So Sarah, you are on.

   STATEMENT OF SARAH LUKIN, DIRECTOR OF EXTERNAL RELATIONS, 
AFOGNAK NATIVE CORPORATION, AND ALUTIIQ, LLC, ANCHORAGE, ALASKA

    Ms. Lukin. Cama'i. Hello, Chairman Rahall, Ranking Member 
Young, and Distinguished Members on the Committee of Natural 
Resources.
    My name is Sarah Lukin. Quyanaa. Thank you for allowing me 
the opportunity to provide a village perspective in this 
hearing, and to discuss how the 8[a] program has impacted my 
life, my family, and my community. I have a short statement to 
read and would like to submit my longer written testimony with 
appendix for the record.
    The Chairman. Without objection, all testimonies will be 
made part of the record.
    Ms. Lukin. Thank you. Under the SBA 8[a] program, Alaska 
Native Corporations and Tribes perform government contracts and 
perform them well. The earnings from these contracts are, in 
turn, distributed to provide benefits for entire Native 
communities. My family is living proof of the positive impact 
and Alaska Native Corporations success in the 8[a] program has 
had on my village. It isn't a hand out, it is a hand up. I 
worked hard for everything that I have. 8[a] gave me the 
fortitude to fight my way out of poverty to achieve my dreams. 
It unlocked my potential and my family, my community, and the 
local Alaskan economy have all benefitted as a result.
    I am Alutiiq from the Native village of Port Lions on 
Kodiak Island, a remote community of 250 people in the Gulf of 
Alaska. I am a shareholder of the Afognak Native Corporation, 
my village corporation, and Kodiak, Incorporated, my regional 
corporation. I serve on the Native Village of Afognak Tribal 
Council. There are no roads connecting my village to other 
communities. It is only accessible by small boat, small 
airplane, or a seasonal ferry from the mainland.
    This remoteness, so common among our rural Alaska Native 
villages and many Tribes in the lower 48 states means there are 
few economic development opportunities for our community. Like 
so many of our Native children, I was a statistic. I come from 
a broken family that faced substance abuse and poverty. I 
remember how ashamed I would feel when I had to buy groceries 
with food stamps and wear secondhand clothes. No one in our 
family had ever earned a degree before, but my two sisters and 
I had been given an opportunity our parents never had, one that 
has empowered us to overcome enormous odds and experience our 
own American dream.
    Scholarships from my Native corporations helped me to 
attend college. I earned a bachelor's degree from the 
University of Alaska, Anchorage, in 2001. I worked hard, 
excelled in my classes while employed as an intern at my 
regional corporation, getting on-the-job skills. I graduated 
with a master's degree in rural development from the University 
of Alaska, Fairbanks, in 2005.
    Today, I am the Director of External Relations for Afognak 
Native Corporation in our government contracting subsidiary, 
Alutiiq, LLC. I am a Native shareholder in a leadership 
position, working directly in support of our business, serving 
our 700 shareholders and their families.
    Both of my sisters have earned master's degrees as well, 
and have worked for various Native organizations to improve the 
quality of life for our Native people.
    My dad had been a carpenter and a fisherman his entire 
life. A couple of years ago at age 53, after Afognak had begun 
to experience success in the 8[a] program, he decided to build 
his own sports fishing charter business in our village. He 
received Native Corporation scholarships to cover the costs for 
the required Coast Guard training and certification, and he 
utilized his Native dividends to help purchase a boat and other 
needed equipment.
    Today, he is focusing on expanding his business and 
employing young students, directly impacting the local village 
economy.
    Alaska Native Corporations and Tribes, unlike individually 
owned 8[a] companies, are responsible for providing benefits to 
entire communities. In addition to dividends, jobs, and 
scholarships, my Native corporations support a variety of 
programs to help sustain our culture and values. One of my 
favorite programs is the Dig Afognak Cultural Camps run by the 
Native Village of Afognak. At these camps are children, like my 
son, Kadin, are learning Alutiiq history, culture, language and 
traditional ways from our elders. But my village is only one of 
many Native communities benefitting from Alaska Native 
Corporation and travel participation in the 8[a] program.
    Other Alaska Native Corporations and Tribes are building 
community infrastructure and capacity, developing drug abuse 
prevention programs and management trainee programs, just to 
name a few.
    Through the contracts we successfully perform, 8[a] 
empowers our Native corporations and tries to improve the 
quality of life of our people and strengthen our communities by 
providing job opportunities, scholarships, dividends, social 
and cultural program support. 8[a] must continue so that 
younger generations of Alaska Natives and Natives Americans may 
have the same opportunity to improve their lives.
    I am one person representing many more young Alaska Native 
and Native American professionals. We are the future of our 
communities. We will continue to stand on the shoulders of the 
Native leaders before us, and overcome enormous odds to help 
shape the future for the next generation. We will continue to 
focus on economic self-determination.
    Quyanaasinaq, thank you very much for your time, and I 
would be happy to answer any questions you may have.
    [The prepared statement of Ms. Lukin follows:]

     Statement of Sarah L. Lukin, Director of External Relations, 
              Afognak Native Corporation and Alutiiq, LLC

    Cama'i (hello) Chairman Rahall, Ranking Member Young, and 
distinguished Members of the Committee on Natural Resources. My name is 
Sarah Lukin. Quyanaa (thank you) for allowing me the opportunity to 
provide a village perspective in this Hearing, and to discuss how the 
8(a) program has impacted my life, my family and my community. I have a 
short statement to read and would like to submit my longer, written 
testimony for the record.
    I am Alutiiq from the Native Village of Port Lions on Kodiak 
Island, a remote community of 250 people in the Gulf of Alaska. I am a 
shareholder of Afognak Native Corporation, my village Corporation, and 
Koniag Incorporated, my regional Corporation, each of which were 
created and mandated by the Congress through passage of the Alaska 
Native Claims Settlement Act (ANCSA) in 1971. I serve on the Native 
Village of Afognak Tribal Council and the National Congress of American 
Indians Executive Council.
    There are no roads connecting my Village to other communities. It 
is only accessible by small boat, small airplane or a seasonal ferry 
from the mainland. This remoteness, so common among our rural Alaska 
Native villages and many lower 48 Tribes, means there are few economic 
development opportunities for our community. Alaska Natives cannot 
pursue gaming, leaving 8(a) as one of the only other viable economic 
engines available for our remote communities. The Alaska Native 
Corporations 2005 Economic Data Wooch Yaayi: Woven Together elaborates, 
``In the early years, the successful [Alaska Native] corporations were 
those blessed with an abundance of various natural resources. Now, 
under 8(a), the playing field is more level. Smaller corporations, or 
those with few natural resources, can compete in non-resource based 
industries and grow their businesses for their shareholders' (ANCSA 
Regional Corporations Presidents & CEOs, Inc., 2007).
    Like so many of our Native children, I was a statistic. I come from 
a broken family that faced substance abuse and poverty. I remember how 
ashamed I'd feel when I had to buy groceries with food stamps and wear 
second hand clothes. No one in our family had ever earned a degree, but 
my two sisters and I have been given an opportunity our parents never 
had--one that has empowered us to overcome enormous odds and experience 
our own American Dream.
    Scholarships from my Native corporations helped me attend college. 
I earned a Bachelors Degree from the University of Alaska Anchorage in 
2001. I worked hard, and excelled in my classes while employed as an 
intern at my regional corporation gaining on-the-job skills. I 
graduated with a Master's Degree in Rural Development from the 
University of Alaska Fairbanks in 2005. Today, I am the Director of 
External Relations for Afognak Native Corporation and our government 
contracting subsidiary Alutiiq, LLC. I am a Native shareholder, in a 
leadership position, working directly in support of our business.
    Both of my sisters have earned Master's Degrees and have worked for 
various Native organizations to improve the quality of life of our 
Native people.
    My dad had been a carpenter and fisherman his entire life. A couple 
of years ago, at age 53, and after Afognak had begun experiencing 
success in the 8(a) program; he decided to build his own sports fishing 
charter business in our village. He received Native corporation 
scholarships to cover the costs for the required Coast Guard trainings 
and certification, and he utilized his Native dividends to help 
purchase a boat and other needed equipment. Today, he's focusing on 
expanding his business and employing young students, directly impacting 
the local village economy. His story clearly illustrates the spirit of 
intent for Alaska Native Corporation and Tribal participation in the 
8(a) program--to provide the tools necessary for people like my dad to 
give back to our communities, in more ways than just employment with 
the corporation.
    My family is living proof of the positive impact an Alaska Native 
corporation's participation in the 8(a) program has had on our village. 
It isn't a hand out, it's a hand up. I worked hard for everything I 
have. 8(a) gave me the fortitude to fight my way out of poverty--to 
achieve my dreams. It unlocked my potential: my family, my community 
and the local Alaskan economy have all benefited as a result. A paper, 
published last week by the Native Nations Law & Policy Center of the 
UCLA School of Law, titled Federal Contracting Support for Alaska 
Natives' Integration into the Market Economy, states, ``Competitive and 
self-sufficient ANCs will help alleviate economic and social 
disadvantages of Alaska Native communities, increase tax revenues, and 
reduce the costs of government support programs to Alaska Natives.'' My 
company, Afognak Native Corporation, works hard, providing much needed 
services to the federal government at good value and, as a result, it 
is able to help shareholders like me and other members of my family 
achieve a better future. I am no longer a statistic.
    Alaska Native corporations and Tribes, unlike individually owned 
8(a) companies, are responsible for providing benefits to entire 
communities of Native people. Afognak Native Corporation, like most of 
the Alaska Native corporations, has staff dedicated to assisting 
shareholders find employment within our family of companies, and with 
other organizations. The staff also helps shareholders obtain the 
training and educational opportunities necessary to improve their 
skills and job prospects. Afognak recently started a formal Internship 
Program to provide shareholders and descendants with valuable work 
experience which in turn, will provide them with marketable skills. 
(``Descendant'' is the term used in ANCSA for shareholders children. 
Descendants often qualify for the same benefits in a Native Corporation 
as their parent[s] and may hold a different class of stock.) Interns 
will receive competitive pay and a full benefits package, including 
insurance and a retirement plan.
    To increase the quality of life for our over 700 shareholders, 
Afognak has been able to provide a substantial annual dividend, as a 
direct result of our participation and success in the 8(a) program. In 
2005 Afognak paid $10.8 million in dividends, providing the average 
shareholder (holding 100 shares) with $21,000. In 2006 Afognak paid 
$11.1 million in dividends, providing the average shareholder with 
$21,688. In addition, Afognak has a Shareholder Permanent Fund and a 
Trust so that future generations will also benefit from today's 
business success. These dividends mean a tremendous amount to our 
members--young families just starting out, elders, and families who 
live a subsistence lifestyle in our traditional village.
    Scholarships are a vital component for our future to ensure we have 
educated, experienced shareholders to lead our corporations. Karl 
McLaughlin, a shareholder of Afognak Native Corporation, is an 
excellent example of this. Karl began his career over 14 years ago as 
an intern at Afognak and later became a network technician. He climbed 
the ranks of the company as he finished his formal education with 
financial assistance from Afognak's scholarship program. Karl graduated 
with a Bachelor's degree from the University of Alaska and later earned 
additional information technology related certifications. Today Karl is 
a leader in our company. As the Senior Vice President of Information 
Technology for Afognak Native Corporation he is part of our executive 
team, and oversees all IT related operations for a company with 4,700 
employees nationwide.
    In addition to dividends, jobs and scholarships, my Native 
corporations support a variety of programs run by local organizations 
to help sustain our culture and values. One of my favorite programs is 
the Dig Afognak Culture Camps, operated by the Native Village of 
Afognak. At these camps our children, like my son Kadin, are learning 
Alutiiq history, culture, language, and traditional ways from elders. 
Perpetuating Alutiiq traditions is a core value of our people, and 
keeps our youth grounded in their identity as they move forward in 
corporate America, strengthening our community.
    Supporting the Alutiiq Museum & Archeological Repository through 
financial and in-kind contributions is a top priority for Afognak 
Native Corporation. The Museum has implemented several programs to save 
and revitalize Alutiiq language, culture, and traditional ways. For 
example, the Alutiiq Museum, working closely with our Native 
corporations, has conducted numerous archeological digs to save 10,000 
years of Alutiiq history from vandalism and erosion. To date the Museum 
has gathered tens of thousands of artifacts. These fragile 
irreplaceable treasures, gathered for our people by our people, are 
truly a library. They contain incredible information on our ancestor's 
lives. They hold the stories of our people that are available from no 
other source. Thousands of our artifacts are currently housed at the 
Alutiiq Museum in Kodiak and at Afognak Native Corporation's recently 
constructed 1,200 square foot museum facility in Anchorage.
    But my village is only one, of many Native communities, impacted by 
Alaska Native corporation and Tribal participation in the 8(a) program. 
The Native American Contractors Association (NACA) compiled data from 
12 Alaska Native corporations in 2005 on the benefits they provide to 
their shareholders. NACA reports that Alaska Native shareholders 
received $33.6 million in dividends while $5.5 million was donated to 
various cultural and social programs and $9.5 million was awarded in 
scholarships to Native students (NACA Briefing Packet, http://
www.alutiiq.com/pdf.8a-Program-Data.pdf, last visited September 13, 
2007). There are many examples of the unique ways in which Alaska 
Native Corporations fulfill their responsibilities to their 
shareholders.
    For example, Chenega Native Corporation provides essential health 
and insurance components for its shareholders, in an effort to meet the 
ongoing, everyday needs of its villagers.
    The Aleut Corporation last year provided free homes to 52 
shareholder families on Adak Island and will be providing additional 
affordable housing in the near future. This new Adak community will be 
an excellent employee base for a local Sea-Based X Band Radar Project 
under its Missile Defense Agency Contract.
    Ahtna Incorporated, has donated significant time, materials, and 
labor to the construction of a community recreation and learning center 
project in the Native Village of Kluti-Kaah. The recreation and 
learning center, once complete, will promote healthy living, cultural 
pride, and positive alternatives to substance abuse. Ahtna has been 
working with the local community to train and employ local shareholders 
to construct the center, building workforce skills and boosting the 
local economy.
    Although Alaska is remote, it is not isolated from the 
methamphetamine abuse epidemic sweeping the country, especially Indian 
Country. Arctic Slope Regional Corporation has taken a leadership role 
within their region to fight the war against substance and alcohol 
abuse. In partnership with local organizations, Arctic Slope Regional 
Corporation has a full-time position dedicated to fighting the War on 
Drugs.
    Chugach Alaska Corporation has an entire department committed to 
Shareholder Development. The Shareholder Development Department 
recently created a Succession Plan/Program that provides training, 
education and other skills to Shareholders and Descendants 
demonstrating ``high potential'' for becoming a leader within the 
Corporation. Programs like this are designed to incubate our own Native 
executives to lead our companies in the complex global market. As 
Alaska Natives continue to learn the skills to provide the executive 
leadership necessary to carry our companies into the 22nd century, we 
need to have the ability to hire experienced capable staff:
        In order to be competitive and enhance Alaska Native 
        Shareholder and corporate self sufficiency, ANCs must have the 
        flexibility to hire talented staff and executive leadership--
        This means that many employees and top managers will not always 
        be Alaska Natives. Innovative executives with the social and 
        cultural skills to navigate and serve the interests of Alaska 
        Native corporate boards are rare and should be praised and 
        compensated accordingly, if they are improving assets, 
        profitability and the missions of serving and upholding Alaska 
        Native cultural, self-determination, and economic goals. 
        (Champagne & Goldberg, 2007, attached.)
    Not every shareholder or descendant desires employment with their 
Alaska Native corporation, nor should they be expected. Native 
corporations recognize this and embrace the opportunity to provide 
tools to help shareholders succeed in various walks of life. For 
example, Chugach Alaska Corporation's Shareholder Development 
Department administers a Shareholder Business Assistance Program 
(SBAP). Under the annual SBAP, shareholders and descendants who have an 
existing business, or an innovative concept, can apply for a grant to 
further their plans. The shareholder must submit an application and a 
summary business plan. The applications are scored by an independent 
third party for merit and chance for success. This is an excellent way 
the corporation can assist shareholder owned businesses to encourage 
economic self-determination in their rural villages. Some of their 
recent awards went to a Fur Sewing Business, expansion of a hair salon, 
a construction company, a mortgage business, an equipment rental 
operation, a sports lodge, an ice cream shop, a jewelry business and a 
feed and grain store.
    Oolognik has, for the last few years, had a summer work program in 
the Village of Wainwright. This local program is funded from the 
profits generated by Oolognik's participation in the 8(a) program. 
Through the summer work program Oolognik is able to employ 10 to 20 
shareholders to perform various improvements to the corporation's 
hotel, store, offices and other assets in the village. This program has 
been a great success; providing jobs, training, and payroll while 
improving the infrastructure of the local community.
    NANA Regional Corporation represents the remote northwest arctic 
region of Alaska. Their villages face extraordinarily harsh winters. 
Each year shareholders are swept away in icy waters or lost on the 
tundra in white-out conditions when hunting, fishing or traveling 
between villages. In an effort to save lives, the NANA family of 
companies began researching several technologies available to help with 
search and rescue operations. The three-year project was spearheaded by 
NANA's Alaska Native interns. As a result of the interns' work, NANA 
has purchased several Personal Locator Beacons (PLBs) for their 11 
northwest villages. The PLB is a small hand-held device that villagers 
can check out free of charge and, when activated, transmits a signal to 
the Alaska Rescue Coordination Center so a rescue operation can be 
coordinated immediately between local, state and federal authorities, 
decreasing the chance of a fatality.
    8(a) empowers our Native corporations and Tribes to improve the 
quality of life of our people and strengthen our communities by 
providing job opportunities, scholarships, dividends, social and 
cultural program support. 8(a) must continue so that younger 
generations of Alaska Natives and Native Americans may have the same 
opportunity to improve their lives. ``Continued support and guidance 
from SBA programs will incubate market competitiveness among ANCs 
allow[ing] Alaska Native and Congressional goals of economic self-
sufficiency and greater local self-government and cultural recovery [to 
be achieved] more quickly and efficiently'' (Champagne & Goldberg, 
2007, attached). 8(a) is the shining light that completes the ANCSA 
story.
    I am one person representing many more young Alaska Native and 
Native American professionals. We are the future of our communities. We 
will continue to stand on the shoulders of the Native leaders before us 
and overcome enormous odds to shape the future for the next 
generation--our children. We will continue to focus on economic self-
determination.
    Quyanaasinaq (thank you very much) for your time.
                                 ______
                                 

      Federal Contracting Support for Alaska Natives' Integration 
                        into the Market Economy

                 Professor Duane Champagne (Sociology)

                    Professor Carole Goldberg (Law)

                   Native Nations Law & Policy Center

                           UCLA School of Law

                            Los Angeles, CA

                           September 13, 2007

Introduction
    The SBA (Small Business Administration), according to current law, 
supports Alaska Native Corporations (ANCs) and American Indian tribal 
businesses in 8(a) contracts, as minority and economically 
disadvantaged businesses. 1 In compliance with statutory and 
administrative guidelines, 8(a) government contracts can be awarded to 
minority and economically disadvantaged businesses on a sole-source 
basis without requiring multiple competitive bids. In addition, federal 
legislation allows American Indian and ANC firms to bid on larger 
contracts than other 8(a) contractors, and also allows tribes and ANCs 
to operate multiple 8(a) firms.
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    \1\ The law that grants contracting benefits to minority and 
economically disadvantaged businesses, popularly known as Section 8(a) 
of the Small Business Act is codified at 15 U.S.C. Sec. 637(a). In 1988 
and 1992, Congress enacted laws specifying that ANCs shall qualify as 
minority and economically disadvantaged businesses so long as the 
corporations remained majority owned and controlled by Alaska Natives. 
Likewise, subsidiaries and joint ventures involving ANCs qualify, so 
long as a majority of ownership and control remain with Alaska Natives. 
Pub. L. 100-241, Sec. 15, Feb. 3, 1988, 101 Stat. 1788; Pub. L. 102-
415, Sec. 10, Oct. 14, 1992, 106 Stat. 2115. A similar provision 
affords a preference in defense contracting to ANCs. Section 8014(3) of 
the Fiscal Year 2000 Defense Appropriations Act, Pub. L. No. 106-79, 
enacted October 25, 1999, 113 Stat. 1212, 1234.
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    A recent GAO (Government Accountability Office) report on ANCs and 
8(a) 2 does not challenge the legislation or the eligibility 
of ANCs for 8(a) contracts, so long as they qualify as an ANC or non-
profit and are more than 50% tribally owned. 3 And some 
personnel in government agencies find working with ANC's in non-
competitive contracts is often more efficient and effective than 
competitive contracting processes. 4 Furthermore, government 
vendors often understand the government's purpose and intent of 
providing ANCs with contract opportunities that will encourage long 
term market enterprise and self-sufficiency within tribal communities. 
5 The Native American Contractor's Association encourages 
the SBA to give more attention to the market enterprise goals of tribal 
communities, 6 and the SBA has discussed the issue in 
reports over the last several years. 7
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    \2\ David E. Cooper, Alaska Native Corporations: Increased Use of 
Special 8(a) Provisions Calls for Tailored Oversight. Testimony Before 
the Committees on Government Reform and Small Business, House of 
Representatives (Washington, DC: U.S. GAO, 2006),
    \3\ http://ezcertify.com/certificationfacts/8afact12.asp. Federal 
courts have upheld the constitutionality of preferences for ANCs in 
government contracting, finding that the preferences do not constitute 
discrimination on the basis of race, but rather the expression of 
Congress's constitutional power over Indian affairs. See AFGE v. United 
States, 95 F. Supp. 2d 4 (D.D.C. 2002), aff'd 330 F.3d 513 (D.C. Cir. 
2003). For an extended analysis of this issue, see Carole Goldberg, 
American Indians and ``Preferential'' Treatment, 49 UCLA L. Rev. 943 
(2002).
    \4\ See Jerry Reynolds, ``Native 8a Program: The Other Economic 
Initiative Success Story,'' Indian Country Today, June 6, 2007, p. 2 
(pointing out that because of increased procurement demands post -9/11, 
``Federal procurement contracts became bigger, and personnel cutbacks 
at the SBA, charged with overseeing the Native 8a program, meant 
procurement officers could put a premium on the quick, large and legal 
contracts Native 8a firms alone were eligible to execute.'').
    \5\ See AFGE v. United States, 95 F. Supp. 2d 4, 36 (D.D.C. 2002), 
aff'd 330 F.3d 513 (D.C. Cir. 2003), in which the Department of Defense 
argued that a contracting preference similar to 8(a) is justified 
because it ``furthers the federal policy of Indian self-determination, 
the United States's trust responsibility, and the promotion of economic 
self-sufficiency among Native American communities.''
    \6\ GAO, Contract Management: Increased Use of Alaska Native 
Corporations' Special 8(a) Provisions Calls for Tailored Oversight, 
GAO-06-399 (Washington, DC: April 2006), pp. 67-77.
    \7\ GAO, Federal Procurement: Spending and Workforce Trends, GAO-
03-443 (Washington, D.C.: April 30, 2003); GAO, Contract Management: 
Impact of Strategy to Mitigate Effects of Contract Bundling on Small 
Business is Uncertain, GAO-04-454 (Washington, D.C.: May 27, 2004); 
GAO, Small Business Contracting: Concerns About the Administration's 
Plan to Address Contract Bundling Issues, GAO-03-559T (Washington, 
D.C.: March 18, 2003); GAO, Reporting of Small Business Contract Awards 
Does Not Reflect Current Business Size, GAO-03-776R (Washington, D.C.: 
May 7, 2003); and GAO, Interagency Contracting: Problems with DOD's and 
Interior's Orders to Support Military Operations, GAO-05-201 
(Washington, D.C.: April 29, 2005).
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    Very recently, however, the House of Representatives Committee on 
Government Oversight and Reform has been questioning the desirability 
of ANCs' participation in 8(a) contracts. 8 As part of a 
larger challenge to Administration use of no-bid contracts in the Iraq 
war and elsewhere, Congress has been considering measures that would 
curtail ANCs' share of 8(a) contracts. 9 Whether ANCs' 
current 8(a) status is warranted, and should continue, is the subject 
of this paper.
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    \8\ Prepared Remarks of Rep. Henry A. Waxman, Chairman, House 
Committee on Oversight and Government Reform, The Center for American 
Progress, Forum on a Return to Competitive Contracting, May 14, 2007, 
available at http://oversight.house.gov/documents/20070515121402.pdf 
(describing ANCs' participation as ``a major procurement loophole'').
    \9\ Small Business Fairness in Contracting Act, H.R. 1873, 110th 
Cong. This bill, which passed the House on May 10, 2007, would lower 
the limit on 8(a) contracts as a whole, cap the contract amount on 
noncompetitive contracts, and prohibit ``bundling'' of multiple 
contracts in order to facilitate execution by larger firms.
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Nature and Purpose of Alaska Native Corporations (ANCs)
    ANCs were created by the Alaska Native Claims Settlement Act of 
1971(ANCSA) and have been modified numerous times by Congress, 
10 including an amendment in 1988 designating ANCs as 
minority business enterprises and Congressional language in 1992 
designating ANCs as ``economically disadvantaged'' enterprises. 
11 Through this legislation, ANCs and their qualifying 
subsidiaries have been enabled to qualify for federal contracting and 
subcontracting, including SBA 8(a) and Department of Defense Small and 
Disadvantaged Business programs.
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    \10\ Alaska Native Claims Settlement Act, 43 USC Sec. 1601 et seq.
    \11\ See note 1, above.
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    The purpose of ANC status from the Alaska Native point of view is 
to assist ANCs in gaining competitive access and capabilities to 
successfully generate economic growth within the market economy. ANCSA 
created the ANCs as part of the land claim settlement for most of the 
present state of Alaska. 12 Alaska Natives gave up 
aboriginal title claims (surface and subsurface, as well as hunting and 
fishing rights) to most of the land of Alaska, constituting nearly 375 
million acres. In exchange, the Natives received approximately 40 
million acres (about 12% of the area of the state) and $962.5 million, 
divided among over 200 village corporations and 12 (later 13) regional 
corporations. Each village was given an option to form a village for-
profit corporation and most shareholders hold shares in both their 
local village and regional corporations. Village corporations received 
surface title to another 27.6 million acres, while the regional 
corporations got the subsurface rights to that same territory. Finally, 
regional corporations received full title to an additional 16 million 
acres. 13 While the amount of the settlement may at first 
seem large, it looks less bountiful when considered in light of the per 
acre payment ($3.00) and when compared with recent forms of Alaska 
assistance financed by oil revenues from state lands. 14
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    \12\ For a history of the Act, see Robert D. Arnold, Alaska Native 
Land Claims (Anchorage: Alaska Native Foundation, 1978); Donald Craig 
Mitchell, Take My Land, Take My Life: The Story of Congress's Historic 
Settlement of Alaska's Native Land Claims, 1960-1971 (Fairbanks: 
University of Alaska Press, 2001).
    \13\ Gigi Berardi, Natural Resource Policy, Unforgiving 
Geographies, and Persistent Poverty in Alaska Native Villages, 38 Nat. 
Resources J. 85, 93 (1998).
    \14\ Id. at 96. Berardi points out that ``consumers served by the 
Four Dam Pool hydroelectricity projects in Alaska have benefited from 
$485 million in state grants and loans, equivalent to about $16,000 per 
beneficiary.''
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    The corporate entities established to receive settlement lands and 
funds were an experiment, intended as an alternative to putting the 
settlement in federal trust for tribes on reservations. 15 
Corporations were supposed to free Alaska Natives from oppressive and 
inefficient federal control, and ease their adjustment to a market 
economy. The corporate shares were to be alienable to non-Natives after 
20 years, in 1991. Soon, however, Alaska Natives realized that the 
corporations would not achieve Congress's goal of establishing 
economically viable and protective corporate entities by 1991. 
Furthermore, Alaska Natives came to view the provisions for 
transferability of corporate shares as termination in disguise, and 
they began to work with Congress to restrict that possibility. 
16 The very same amendments to ANCSA that made ANCs eligible 
for 8(a) contracts are the amendments that protected settlement lands 
and funds from falling into non-Native hands.
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    \15\ See Thomas R. Berger, Village Journey: The Report of the 
Alaska Native Review Commission (New York: Hill & Wang 1985); Arthur 
Lazarus, Jr. & W. Richard West, Jr.,The Alaska Native Claims Settlement 
Act: A Flawed Victory, 40 Law and Contemporary Problems 132 (1976).
    \16\ Charles Wilkinson, Blood Struggle: The Rise of Modern Indian 
Nations (New York, NY: W. W. Norton and Company, 2005), p. 239.
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    Alaska Natives have lived on the land, and the loss of land 
seriously constrained access to land and subsistence life-style. The 
rights of Alaska Natives to use the land for their economy and 
subsistence has been in contention almost since passage of ANCSA, and 
federal authorities have had to reassume management of Alaska Native 
hunting and subsistence rights, since they were not protected under 
state law. 17 In effect, most Alaska Natives have lost the 
right and access to make a living in the traditional subsistence 
economy of hunting and gathering. The forty million acres left to 
Alaska Natives by ANCSA are not enough, or appropriately positioned, to 
fully support a subsistence economy. 18
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    \17\ In 1980, Congress passed the Alaska National Interest Lands 
Conservation Act (ANILCA), which affords Alaska Natives some protection 
for subsistence uses on public lands, this protection appearing in the 
form of a preference for ``rural Alaska residents.'' 16 U.S.C. 
Sec. 3101 et seq. ANILCA allowed the state to regulate such uses if it 
could do so consistent with the federal preference; but the Alaska 
courts have invalidated every state effort to introduce a rural 
preference. Accordingly, since 1989, the United States has been 
regulating subsistence hunting and fishing on public lands in Alaska. 
See Nell Jessup Newton et al., Cohen's Handbook of Federal Indian Law 
354-360 (Newark, NJ: LexisNexis, 2005).
    \18\ Wolfe, Robert J. Subsistence in Alaska: A Year 2000 Update 
(Juneau, AK: Alaska Department of Fish and Game, March 2000), p. 2.; 
Gigi Berardi, Natural Resource Policy, Unforgiving Geographies, and 
Persistent Poverty in Alaska Native Villages, 38 Nat. Resources J. 85, 
96-100 (1998); The Harvard Project on American Indian Economic 
Development, The State of the Native Nations: Conditions Under U.S. 
Policies of Self-Determination (New York, NY: Oxford University Press, 
2007), pp. 327.
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    Both Congress and Alaska Native leaders created the ANCs as a means 
by which Alaska Natives could control settlement funds and land in for-
profit corporations that would enable direct participation in the 
market economy. Alaska Native leaders agreed to the corporations since 
they wanted to avoid the paternalism and control exerted by the Bureau 
of Indians Affairs (BIA). Both Congress and Alaska Native leaders 
believed that the bureaucratic administration of Indian land assets in 
the lower forty-eight states did not create conditions conducive to 
active market participation in the economy and constrained management 
and initiative. Recent court cases affirm that Congress did not intend 
to put remaining Alaska Native settlement lands in trust with the U.S. 
government, 19 and in principle, the land is fee simple, 
most under management of the ANCs. ANCSA invites Alaska Natives to 
enter the market economy, and to support Alaska villages and 
individuals through increasing integration into the U.S. national 
market economy.
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    \19\ Alaska v. Native Village of Venetie, 522 U.S. 520 (1998).
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    ANCs are organized along similar principles as most U.S. 
corporations, with an elected board of directors and individual 
shareholders. However, Congress, in ANCSA and subsequent amendments, 
recognizes that ANCs are organized to promote the economic interests of 
Alaska Native villages and individuals. Most ANCs, through their 
boards, shareholders, and tribal leaders, work to engage the market 
system with the goal of maximizing the benefits to their shareholders, 
many of whom live in traditional villages and who share common 
traditional indigenous cultures, values, communities, and identities. 
Alaska Native villages retain many rights and obligations to self-
government as they exercised from time immemorial. For most Alaska 
Natives, the ANCs are institutions for ensuring the economic, 
political, and cultural well-being of their communities. In this 
regard, the ownership of ANCs and their purposes are different from 
most private corporations in the U.S. market place. The for-profit ANCs 
are designed to enable Alaska Natives to participate in the market 
economy, and follow shareholder interests, which for ANCs requires 
efforts to enhance community well being, support self-government, 
uphold language, and assist shareholders preserve their subsistence 
economy while opening new opportunities for market participation. 
20 ANCs are like municipal utility corporations, that are 
serving the collective interests of the shareholder community, not only 
their individual finances. The ANCs administer land, assets, and moneys 
for the benefit of Alaska Native shareholders, who value their 
communities, lands, languages, and continued community organization. 
21 Alaska Natives are relatively new to competitive market-
based economies, and have locations and limited resources that do not 
position them well for advantageous participation in markets.
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    \20\ As Berardi notes, ``three of the regional corporations--stress 
the ability of their shareholders to keep their cultural identity and 
subsistence lifestyle while participating in the wage economy on their 
own terms as Native corporation employees.'' Gigi Berardi, Natural 
Resource Policy, Unforgiving Geographies, and Persistent Poverty in 
Alaska Native Villages, 38 Nat. Resources J. 85, 102(1998).
    \21\ For a discussion of contemporary form of American Indian 
economic organization see: Champagne, Duane ``Tribal Capitalism and 
Native Capitalists: Multiple Pathways of Native Economy'' Social Change 
and Cultural Continuity Among Native Nations (Lanham, MD: AltaMira 
Press, 2007), pp. 45-65; See also Hosmer, Brian and Colleen O'Neill 
Native Pathways: American Indian Culture and Economic Development in 
the Twentieth Century (Boulder, CO; University Press of Colorado, 
2004); Smith, Dean Howard Modern Tribal Development: Paths to Self-
Sufficiency and Cultural Integrity in Indian Country (Walnut Creek, CA: 
AltaMira Press, 2000).
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ANCs, 8(a) Contracting, and the Road to Market Participation
    A primary goal of U.S. policy is that ANCs will help alleviate 
poverty and economic and social disadvantage among Alaska Natives. 
22 Alaska Natives continue to endure high rates of poverty, 
low per capita incomes, lower levels of education, many health 
problems, and many social problems such as high suicides (three times 
the rate of other Alaskans), high rates of crime, and incarceration. 
23 These conditions are exacerbated by the decline of local 
subsistence economies, and loss of access to land and resources.
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    \22\ ``Wooch Yaayi'' Woven Together Alaska Native Corporations, 
2005 Economic Data. A Look at Thirteen Regional Corporations and Three 
Village Corporations (Anchorage, AK: ANCA Regional Corporation 
Presidents and CEOs, Inc., 2007), p.4.
    \23\ Scott Goldsmith, Jane Angvik, Lance Howe, Alexandra Hill, and 
Linda Leask Status of Alaska Natives 2004 (Anchorage, AK: Institute for 
Social and Economic Research, University of Alaska, Anchorage, 2004), 
pp. 2-14, 3-2 to 3-39, 4-2 to 4-14, 5-2, 6-2 to 6-6; Alaska Native 
Policy Center, Our Choices, Our Future: Analysis of the Status of 
Alaska Natives Report 2004 (Anchorage, AK: Alaska Native Policy Center, 
2004); The Harvard Project on American Indian Economic Development, 
Native Nations, pp. 326-329.
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    The path to participation in the market economy is not easy for any 
culture or community. Alaska Natives seek greater ability to manage 
their for-profit corporations in order to provide employment, 
management skills, experience with business partnerships and business 
opportunities for their shareholder-community members. Economic self-
sufficiency is the goal of the ANCs and their shareholders. 
24 This goal can be achieved only through active 
participation in the U.S. and world economy. Most likely ANCs will need 
to be full participants and competitive players in the market place. 
Most ANCs may not have local advantages that will not enable them to 
succeed easily. Rights to the most lucrative oil and natural gas 
reserves in Alaska were not retained by Alaska Natives under the ANCSA. 
The main economic advantage of the Alaska region is not directly in the 
control of the Alaska Native communities, and therefore, ANCs must use 
other means and less advantageous resources to achieve a permanent 
foothold in the market economy.
---------------------------------------------------------------------------
    \24\ See Letter from Sheri Buretta, President, Association of ANCSA 
Regional Corporation Presidents/CEOs, in MALRUGNI YUULUNI: Walking In 
Two Worlds With One Spirit: Alaska Native Corporations Annual Economic 
Report Based on 2003 Financial Data (Association of ANCSA Regional 
Corporation Presidents/CEOs, 2005), available at http://www.chugach-
ak.com/pdf/7136ANCSA2005report.pdf: ``ANCs have become the main vessel 
for our people to compete in the marketplace. They are the economic 
engines charged with creating economic value and opportunities in our 
homelands, employing our people, and supporting social and cultural 
programs important to our people. ANCs also are engaged in the larger 
economic arena to capture new technologies, build greater capacities in 
management and labor, and transform the way we do business.''
---------------------------------------------------------------------------
    How do ANCs benefit shareholders? As mentioned already, some 
primary concerns for ANCs are supporting village life and community, 
helping preserve language and culture, assisting in the transition to 
the market economy, protecting and sustaining the remnants of their 
subsistence economy, and promoting education, health, and the well 
being of shareholder-community members. Most U.S. corporations are not 
so socially and culturally responsible or have shareholders who require 
their corporation to invest in the community and future of their 
shareholders. Most U.S. corporate shareholders are individuals and are 
seeking to maximize their incomes. Although it is not a foreign concept 
for investors and beneficiaries of large funds, such as retirement 
funds or endowments, to insist that investments only go to enterprises 
that are ecologically sound, or tobacco free, or that are showing 
responsibility as corporate citizens, most corporations are not as 
thoroughly responsible for the well-being of their shareholders as are 
ANCs.
    In the annual report for the 13 major ANCs and three village 
corporations for 2005, the corporations collectively had revenues of 
$5.85 billion and assets of $3.83 billion. The major ANCs paid $88.7 
million in dividends to shareholders. The corporations employed 3,380 
Alaska Natives and employed 13,604 individuals in the state of Alaska. 
A total of $8.97 million was given in charitable donations, most 
benefiting community organizations related to shareholders, and $4.4 
million was distributed in scholarships benefiting 3,228 students, 
mostly shareholders. 25 In 2005, shareholder equity for the 
13 major ANCs grew 19.3 % to $2.15 billion for a growth total of about 
a third of the original ANCSA payment of $962.5 million. Revenues for 
ANCs have shown steady growth over the 1995-2005 period. The 13 major 
ANCs had total revenues of about $1 billion in 1995, about $2.8 billion 
in 2001, and $4.4 billion in 2005. From 1995 to 2005, the total assets 
of the 13 major ANCs grew from about $1.6 billion in 1995 to $3.24 
billion in 2005. Net income has been variable from year to year among 
the 13 major ANCS, but collectively positive from 1995 to 2005, ranging 
on average in the $120 million range, with a high of about $460 million 
in 2001 and a low of about $25 million in 2001. Net income for the 
major ANCs was $361 in 2005, an increase over $125 million in 2004. In 
2005, 18 ANC regional and village corporations were among the top 49 
businesses in the state of Alaska. ANCs claimed seven of the top ten 
spots, and Arctic Slope Regional Corporation and Chugach Alaska 
Corporation were numbers one and two. The 18 largest ANCs accounted for 
11,000 jobs in Alaska and for 34,000 jobs worldwide. 26
---------------------------------------------------------------------------
    \25\ ``Wooch Yaayi'' Woven Together, p.8; ``ABMs Top 49s: Alaska's 
New Gold Standard for Business'' Alaska Business Monthly (October 
2006): 82-109; Alexandria J. McClanahan, Cindy Alfred, Jason Evans, and 
Michael Orr ``Ch'elbuja-We Share It. 2005 Alaska Native Corporation 
Report; ``The Trends 100 - Alaska's Largest Private Employers in 2006'' 
Alaska Economic Trends (August 2006): 6-7.
    \26\ McClanahan, ``Ch'elbuja-We Share It.: 6-7; GAO Report 
Highlights Successes & Challenges of Tribal Business Development 
Program. Press Release Native American Contractors Association, April 
27, 2006.
---------------------------------------------------------------------------
    In 2005, ten regional ANCs and two villages ANCs, Alutiiq and 
Chenega, were the most significant participants in government 
contracting. The twelve leading ANC government contractors provided 
dividend income to shareholders totaling $33,663,803. Furthermore, the 
same twelve ANCs provided nearly $5.5 million for cultural and social 
support to Native communities, and $889,835 for non-Native social 
programs. 27 School programs, Elders Trust Funds, Potlatches 
and intern programs were supported with over $7 million from the twelve 
ANCs, and Native Permanent Fund programs had funds valued at $88.2 
million in 2005. Government contracting through ANCs paid business 
payrolls in the State of Alaska totaling over $413.5 million, and 
employed 9,750 in Alaska, of which 3,170 were Native employees. In 
2005, Government contracting ANCs were operating in 49 states, 2 U.S. 
Territories, and the District of Columbia. In the same year, 2005, the 
twelve ANCs engaged in 871 government contracts, and retained 31,717 
employees in the United States. 28 ANCs are responsible 
corporate citizens, both Native and non-Natives are benefiting from 
employment opportunities, business growth, and charitable contributions 
generated by the Alaska Native Corporations.
---------------------------------------------------------------------------
    \27\ In the interest of full disclosure, several ANCs recently 
donated a total of $25,000 to UCLA School of Law for scholarships 
directed toward students working on Native law and policy issues.
    \28\ The figures presented in this paragraph are based on self-
disclosures by the ten regional ANCS and two village corporations that 
engages in most government contracts. All figures are from the year 
2005. See Native American Contractors Association website on page 3: 
http://www.nativeamericancontractors.org/pdf/NACA-Pkt_040607.pdf Last 
visited on 8/29/07.
---------------------------------------------------------------------------
    The thirteen original ANSCA regional corporations serve 
approximately 109,000 shareholders, and more generally the entire 
current population of 140,000 Alaska Natives, as well employing many 
non-Natives. 29 ANCs serve a significant number of 
disadvantaged shareholders, and both policy goals of promoting 
competitive market entry and generating self-sufficiency among minority 
and disadvantaged communities can be achieved through fostering the 
market opportunities for ANCs. The SBA's promotion of development of 
small businesses, including American Indian and minority small business 
enterprises should remain a primary policy goal. Nevertheless, the long 
term advantages of competitive and profitable ANCs and other tribal 
businesses promise to fulfill not only business development goals for 
disadvantaged minority firms, but also helps fulfill the goals and 
intent of ANCSA as well as many agreements, policies, and legislative 
acts aimed at the well-being of Alaska Natives and American Indians.
---------------------------------------------------------------------------
    \29\ ``Alaska Native Regional Corporations'' Wikipedia, [http://
en.wikipedia.org/wiki/Alaska--Native--Regional--Corporations]
---------------------------------------------------------------------------
    In order to be competitive and enhance Alaska Native shareholder 
and corporate self sufficiency, ANCs must have the flexibility to hire 
talented staff and executive leadership, as well as have the ability to 
use partnerships and subcontracting tools any competitor business might 
use. This means that many employees and top managers will not always be 
Alaska Natives. Innovative executives with the social and cultural 
skills to navigate and serve the interests of Alaska Native corporate 
boards are rare and should be prized and compensated accordingly, if 
they are improving assets, profitability and the missions of serving 
and upholding Alaska Native cultural, self-determination, and economic 
goals. Similarly, ANCs must have the capability to form partnerships 
and subcontracts, in order to complete jobs and make profits. Most 
corporations resort to similar tools to complete tasks that are not 
within their current organizational capabilities. Recent criticisms 
about non-Alaska Native CEO hired by some ANCs and the practice of 
partnering up to 49% of certain 8(a) contracts will constrain ANCs in 
ways that will make them less competitive, and therefore less able to 
achieve their self-sufficiency economic, political, and cultural goals. 
All Small Business Administration and government contractors have the 
right to subcontract minority portions of government contracts, and 
ANCs should have the same opportunities. 30
---------------------------------------------------------------------------
    \30\ Kimberly Palmer, ``Congressmen Probe Contracts with Alaska 
Native Firms'' Government Executive.Com, March 8, 2005 [http://
www.govexec.com/dailyfed/0305/030805k1.htm].
---------------------------------------------------------------------------
    While partnerships and non-Alaska Native managers may seem to 
constrain the benefits to shareholder-community members, ANCs are 
managed by boards and shareholders, who are elected to office to carry 
out the interests and values of the shareholder community. Unlike most 
U.S. corporations, the ANCs are understood by their shareholders as 
instruments of economic development, asset management, and community 
preservation and cultural continuity. The ANCs are more than profit-
making engines, but are the economic means to support preservation of 
land, equity, and entree into the market economy. The ANC shareholders 
are in control of their corporations, and see them as protectors of 
their heritages, as well as the means to engage in the globalized 
market economy of the 21st century and future. 31 Without 
the capability to compete in markets, Alaska Native assets certainly 
would be lost, communities impoverished, and communities and cultures 
destroyed.
---------------------------------------------------------------------------
    \31\ Berger, Thomas Village Journey: The Report of the Alaska 
Native Review Commission (New York, NY: Hill and Wang, 1985).
---------------------------------------------------------------------------
    ANCs are a primary economic hope for Alaska Natives to gain self-
sufficiency and economic stability that will enable their communities 
and cultures to flourish well into the future. ANC communities and 
shareholders have strong commitments to achieving their goals, and will 
not allow corporate managers to deter them from their goals. 
32 ANC boards nowadays are filled with community leaders, 
many with decades of experience with the market and cultural issues 
facing their corporations. Many ANC boards chose the path of not 
delegating their corporations and assets to managers unknown to them, 
and decided to learn how to navigate the corporate and market world by 
first hand experience. This was a risky path, and profit margins were 
sacrificed for many years to ensure Alaska Native control and to 
provide time for community leadership to gain valuable first hand 
experience. Now many board members have decades of experience, Alaska 
Natives act as CEOs and corporate managers, and many ANC boards are 
elected with Alaska Native business persons, lawyers, and individuals 
with business degrees. The ANC boards are entrusted with 
responsibilities to ensure community assets and long term economic 
goals are preserved. Alaska Natives are in control of their 
corporations, and they see them as more than profit-making engines, but 
as a critical institution for ensuring the future of their cultures and 
communities. 33 As one report by an association of ANC 
Presidents and CEOs has pointed out, ``Many Alaska Native Corporation 
leaders have become sophisticated business managers, but they all 
retain their respect for the cultures and many of them continue to 
participate in subsistence activities. Jake Adams of Barrow serves as 
president and CEO of Arctic Slope Regional Corporation, and he is also 
a whaling captain.'' 34
---------------------------------------------------------------------------
    \32\ See Gigi Berardi, Natural Resource Policy, Unforgiving 
Geographies, and Persistent Poverty in Alaska Native Villages, 38 Nat. 
Resources J. 85, 101-102 (1998).
    \33\ : For the importance of control over economic assets and 
management see: Stephen Cornell and Joseph P. Kalt ``Sovereignty and 
Nation Building: The Development Challenge in Indian Country Today'' 
American Indian Culture and Research Journal 22(Summer 1998): 187-214. 
For the role of culture in Native economic development, see Ron Trosper 
``Mind Sets and Economic Development on Indian Reservations'' What Can 
Tribes Do? Strategies and Institutions in American Indian Economic 
Development ed. Stephen Cornell and Joseph P. Kalt (Los Angeles, CA: 
UCLA American Indian Studies Center, 1992), pp 303-333.
    \34\ Jake Adams is now retired as CEO of Arctic Slope Region 
Corporation. For the citation see: MALRUGNI YUULUNI: Walking In Two 
Worlds With One Spirit: Alaska Native Corporations Annual Economic 
Report Based on 2003 Financial Data (Association of ANCSA Regional 
Corporation Presidents/CEOs, 2005), available at http://www.chugach-
ak.com/pdf/7136ANCSA2005report.pdf
---------------------------------------------------------------------------
    A recent GAO report suggests that the SBA should exert greater 
oversight on 8(a) contracting to ANCs. 35 The report did not 
find any wrong doing by ANCs, but rather suggests that stronger 
oversight be created to avoid possible future abuses. 36 
Comments by the SBA were less agreeable about the report's findings, 
but were agreeable about possibilities of increased monitoring of non-
competitive contracts and expanding competitive contracting. 
37
---------------------------------------------------------------------------
    \35\ David E. Cooper, Alaska Native Corporations: Increased Use of 
Special 8(a) Provisions Calls for Tailored Oversight. Testimony Before 
the Committees on Government Reform and Small Business, House of 
Representatives (Washington, DC: U.S. GAO, 2006), pp. 2-11; Peter 
Homer, ``Congressional Probe of Alaska Native Corporations an Attack on 
Indian Country's Economic Future'' Indian Country Today March 19, 2005; 
Jerry Mandel, ``House Committees Probe Alaska Native Contracting 
Program'' Government Executive June 21, 2006 
(www.GovernmentExecutive.com).
    \36\ GAO, Contract Security Guards: Army's Guard Program Requires 
Greater Oversight and Reassessment of Acquisition Approach. Report to 
Congressional Requesters, April 2006, page 93.
    \37\ Havemann, Joel ``Rise in Spending Tied to Contracts'' Los 
Angeles Times Thursday June 28, 2007, p. A 20.
---------------------------------------------------------------------------
    The SBA emphasizes that the ANC program helps fulfill Congressional 
intent to allocate 23% of government contracts to small businesses and 
five percent to minority and disadvantaged businesses. In recent years, 
ANCs incrementally have gained management capabilities that enable them 
to start competing and negotiating for government and 8(a) contracts. 
In 2000, ANCs were contracting about $265 million through 8(a) programs 
and in 2004 contracting increased to $1.1 billion. Non-competitive 
contracting with agencies of the U.S. government totaled $207 billion 
in 2006, and $145 billion in 2005. 38 In 2005, all federal 
contracts awarded to ANCs and American Indian tribal businesses 
collectively totaled $3.197 billion, which represented less than one 
percent (0.847%) of all government contracts. 39 Total small 
business procurement in 2005 totaled $65 billion or 17.2% of total 
government contracts. In the same year, $11 billion in government 
contracts were awarded to 8(a) firms, and $1.9 billion or 17.2% was 
awarded to ANCs and tribal businesses. ANCs received $1.5 billion in 
8(a) contracts in 2005. 40 The gain to ANCs is not coming at 
great expense to other government contractors, especially when one 
considers that 8(a) contracts with ANCs benefit thousands of Alaska 
Native shareholders, not a single small business owner.
---------------------------------------------------------------------------
    \38\ ``Wooch Yaayi'' Woven Together, p. 10.
    \39\ Native American Contractor's Association (NACA) Annual Meeting 
2006, Seattle, Washington. See [http://www.alutiiq.com/pdf/8a-Program-
Data.pdf], last visited September 10, 2007.
    \40\ Native American Contractor's Association (NACA) Annual Meeting 
2006, Seattle, Washington. See [http://www.alutiiq.com/pdf/8a-Program-
Data.pdf], last visited September 10, 2007. Source: Eagle Eye.
---------------------------------------------------------------------------
Conclusion
    Alaska Natives ceded large parts of Alaska to the United States and 
possibly trillions of dollars of natural gas and oil reserves. In 
return, Alaska Natives retained some land and less than a billion 
dollars as assets to develop for-profit and non-profit regional 
corporations and associations. Market entry and eventual economic self-
sufficiency of ANCs are primary goals of ANCSA and several subsequent 
Congressional amendments. ANC access to federal contracts helps fulfill 
Congressional mandates for government contracting aimed at providing 
training and market opportunities for minority and disadvantaged 
businesses. Alaska Native communities are in shareholder and board 
control of ANCs and are the primary beneficiaries of dividends, equity, 
and philanthropy generated by ANCs. The primary goals of ANCs are 
economic self-sufficiency, and community and cultural development and 
continuity of Alaska Native tribes and villages. 41 In 
recent years, ANCs have made strides toward greater participation in 
the market and are in a better position to take advantage of federal 
government contracts and 8(a) programs. Collectively ANC and tribal 
contracts represent less than one percent of all government contracts. 
While a GAO report suggests greater SBA oversight and management of 
contracts granted to ANCs, the report does not find any wrong doing on 
the part of ANCs. Alaska Native communities and leadership most likely 
will welcome SBA oversight and guidance as long as it fosters corporate 
learning and enhancement of market-based competitive capabilities and 
the efficient use of taxpayer funds, as is the intent of Congress. The 
fostering of competitive and self-sufficient ANCs is in the interests 
of the United States, and Alaska Native communities. Competitive and 
self-sufficient ANCs will help alleviate economic and social 
disadvantages of Alaska Native communities, increase tax revenues, and 
reduce the costs of government support programs to Alaska Natives. 
Continued support and guidance from SBA programs will incubate market 
competitiveness among ANCs allow Alaska Native and Congressional goals 
of economic self-sufficiency and greater local self-government and 
cultural recovery more quickly and efficiently.
---------------------------------------------------------------------------
    \41\ Charles Wilkinson, Blood Struggle: The Rise of Modern Indian 
Nations (New York, NY: W. W. Norton and Company, 2005), pp. 231-240.
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                                 ______
                                 
    The Chairman. The Chair recognizes the gentleman from 
Oklahoma, Mr. Cole, for the purposes of introducing our next 
panel member.
    Mr. Cole. Thank you very much, Mr. Chairman. Very kind of 
you.
    I don't know that Secretary McCaleb particularly needs an 
introduction to this panel as he has been here in other 
capacities before, but I do want to note for the record some 
things you may not know about him. He was very distinguished 
and is a very distinguished business person in Oklahoma; was 
elected to the Oklahoma Legislature, if I recall, in 1974, and 
rose to the position of the Republican Leader in the House of 
Representatives; was a candidate for Governor; and along the 
way he persuaded my mother to run for office.
    [Laughter.]
    Mr. Cole. And she persuaded me to be her campaign manager, 
and she was very successful. She was in the State House and the 
State Senate. So I certainly would not be here today, because 
politics was the last thing I had in mind, if he hadn't talked 
my mother into this stuff, and she didn't talk me into it, she 
just told me what I was going to do.
    [Laughter.]
    The Chairman. Did that include being a Republican.
    Mr. Cole. It absolutely did.
    [Laughter.]
    Mr. Cole. It absolutely did, and if you knew her, you 
wouldn't have argued with her either.
    [Laughter.]
    Mr. Cole. But Mr. McCaleb is just a tremendous family 
friend, and more than that, he has been an extraordinarily 
leader for the State of Oklahoma, and certainly for the 
Chickasaw Nation in what he has been able to accomplish with 
them and working with them. It is quite remarkable. So he is 
somebody in Oklahoma that we are extraordinarily proud of, and 
I think in Indian Country, all of us are proud of and 
appreciate his efforts over the years.
    Thank you, Mr. Chairman.
    The Chairman. Mr. Secretary.

STATEMENT OF NEAL McCALEB, CHAIRMAN OF THE BOARD OF DIRECTORS, 
        CHICKASAW NATION INDUSTRIES, INC., ADA, OKLAHOMA

    Mr. McCaleb. Chairman Rahall, Ranking Member Young, and 
Distinguished Members of the Committee, and especially to my 
fellow Tribesman of the Chickasaw Nation, Congressman Cole. I 
am very, very pleased to have the opportunity to be here and 
make a few remarks this morning as a preamble to the written 
statement that I have submitted.
    I am privileged to serve as the Chairman of the Board of 
the Chickasaw Nation Industries, and as the Chairman of the 
Chickasaw Nation Economic Development Council, and we also own 
a bank, Bank II. It is wholly owned by the Chickasaw Nation 
that I am privileged to serve on the board.
    I am here this morning to talk about the Tribal SBA 8[a]s 
and the need to provide continuity for this program as it is 
operated today and its effectiveness for tribally owned 
business and its impact on emerging economies in Indian 
Country. I will speak from my personal experience of over more 
than 40 years in efforts to develop self-sustaining economies 
in Indian Country, most of the time without a great deal of 
success, I am afraid.
    During my service to the Oklahoma Indian Affairs 
Commission, the National Council on Indian Opportunity, the 
President's Commission on Indian Reservation Economies, as 
Assistant Secretary of Interior for Indian Affairs, and my 
current role with the Chickasaw Nation. I have had a unique 
opportunity to see what works and what doesn't work.
    I am a civil engineer, and my early involvement beginning 
in 1966 and through the seventies with Tribal governments were 
directed to Federally funded programs, largely for 
infrastructure improvement. I don't want to demean it in any 
way, but for many years we kind of had a--the program de jour 
of that year for developing economies in Indian lands, related 
largely to infrastructure improvement, and it was intended to 
attract outside investment and to create jobs on Indian lands.
    While these expenditures were very valuable to architects 
and engineers like myself that worked for Tribes on those 
projects, unfortunately, they were ineffective in creating 
sustaining economies on Indian lands, and have not resulted in 
significant residual employment on reservations.
    I was privileged to serve on the President's Commission on 
Indian Reservation Economies in 1983, and the findings of the 
commission after a year-long investigation and visiting most 
reservations, or many reservations through Indian Country led 
us to the conclusion that there essentially was no sustaining 
economy or financial infrastructure in the vast majority of 
Indian Country.
    Now, to the successes that I have observed. I have had the 
personal experience with the success in the Tribal 8[a] program 
as a board member of the Chickasaw Nation Industries, and its 
positive economic influence for prosperity not only for 
Chickasaws but also for non-Indians benefitting directly from 
employment and collateral economic growth. It is my considered 
opinion that the Tribal 8[a] program as it is operated today 
offers a great potential for self-sustaining economies in 
Indian Country, maybe the greatest potential in the long pull 
of any program that is advocated, principally because it 
doesn't have to be near population centers like gaming does. It 
can be in the remote, most remote areas. The Tribal 8[a] 
program offers not only marketing advantages necessary to 
stimulate sustained effort in developing marketing skills and 
to compete in the larger marketplace, but also the continuity, 
and I want to emphasize that, the continuity to encourage 
Tribal investment and to recruit the highly skilled managers 
and technicians hired for long-term success.
    The profits of these successful enterprises has been 
eloquently said before go back to Tribal purposes, to either 
expand the business or they go for help or education or housing 
or public safety. So the profits are for the people.
    The SBA 8[a] program has been said very clearly before is 
not a hand out, it is hand up program, and it doesn't cost a 
dime in extra Federal money. All the monies that go into this 
contracting have already been appropriated and determined by 
Congress to be for good public purposes.
    The written testimony that I am presenting deals with the 
GAO report and our recommendations for the mechanisms and how 
to comply with that GAO report. That is Appendix 1. Appendix 2 
deals with some recommendations that we have to the SBA on how 
to improve their delivery of the service. We have 38 Federally 
recognized Tribes in Oklahoma, less than a third of those are 
participants in the 8[a] program, the Tribal 8[a] program right 
now, and we have many that are in the queue to have 
applications in, so that needs to be--that barrier to entry 
needs to be removed.
    The opportunities for emergency of Tribal economies in 
today's environment are excellent because of two converging 
economic vectors. The first is technology in communication. We 
can be in remote locations and be competitive, and that has 
only happened in the last 15 years. The second is the expanded 
government contracting program to out-source all kinds of 
services, and these vectors are converging, but the pivotal 
ingredient necessary to make this happen for Tribes is the 
Tribal 8[a] program, and I hope that we won't do anything to do 
harm to that program as it exists, and we will focus on 
administratively improving its operation.
    Thank you for the great privilege of being here with you 
today, and I will be happy to answer any questions at the 
appropriate time.
    [The prepared statement of Mr. McCaleb follows:]

    Statement of Neal McCaleb, Chairman of the Board of Directors, 
                   Chickasaw Nation Industries, Inc.

    Good Morning Chairman Rahall, Ranking Member Young, and Members of 
the Committee, my name is Neal McCaleb and I am honored to bring you 
greetings on behalf of the Unconquered and Unconquerable Chickasaw 
Nation and to represent Chickasaw Nation Industries, Inc. at today's 
important hearing on Diversifying Native Economies. I am an enrolled 
member of the Chickasaw Nation, a federally recognized Tribe of 
approximately 38,000 members located in south central Oklahoma, and I 
serve as the Chairman of the Board of Chickasaw Nation Industries, Inc. 
I bring today the perspective of a career spent in private sector 
business, service to the great State of Oklahoma, federal service to 
our great Nation, and now service to the Chickasaw Nation.
    I am also honored because the subjects we are discussing today are 
so critical to the future well being of Native peoples, their 
governments and economies. Indian Country and its Tribal Nations are 
now experiencing some of the benefits of the modern era of Self-
Determination in Federal Indian Policy. While so many discussions in 
this modern era have focused on economic development, our focus today 
and for moving forward needs to be on developing economies. That is, 
rather than focusing on what federal, Tribal, and private sector 
policies and program mechanisms can provide for a single, or even a 
series, of good businesses, we should focus instead on the elements of 
those policies and programs that create an entire atmosphere in Native 
communities for empowering entrepreneurialism and sustaining economic 
opportunities. While increased opportunities for Tribal jobs are an 
important and valuable byproduct, the focus of the Chickasaw Nation's 
businesses is on the bottom line, with the ultimate goal of creating 
market leading companies that have their own strong capabilities, with 
sustainable acumen and corporate infrastructures.
    Tribal Nations and the Federal Government must work together as 
partners to ensure that opportunities for economic success grow, and 
the prosperity experienced by Tribes now are not diminished. Tribal 
lands are not easy places to grow an economy. Not every Native Nation 
is well positioned. Basic elements of economic opportunity that exist 
outside of Indian Country often are not available to those within it. 
Tribes cannot tax their citizenship to create investment revenue, and 
lands held in trust, or that are trust restricted, cannot effectively 
be used to collateralize a business loan the way I could use my own 
home.
    It is also important to recognize that successes of Native people 
and their governments come only after they have endured the residual 
effects of the eras of removal, reservation, assimilation and 
termination. One should also note that certain of these historic eras, 
and the actions taken in them, were responses to the then increasing 
economic strength of Tribal nations as land owners and market 
participants. While in the past our presence served to threaten others, 
today we represent an important opportunity for partnership and shared 
success across America, especially in rural and remote America. As 
Tribes work toward modern prosperity and enjoy varying degrees of 
economic success in our times, we remember well what happened in those 
eras. Working together with the federal government, the private sector 
and our neighbors, will ensure that the experiences of those eras never 
return. In that vein, our charge today is to discuss those elements 
that will help Native economies grow and prosper.
    Over the past two decades under the leadership of Governor Bill 
Anoatubby, the economy of the Chickasaw Nation has experienced 
unprecedented levels of success in the history of the Chickasaw people. 
I believe, however, that every Chickasaw would agree we have much more 
to do in strengthening our economy. The Chickasaw Nation has built 
businesses, acquired firms and their expertise, and expanded its 
strategic alliances. These successful economic development and business 
diversification efforts provide a number of benefits which help the 
Tribe accomplish its sovereign mission to enhance the quality of life 
of Chickasaw people. Governor Anoatubby has often stated, ``A nation 
cannot be truly sovereign until it is economically independent.''
    Creating a robust Chickasaw economy is part of the Chickasaw 
Nation's overall plan to promote a better way of life. Chickasaw Nation 
business interests include Chickasaw Nation Division of Commerce; 
Chickasaw Nation Industries, Inc.; Solara Healthcare; and, Bank2, a 
full service bank. Chickasaw Nation Division of Commerce employs 6,488 
workers and operates more than 57 businesses including motels, 
restaurants, travel plazas, gaming centers, recreation centers, 
convenience stores, two commercial radio stations, a golf course, a 
newspaper, and a chocolate factory. Chickasaw Nation Division of 
Commerce operates its business enterprises largely within the 
historical boundaries of the Chickasaw Nation in south central 
Oklahoma. Its successful gaming enterprises and business operations 
have enabled the Chickasaw Nation to invest in a number of new 
businesses. Investment in Solara Healthcare, which operates health care 
facilities in Oklahoma, Texas and Louisiana, is an example of business 
diversification efforts aimed at providing the best opportunity for 
stable long-term returns. Successful gaming enterprises have also 
enabled the Chickasaw Nation to develop other business interests, 
including Bank2, which has enjoyed rapid expansion and consistent 
profits since it was established in 2001.
    Chickasaw Nation Industries, Inc. is a family of companies that 
provides a variety of products and services that include professional 
services, construction management, manufacturing, property management, 
information and communications technologies, aviation technology 
services, records management, environmental, logistics, and medical and 
dental staffing. Currently, Chickasaw Nation Industries, or CNI, 
manages business enterprises that collectively employ more than 2,200 
people, providing services to a wide variety of government entities in 
over twenty five federal agencies and a number of private firms. 
Currently, CNI is made up of twelve different companies that include 
seven federally designated Small Business Administration Tribal 8(a) 
companies and five non-8(a) or graduated 8(a) companies all working 
under the CNI umbrella.
    CNI was created in 1996 by a vote of the Chickasaw people. We are a 
federally chartered corporation with our charter granted to us by the 
Department of Interior. Our Board of Directors is appointed by the 
Governor and confirmed by our Legislators to serve a three year term 
and may be reappointed. All of our board members are Chickasaw. The 
long-term strategy of CNI is to continue to grow our market share in 
the federal and private sectors by delivering exceptional products and 
services at competitive prices. With the mission of creating commercial 
strength in new geographic and subject matter markets, CNI has offices 
located in Ada, OK; Albuquerque, NM; Atlanta, GA; Chicago, IL; 
Huntsville, AL; Marietta, OK; Norman, OK; Oklahoma City, OK; Purcell, 
OK; Ridgeland, MS; San Antonio, TX; Cape Canaveral, FL; and Washington 
DC.
    Business entities of both Chickasaw Nation Division of Commerce and 
Chickasaw Nation Industries have received national and state wide 
awards and acclaim, however, perhaps the most important benefit of 
economic development is providing more opportunities for individual 
Chickasaws to succeed. Because the Tribe is focused on increasing the 
number and quality of opportunities available, its success is measured 
by the number of people who seize those opportunities. By that measure, 
tribal economic development has been very successful, as the Chickasaw 
Nation now employs more than 10,400 workers.
    Another measure of success is the ultimate use of business 
revenues, which directly enable the Tribe to develop programs in 
addition to those supported by federal government programs, and to 
supplement federal funding of federal services that have seen steady 
reduction in several past budgets. Recently implemented health, 
education, housing and aging services developed for Chickasaws living 
beyond the tribal service area are one example of these augmented 
services. Funding specifically for our youth workers is another. Other 
examples include our elders' prescription program and our medication 
assistance program. The Chickasaw Nation also operates several 
Community Centers and Wellness Centers and will soon open one of the 
first Sick Child Care Centers in the State of Oklahoma.
    Because it is so important to the vitality of a Tribal nation to 
support its people through the profits of its economic efforts, allow 
me to highlight some of the ways in which the Chickasaw Nation utilizes 
its business revenues at home. Last year alone the Tribe awarded $3.1 
million in grants and scholarships to 4,273 students pursuing a higher 
education. This is nearly three times the amount of total Tribal assets 
in 1988 when Governor Anoatubby took office, before gaming became a 
significant source of income and before the Tribe stimulated its 
diversification efforts.
    In the areas of healthcare and wellness, according to 2006 records, 
the Chickasaw Nation Health System had more than 336,000 patient visits 
at the Carl Albert Indian Health Facility in Ada, the seat of Chickasaw 
Government, and the five health clinics located throughout the 13-
county area of the Chickasaw Nation. Last year, more than 800,000 
prescriptions were filled through six pharmacy sites. The Chickasaw 
Nation operates two wellness centers, and has a third center currently 
under construction. Through an interactive cooking show called the 
``Get Fresh!'' program, the Chickasaw Nation Health System offers free 
demonstrations and healthy and nutritious cooking to everyone in the 
community. Nutrition sites and food distribution grocery stores ensure 
adequate access for all citizens in need of healthy food options. The 
Chickasaw Nation also operates partnerships with other programs such as 
the Oklahoma University Medical Center, Oklahoma Blood Institute, 
Juvenile Diabetes research Foundation, Dean McGee Eye Institute, 
Oklahoma State Health Department, and the National Diabetes Education 
Program.
    Several efforts are made to care for our elders. Healthy, 
nutritious lunches are provided free of charge for those 60 and over at 
10 senior nutrition centers throughout the Chickasaw Nation. An 
eleventh location is also currently under construction. Health 
screenings, home health care services, transportation to medical 
appointments, home maintenance, an over-the-counter medication program 
and wellness education are also available to seniors. Continuing 
education opportunities are available through language and computer 
classes provided at all senior nutrition center locations. This 
exposure to technology has opened doors for seniors to learn new 
computer programs and hundreds have received free computers through the 
Tribe's computer distribution program.
    The Tribe is also dedicated to its youth. More than 650 Native 
American youth, aged 14-21, participated in the Chickasaw Nation Summer 
Youth program, which is aimed at recognizing, identifying, and 
promoting the talents of young workers. The program offers paid 
employment in many fields for various employers. The Chickasaw Nation 
is devoted to year-long learning and 15 camps, offered free of charge 
to Chickasaw youth, keep the children's skills sharp. Whether 
participating in our premier sports camps like basketball and baseball, 
our paramount trade camps like arts, aviation and space, or our 
entrepreneur academies, youth have the opportunity to perfect a skill 
or just learn something new. Nearly 900 students participated in the 
camps last year.
    In ensuring the vitality of our families, the Chickasaw Nation 
knows that children raised in strong families are much more likely to 
be happy, healthy and successful. In its second year, the Governor's 
Family Initiative offers several methods to help families grow 
stronger, including relationship enhancement programs, fatherhood 
accountability groups, abstinence education, and single parent support 
groups. 7,000 area residents and employees have participated in the 
classes. Our nationally recognized child support services program has 
collected more than $5.1 million dollars to ensure the financial 
stability of our families. The office also administers the tribal 
employment placement program that assists and monitors the progress of 
non-custodial parents in obtaining and maintaining employment. In 
support of continuing education, last year, numerous grants and 
scholarships were awarded totaling more than one half of a million 
dollars toward continuing education.
    The Chickasaw Child Care Development program provided child care 
services to 587 children ages six weeks through 6th grade, focusing on 
physical, intellectual, emotional and social development. Chickasaw 
Nation Child Care incorporates programs like the Reading is Fundamental 
program where more than 750 books were distributed to 256 Head Start 
students. In addition, computer-driven SmartBoards were installed in 
several of our Head Start classrooms, to provide first-hand innovative 
technology to pre-school children. In addition, a newly added program 
providing $200 yearly clothing grants ensure that all school age 
children from 3-18 are dressed for success. 5,500 students participated 
in the program this past year.
    In the area of housing, the Tribe's Division of Housing provides a 
variety of programs and services to assist families including home 
ownership, homeowner education, rental assistance, storm shelter 
installation and driveway repair. Since the program began in 2003, 
nearly 900 storm shelters have been installed for Chickasaw families. 
The innovative and national award winning ``Chuka Chukmasi'' program 
has assisted nearly 500 families in more than a dozen states by 
providing low down payment and flexible home loans to Chickasaw 
citizens and Chickasaw Nation employees. Since the Tribe assumed 
control of housing programs in 1997, more than 440 new homes have been 
constructed for Native American families, compared to far fewer prior 
to 1997.
    The Tribe is also working to multiply these opportunities by 
striving to work with individual Chickasaw business owners in a number 
of ways. A directory of tribal businesses was created, giving 
individual Chickasaw business owners the opportunity to become 
preferred providers for tribal businesses. Chickasaws considering 
starting a business now have access to a number of important resources 
through the Chickasaw Nation Small Business Development Center 
(CNSBDC), which offers a number of services to aspiring entrepreneurs. 
These include help in developing a business plan, management 
counseling, marketing assistance, technical assistance and assistance 
in locating financing. Every individual who comes to the center 
receives individual attention, but that process goes beyond assistance 
in developing a business plan and completing loan applications. Staff 
at the center also discuss the advantages of the different types of 
businesses and provide direction in registering the business with the 
state. There are a number of grants, loans and loan guarantees 
available through the CNSBDC and other entities. For that reason, the 
CNSBDC works with a number of other government entities and financial 
institutions to make the best use of all available resources.
    These diverse business interests will enable the Chickasaw Nation 
to continue to provide a level of service that not only benefits 
Chickasaw citizens, but has a significant positive impact on the 
greater community. Dozens of businesses created by the Chickasaw Nation 
have a powerful impact on Oklahoma's economy. Thousands of Oklahomans, 
both Indian and non-Indian are directly employed by the Chickasaw 
Nation. These jobs and businesses not only increase the Oklahoma tax 
base, they also provide additional funding for the many programs and 
services provided by the Tribe. At the current annual payroll of almost 
$200 million in Oklahoma, it is estimated those employees pay more than 
$7.5 million in Oklahoma withholding taxes. The nation-wide operations 
of Chickasaw Nation Industries and Solara Healthcare provide similar 
benefits to those states.
    Chickasaws and many other Oklahomans receive higher quality health 
care, education, housing and family services because of efficient, 
effective local administration of federal programs. Programs such as 
the Women, Infants and Children (WIC) nutrition program, Head Start 
early childhood education program and others serve all Oklahomans, 
enhancing the level of education, health care, family and nutrition 
services for the entire state. In FY 2005, the Tribe donated more than 
$1.5 million to fire departments, schools, churches, civic, and 
charitable organizations. In addition, millions of dollars are invested 
in Oklahoma roads and bridges through tribal nations. The Chickasaw 
Nation Roads program joined efforts with various counties throughout 
the year to complete many projects. Examples of this partnership 
include replacement of a dilapidated bridge and road repairs in many 
counties. Thus, the Chickasaw Nation and its economic enterprises are 
committed to being a good neighbor.
    With these experiences, and our commitment to our sole owner, the 
Chickasaw people, I now wish to address recommendations to you on 
behalf of Chickasaw Nation Industries that will enhance the ability of 
Tribal Nations to diversify sustainable economies.
    To set the context of our first set of recommendations, I wish to 
provide our prospective on the importance of the Tribal 8(a) program. 
CNI is created as a federal government contracting entity to utilize 
the Tribal 8(a) program of the Small Business Administration (SBA) as 
its primary tool of economic diversification. The Tribal 8(a) program 
is one of the best examples of enlightened legislation in the history 
of federal tribal policy. It recognizes the right to act and grow as 
entrepreneurs, without sacrificing or limiting the Native government's 
authority to exercise their sovereign powers in fulfilling their 
responsibility to care for their people. Some entities outside the 
program claim that it is federal charity. We know that it is economic 
self-determination. We know that it is based on the sound premise that 
the federal dollar returns two fold--it buys a quality product or 
service on time at a good price--and it circulates in Native 
communities to help sustain Native economies.
    It is important to recognize that while this legislation gave our 
businesses significant contracting rights, it did not simultaneously 
confer instant capabilities. As we have demonstrated, we are committed 
to creating our own capabilities. We also know that with our rights 
come responsibilities. Native communities have assumed greater 
responsibilities to protect the integrity of the program by creating 
effective means of entering the marketplace and by creating strong 
internal corporate infrastructures, controls, and capabilities.
    At CNI, we have also assumed an unprecedented responsibility to 
others through our Native American Minority Empowerment Program (NAMEP) 
to engage in team relationships that share concepts and business 
strategies and to coordinate the communication of those concepts to 
federal partners, with Congress, and the non-Native, minority, and 
small business worlds. The NAMEP program is our own diversity program, 
and its most important mission is to respectfully encourage and assist 
other small and developing business entities as teammates and 
subcontractors by sharing economic opportunities, experiences and hard 
lessons learned. NAMEP is a business development and empowerment 
program, not philanthropy, and includes engaging teaming opportunities 
with Tribal and Native-owned businesses, African-American, Hispanic, 
Women-owned, Veteran-owned businesses and minority individuals.
    Thus, over the past several months CNI has engaged with a number of 
other Native business entities and national Tribal policy organizations 
to address the concerns that have been raised on Capitol Hill and 
elsewhere about the participation of Native entities in the 8(a) 
program. While these issues and recommendations are highlighted here, 
they are also discussed in further depth in the appendices to this 
testimony.
    Appendix 1 includes a series of three CNI whitepapers shared with 
other Native contracting entities in the ad hoc working group convened 
by the National Congress of American Indians, Native American 
Contractor's Association, and the National Center for American Indian 
Enterprise Development, focusing on 8(a) issues over the past year and 
a half. CNI was invited by the SBA and Native entities to take part in 
these discussions and share its policy recommendations from our own 
experiences in that forum. This working group has also endeavored to 
address the concerns expressed in the April 2006 Government 
Accountability Office (GAO) Report entitled ``Contract Management; 
Increased Use of Alaska Native Corporation's Special 8(a) Provisions 
Calls for Increased Oversight.'' (GAO-06-399). While the 2006 GAO 
report focused solely on certain Alaska Native Corporations, which are 
different in legal composition from Tribally-owned businesses, the 
implications of the report concern the same provisions in the 8(a) 
program which cover Tribal 8(a) businesses. As a Tribal 8(a) entity, 
CNI has advocated in this forum, with virtually unanimous agreement 
from its peers, that there be recommendations shared with the SBA for 
policy changes in the areas of subcontracting, mentor-protege 
arrangements, and reporting--all with the goal of strengthening and 
honoring the goals of the 8(a) program.
    Regarding subcontracting requirements, it is important to note that 
the 8(a) business entities of Native Hawaiian Organizations (NHOs), 
Alaska Native Corporations (ANCs) and Tribes, collectively referred to 
here as Native Concerns, are significantly different from traditional 
small businesses. Tribal business entities exist for the economic 
development of their Tribal governments, as opposed to individual small 
business owners, who operate for individual wealth. NHOs exist for the 
benefit of their members, and ANC business entities exist for the 
benefit of their shareholders. In spite of the importance of the 
success of Native Concerns to the public, it is also important to 
assure traditional small businesses that their access to procurement 
opportunities is not negatively impacted by the special provisions 
applicable to Native Concerns.
    The resulting recommendation embodied in Appendix 1 involves a new 
requirement that Native 8(a) business entities receiving a sole-source 
contract in excess of Twenty Million Dollars ($20,000,000) over the 
life of the contract, including option years, would be required to 
submit and negotiate a subcontracting plan that separately addresses 
subcontracting with small business, veteran-owned small business, 
service-disabled veteran owned small business, HUBZone small business 
concerns, small disadvantaged business, and women-owned small business 
concerns. CNI believes that an appropriate response to the issue raised 
by traditional small businesses--that the lack of a cap on Native 
Concerns negatively impacts their contracting opportunities--is to 
exclude Native Concerns from the small business exemption in 
circumstances where the sole-source contract is of a size normally only 
available to other than small businesses.
    It is important to note that while CNI's original recommendation 
reflected in Appendix 1 was at a $10 million requirement level, the 
collective working group agreed that a $20 million requirement level 
would be more appropriate for those Native business entities that may 
not have as much experience in the program or with developing 
subcontracting and teaming relationships, while simultaneously charged 
with developing their own capabilities and corporate infrastructures. 
While Native Concerns acting on behalf of hundreds of thousands of 
Tribal members have only just begun to penetrate a previously 
unreachable federal marketplace, this proposal will effectively respond 
to these perceived issues, while balancing the interests of all of 
SBA's constituents.
    Regarding the role of Native Concerns in mentor-protege 
arrangements, CNI recommends an approach that recognizes the SBA 
Mentor-Protege program is designed to encourage large business Mentors 
to provide various forms of assistance to small businesses. These 
include the provision of technical assistance, management assistance, 
financial assistance in the form of equity investments and loans, 
subcontracts awarded to the Protege by the Mentor, or assistance in 
performing prime contracts with the Government in the form of joint 
venture arrangements. Whether the Protege is a traditional small 
business or an Alaska Native Corporation, a Tribally owned entity, or a 
Native Hawaiian Organization, the goal of the Mentor-Protege program is 
to enhance the capabilities of the Protege and to improve their ability 
to successfully compete for and perform government contracts.
    Past experience, however, shows that Mentors (especially very large 
Mentors) approach traditional small businesses differently than they 
approach Native Concerns. This difference is due to the ability of 
Native Concerns to obtain larger contracts. Consequently, some Mentor 
firms primarily seek a relationship with Native Concerns contemplating 
the ability of participating in and performing large sole source 
contracting opportunities. This creates an environment wherein the 
Protege is at risk to be a mere vehicle for the Mentor to obtain a 
contract that it would not otherwise have been entitled to receive. 
Without Protege performance requirements under the program, the Mentor 
is not motivated to grow the Protege's participation, and therefore not 
motivated to provide mentoring assistance.
    In response to these concerns, CNI recommends that a Protege in a 
Joint Venture should be required to increase their level of performance 
annually over the term of the contract, including option years. Thus, 
at each anniversary of the contract, the Protege would be required to 
increase its performance in increments of 10%, until the Protege's 
percentage of work is no less than 60%. This proposal would meet the 
objectives of ensuring that sole source contracts awarded to 8(a) 
Mentor-Protege joint ventures are not abused as mere pass-through 
contracts for large businesses. And by limiting the required percentage 
of work to be performed by the Protege, the Mentor firms will still see 
incentives to participate in the program.
    The final policy recommendation embodied in Appendix 1 involves 
reporting by Native Concerns. The 2006 GAO Report asserted that SBA is 
not providing adequate oversight to assure that Alaska Native 
Corporation Proteges and other firms are performing an appropriate 
amount of work, are overly subcontracting work, and not tracking 
contract modifications, change orders, and changes in scope. The report 
indicates that failure in oversight of the SBA is in part due to a lack 
of information from government agencies, and that the agencies didn't 
provide the appropriate information despite Memorandums of 
Understanding between the SBA and the agencies, and due to the fact 
that some data are simply not tracked at this time.
    CNI's recommendation is that Native Concerns should be required to 
supply reports to the SBA to demonstrate compliance with the spirit and 
letter of the 8(a) program. This would ensure that Native Concerns are 
performing at the appropriate level or making progress to the 
appropriate level, thus benefiting the 8(a) participant as the Program 
intended. Annual reports provided pursuant to existing regulatory 
requirement regarding the level of attainment of the Mentor-Protege 
program performance and direct award contracts, and semi-annual reports 
to SBA upon modifications, change orders, and changes in scope, would 
achieve this and demonstrate compliance.
    In addition to the above recommendations pertaining to broader 8(a) 
policy issues addressed in national forums and Native working groups, I 
also wish to highlight recommendations CNI recently addressed directly 
to the SBA pertaining to current operations of our own businesses and 
our specific experiences under the agency's administration of the 
program. These involve issues that we have experienced to be 
inconsistently administered with the SBA from office to office or, in 
some instances, within the same office. We believe the inconsistency 
arises primarily from a lack of clear standard operating procedures or 
a lack of defined rules, leaving personnel with apparent discretion, 
hazarding arbitrary actions. Without stated rules, standard operating 
procedures, or a willingness to follow established SOPs, it becomes 
more difficult for a Tribal participant to operate within the program.
    It is important to note at the outset of these concerns that 
earlier this month CNI's General Counsel met with the SBA's General 
Counsel on these matters and significant agreement was had upon the 
perspectives and positions of CNI. CNI is encouraged by the receptivity 
and agreeable, solution-oriented approach of the SBA General Counsel 
and offers these only to be illustrative of issues and reveal a need to 
give SBA personnel clarity and direction as they attempt to oversee and 
administer this important program.
    Attached as Appendix 2 is a memorandum addressed to Mr. Bill 
Largent, the National Director of SBA's Office of Native American 
Affairs, that outlines specific actions of the SBA that amount to 
barriers to entry and growth in four areas. These include significant 
delays in actions regarding the approval of change of managers, an 
unnecessarily repeated requirements of proof of Tribal status as 
``economically disadvantaged,'' reluctance or onerous requirements for 
approval of secondary North American Industry Classification System 
(NAICS) codes requested for the diversification of our 8(a) business 
entities, and a specious requirement not contemplated by the 8(a) 
certification application rules requesting submission of tax returns by 
all directors and the Chief Executive Officer (CEO) of the Tribally 
owned holding entity, CNI, which owns the applicant company.
    With respect to the economically disadvantaged status of the Tribe, 
in CNI's last three applications for 8(a) certification, we have been 
required to provide the Chickasaw Nation's financial statements. Upon 
inquiry, we were informed that SBA had a right to look at them ``to 
determine if the tribe needed the 8(a) program.'' As a Tribe that 
recognizes the potentially limited nature of gaming as its future 
principal source of revenue, the Chickasaw Nation has aggressively 
pursued business development outside of gaming. The 8(a) program has 
proven a very effective diversification tool, as stated above. It is 
unsettling to think that gaming revenue, the very activity the Tribe is 
trying to replace, could cause the loss of a valuable economic 
development tool in that effort. Tribal economies should not be 
punished for their own successes. Markets vary and conditions change. 
Lasting corporate capabilities created through the 8(a) program will 
ensure a sustainable economy.
    Regarding the approval of change of managers, we have experienced 
significant delays in the approval of managers named to replace 
departed managers of participant concerns. With respect to the need for 
secondary NAICS codes, only some but not all SBA regional offices are 
supportive of the participant's business development opportunities and 
recognize that products and services offered by a business may change 
during its life in the program due to market forces, strategic 
decisions, or economic conditions. In recent applications filed by 
companies wholly owned by CNI, the SBA has required that the last three 
years tax returns of the Directors of CNI and the CEO of CNI be 
submitted, along with proof of payment of taxes. Historically, only the 
manager of the LLC applicant was required to submit returns. This 
requirement is burdensome, time consuming, and for no apparent purpose.
    Again, CNI is encouraged by its recent interaction with SBA on 
these issues. As these concerns relate directly to the ability of our 
businesses to continue their development and diversification through 
the use of the program, we look forward to continued coordination with 
SBA and ultimate solutions on these matters. CNI is committed to 
working directly with the SBA to ensure that the goals and prerogatives 
of the 8(a) program receive compliance and are honored.
    In addition to providing perspectives and recommendations on the 
important 8(a) program, I want to highlight another important piece of 
proposed legislation that would support the diversification efforts of 
Tribes.
    H.R. 1954 was introduced earlier this year in this Committee and is 
designed to allow Tribal governments to transfer the credit for 
electricity produced from renewable resources to their development 
partners. This ability would seize upon the significant developments in 
Public Law 109-58, the 2005 Energy Policy Act, and especially Title V 
of that act, entitled Indian Energy. The 2005 Energy Policy Act shifted 
the paradigm of Indian energy from that of royalties to ownership and 
operation. Currently, because of the tax exempt status of Tribal 
governments, if a Tribal entity seeks to enter into an outside 
partnership on any renewable energy project occurring on Tribal lands 
the effort cannot benefit from the production tax credit for renewable 
resources as a private landowner would. The Tribe also cannot transfer 
its portion of the credit to its taxable partners. A disincentive to 
locate such projects on Tribal lands thereby results, as a non-Tribal 
partner may receive half of the credit it would receive if locating on 
private lands.
    H.R. 1954 would simply amend the Internal Revenue Code of 1986 to 
allow Tribal governments and their subdivisions to transfer their share 
of the production tax credit to their taxable partners in joint 
venture, renewable energy projects on tribal lands. This would be a 
significant opportunity for Tribal economic enterprise, and the sharing 
of knowledge and strategic growth between Tribal and private sector 
entities. While the Chickasaw Nation is not a significant energy 
resource Tribe, it does have significant corporate capabilities that 
could bring strategic value to many parts of the chain of operations 
and services required for successful renewable energy projects. Like so 
many other Tribes and Tribal businesses nationwide, CNI has considered 
many renewable energy projects that have varying degrees of potential 
success, but all share one common challenge: funding. The ability to 
transfer tax credits could significantly increase the value proposition 
for many of these opportunities for Tribes on a national scale. As 
concerns for the environment and the need for fossil fuel alternatives 
mount, the importance of such renewable energy projects continues to 
increase nationwide. Congress and this Committee should recognize that 
Indian Energy can play a prominent role in this process, and that 
passage of H.R. 1954 would also support the continued diversification 
of Tribal economies.
    In closing, Chairman Rahall, Ranking Member Young and Members of 
the Committee, I want to reiterate that as this Committee moves forward 
to further strengthen opportunities for economic development in Indian 
County and stimulate the diversification of Tribal economies, it should 
focus on the programs and conditions that create an entire environment 
of entrepreneurialism and opportunity in Native communities, rather 
than simply what elements can make a single success or provide for a 
particular motivation. While Tribal jobs and increased opportunity for 
advancement are valuable and important goals, and indeed exist among 
the core missions of Tribes, they should be viewed as a beneficial 
byproduct of healthy commerce and part of a overall sustainable Tribal 
economic system. Certain federal programs, such as the 8(a) program, 
are stalwart programs in this effort, assisting Tribal businesses in 
achieving actual capabilities and contract performance experience. This 
program must be honored and refined.
    As the Chickasaw Nation continues to work towards an ever more 
robust economy it is motivated by the need to move forward on several 
different fronts at once. Caring for its citizens, providing a future 
for its youth, working with the small businesses of its people and 
those of similarly disadvantage communities, and endeavoring to ensure 
that national policies keep its important capabilities and 
opportunities strong and viable--these will continue to be the 
motivations of the Chickasaw Nation.
    Thank you.
    [NOTE: Attachments to Mr. McCaleb's statement have been retained in 
the Committee's official files.]
                                 ______
                                 
    The Chairman. Thank you. Mr. Taylor.

 STATEMENT OF JONATHAN TAYLOR, RESEARCH ASSOCIATE, THE HARVARD 
   PROJECT ON AMERICAN INDIAN ECONOMIC DEVELOPMENT, HARVARD 
    UNIVERSITY; AND SENIOR POLICY ASSOCIATE, NATIVE NATIONS 
                INSTITUTE, UNIVERSITY OF ARIZONA

    Mr. Taylor. Thank you, Mr. Chairman and Ranking Member 
Young. It is my privilege to speak to you today about 
diversifying American Indian economies and Alaska Native 
economies.
    As you mentioned in the introduction, I wear several 
different hats, and your staff has asked me to appear here to 
deliver testimony as an economic researcher working for the 
Native American Contractors Association, and also as a 
researcher with The Harvard Project on American Indian Economic 
Development, and with the Native Nations Institute. Those are 
two distinct roles, and I need to keep them distinct, and I 
have submitted to separate pieces of testimony.
    One thing I cannot do is try and squeeze both of those into 
five minutes. I am not an auctioneer and I cannot talk as fast 
as an auctioneer. So let me begin, and if we run out of time, 
we will go to questions about either piece of testimony.
    I think it is important to recognize that the outset that 
there are distinguishing features of Tribal and 8[a] companies 
that distinguish them from the other 8[a] companies.
    First of all, their ownership structure is unique. They are 
owned by whole communities. All Alaska Natives of a certain age 
in 1971 participate in Alaska Native Corporations and Tribal 
enterprises. In order to qualify for the exemptions under the 
8[a] program, they have to be owned by the Tribe. It cannot be 
owned by an individual entrepreneur in the Tribe.
    These entities, the ANCs and the Tribal corporations face 
unique social and structural burdens. First, the social 
burdens.
    Next slide, please.
    In Figure 3 of my report, which you can find on page 11, I 
give you the Census data that you are familiar with showing 
that Native Americans as a group in the U.S. Census are the 
poorest identifiable group, and that the poverty rates that 
Native Americans experience are twice the U.S. average, on the 
reservation they are more than three times the U.S., and in 
Alaska they are twice the Alaska State poverty rate.
    These enterprises also face unique structural burdens. The 
corporate governance of tribally owned enterprises is 
complicated. We all know that corporate governance is 
complicated, just as the shareholders of Enron or the people 
coping with Sarbanes-Oxley. It is even more complicated when a 
government owns the business. And the arrangement under the 
Alaska Claims Settlement Act is a shareholder arrangement, but 
it is not exactly the same as the corporate governance of 
publicly traded or even privately held shareholder 
corporations.
    There are structural impediments to performance in those 
companies as well, and Congress has seen fit to make 
corresponding exemptions, exemptions from the affiliation and 
from the sole source requirements because of these unique 
social burdens and structural burdens.
    Next slide, please.
    We have talked a lot about the size of this program. The 
$1.9 billion in Tribal and ANC 8[a] contracting is a half a 
percent of all procurement. It is 1.3 percent of all sole 
source contracting. It is 2.9 percent of all small business 
contracting, and it is 17 percent of all Section 8[a] 
contracting.
    Next slide, please.
    We have also heard a lot about the trend, and here we have 
all American Indian and Alaska Native contracts, that is, 8[a] 
and non-8[a] contracts to all Native entities over the Fiscal 
Years 2000 to 2005, and you can see this expansion that the GAO 
witness talked about. Notice though that the proportions of 
business available for competition and not available for 
competition have not changed.
    Next slide, please.
    Those dollars, all of them together, all of those different 
colors represented as a red region on this graph are a small 
fraction of the total. Procurement generally has been growing 
rapidly.
    Next slide, please.
    And when we put 8[a] contracting in context with all small 
business, woman-owned business, small disadvantaged business, 
disabled veteran, and all [a] business, we can see that it is a 
relatively small piece of the pie.
    Now, let me stop here and say there is one thing that is 
not on this graph, and that is the gap between what I 
understand to be the legally required amount of small business 
procurement, that is, 23 percent of the total $378 billion, 
that would imply that this small business bar should be an 
additional $21.8 billion higher. If my understanding is right, 
that is 34 percent more procurement should be going to small 
business than already does. There, it seems to me, is the 
opportunity for greater small business development.
    Next slide, please.
    Regionally, the 8[a] business concentrates--excuse me--all 
Native procurement concentrates in Alaska, it also concentrates 
in Virginia and Maryland as you would expect, but it also 
concentrates in states like Oklahoma, New Mexico, and 
Washington where there are large numbers of Tribes and large 
number of Indians proportionally.
    Sarah Lukin has done a very eloquent job of demonstrating 
what this means to Native communities. This is evidence of 
irreversible change in Indian Country, and I won't belabor the 
point because she has made it so eloquently, but this happens 
many times over, thousands upon thousands of Indians are owners 
as shareholders or owners as citizens of Tribes, millions of 
dollars go to payroll, to shareholder distributions, to social 
and cultural and economic investment.
    I would conclude my remarks with a quick observation that 
this program is exemplary in my mind in traveling around Indian 
Country for the way it rapidly defuses the techniques and the 
professional skills of running businesses.
    So Mr. DuMontier, when they were getting going, it learned 
a great deal from Arctic Slope Regional Corporation. He went on 
to teach corporations in North Dakota how he had been 
successful, and that is in my mind exemplary for Federal 
programs. There is a long litany of Federal programs that have 
not worked.
    Thank you. I will entertain any more questions.
    [The prepared statement of Mr. Taylor follows:]

Statement of Jonathan B. Taylor, Research Associate, Harvard Project on 
 American Indian Economic Development, Harvard University, and Senior 
   Policy Associate, Native Nations Institute, University of Arizona

    Thank you, Chairman Rahall and Ranking Member Young, for the 
invitation to appear before you. My name is Jonathan Taylor and I am a 
Research Associate of The Harvard Project on American Indian Economic 
Development and a Senior Policy Associate with the Native Nations 
Institute for Leadership, Management and Policy, part of the Morris K. 
Udall Center for Studies in Public Policy at the University of Arizona.
The Challenge
    As you are aware, American Indian and Alaska Native economic 
fortunes have lagged substantially behind those of other Americans. On 
reservations and in remote rural Alaska, especially, unemployment is 
high, poverty is high and incomes are low. Declining federal funding, 
remote markets, challenges attracting educated members, barriers to 
capital investment, and a host of other problems frustrate Native 
economic growth.
    Nonetheless, bright spots are visible in and around Indian Country. 
There are places where natural resource companies support education 
programs. There are places where tourism attracts customers to on- and 
off-reservation businesses. There are places where tribes manage, 
regulate, and adjudicate commerce on-reservation better than other 
governments do. Such was the case before the advent of widespread 
casino development at the Colorado River Indian Tribes' Farms, at White 
Mountain Apache's Sunrise Ski Resort, at NANA's Red Dog Mine, and at 
Mississippi Choctaw's Chahta Enterprise. Such has also been the case 
after casinos gave tribes additional sources of funds and lowered their 
costs of capital.
    By tribal design, these economic endeavors aim to loose the bonds 
of federal spending on reservation economies. In the 1970s federal 
Indian spending rose with the Great Society and other programs, and in 
the 1980s it fell with the Reagan budget cuts (dotted red line in 
Error! Reference source not found.). At the time, much of reservation 
economic life depended upon federal grants and contracts, and in synch, 
Indian incomes rose by 49% in the 1970s, but then dropped by 8% as 
federal funds retreated in the 1980s (shaded bars in Error! Reference 
source not found.). In the 1990s, by contrast, federal Indian spending 
stagnated and fell behind U.S. spending per capita (solid line in 
Error! Reference source not found.), yet Indian incomes grew by a 
third--three times faster than the U.S. income growth rate. 
Interestingly, Indian incomes grew on reservations that did and did not 
witness the development of casino gambling.

[GRAPHIC] [TIFF OMITTED] T7848.011

    As welcome as these gains were for Indian Country, Indians on 
reservations still faced a very large income gap. The gray bars of 
Error! Reference source not found. juxtaposed in Error! Reference 
source not found. against U.S. averages show Indian incomes barely 
reached past one-third the national average in 1999. Even at the 
hopeful pace of growth witnessed in the 1990s, it would take fifty-five 
years for the gap to close, and sustaining that relatively rapid rate 
of growth for the next half century will be a challenge.

[GRAPHIC] [TIFF OMITTED] T7848.012

    Indians confront these income gaps with weak federal support. 
Notwithstanding federal treaty obligations and trust responsibilities 
to advance tribal well-being, the U.S. Commission on Civil Rights finds 
federal funding to be inadequate and below what is available to non-
Indians. \1\ The Commission examines a range of domains of Indian life 
including education, crime, and health, among other things, and finds 
funding gaps across the range. A particularly stark comparison of 
health care expenditures is reproduced in Figure 1 and shows Indian 
Health Service medical funding to be about half of what federal 
prisoners receive. Given that in Indian Country many social and 
economic problems have accumulated over time and reinforced each other, 
one might reasonably expect that reaching social and economic parity 
with the rest of the U.S. would require greater than average federal 
funding, not less.

[GRAPHIC] [TIFF OMITTED] T7848.013

    Thus, the steep challenge ahead for reservation economies 
entails accelerating the pace of growth so that the income gap closes 
in fewer than fifty-five years, all while contending with lower-than-
average federal support. The task will require spreading the nascent 
economic success in Indian Country across industries and across 
geography. To drive growth, Native economies have relied upon natural 
resource endowments, upon powers of regulation and taxation, and 
recently, upon procurement advantages. There is still some room for 
growth under each of these strategies, but in many reservations, there 
is not enough to accommodate the number of high-school age workers 
entering the work force each year. Further growth will have to come 
from competing head-to-head in value-adding industries and from freeing 
private sector initiative, especially on large reservations. Success 
will need to spread geographically, too. Just as mineral resource 
wealth is concentrated at Crow or in the NANA region of Alaska, so too 
is success in gaming, gasoline retailing, and cigarette manufacturing 
concentrated at Ft. McDowell, Winnebago, and Seneca. Economic growth 
needs to spread over the map as well as through industry sectors.
    So how do we deepen and extend the economic success that has been 
achieved? My colleagues and I at the Harvard Project on American Indian 
Economic Development and the Native Nations Institute have been 
learning from Indian Country that there are three essential keys that 
distinguish tribes in takeoff from tribes that struggle with economic 
development. First, successful tribes assert, defend, and use their 
sovereignty. If tribes make the key decisions about development, those 
decisions tend to better reflect local conditions, preferences, and 
opportunities; consequently, those decisions yield better tangible 
results. Second, successful tribes have strong institutions that: a) 
resolve disputes fairly; b) manage the boundary between business and 
politics effectively, and c) administer the day-to-day life of the 
tribal government efficiently. Without working institutions, economic 
development can only last a cycle or two of investment, at which point 
the costs of doing business on the reservation exceed the value and 
capital flees elsewhere. Third, these institutions of governance must 
match local norms of what is and is not appropriate government. Without 
a match between indigenous culture and institutions, the life of 
government becomes riven with questions of legitimacy and progress 
halts. Successful Indian nations have in common that they turned away 
from federally sanctioned, project-based, and grant-funded approaches 
and instead built governing systems that foster development. I will not 
belabor the full spectrum of these points because my colleagues have 
covered them in detail before Congress. \2\ Instead, I want to narrow 
the focus to one issue in particular: managing the boundary between 
business and politics.
Managing Business & Politics 1
---------------------------------------------------------------------------
    \1\ This section draws heavily from work that Kenneth Grant and I 
wrote in (Grant & Taylor, 2007).
---------------------------------------------------------------------------
    Imagine the government owns a business that provides politically 
popular services that don't make money. Or imagine the government owns 
a business where a powerful constituency uses the levers of political 
representation to strengthen its hand against management in a labor 
dispute. Or imagine the government owns a business that makes money, 
but a dispute erupts about whether the profits should be reinvested in 
the business, used to subsidize popular services, turned over to the 
government treasury, or issued as dividends to citizens. Such questions 
pitting corporate success against community values are not idle 
speculation to the owners and managers of AMTRAK, I'm sure. Likewise, 
these questions feature prominently in the daily lives of myriad 
tribally owned corporations. Worse, the political bouts that arise from 
these questions degrade corporate performance if they are not properly 
addressed. \3\
    Why not privatize? Countries around the world are driving down the 
government-owned proportion of GDP to around 5%. When they do so, they 
reap higher profits, lower prices, better service, and better returns 
on investment. As appealing as these gains might be, tribal governments 
nonetheless cannot nor, in many instances, should not privatize their 
tribal enterprises. U.S. tax, procurement, and regulatory policy 
encourage and even mandate tribal ownership of enterprise. Section 17 
of the Indian Reorganization Act of 1934 encourages economic 
development via federal charters for nation-owned enterprises. \4\ IRS 
rules shield nation-owned enterprise profits from federal corporate 
income tax. \5\ Section 8(a) of the Small Business Act offers 
advantages to tribally owned corporations. \6\ The Indian Gaming 
Regulatory Act mandates tribal ownership in all but the rarest cases. 
\7\
    Even in the absence of these federal inducements and requirements, 
government ownership of enterprises would be a sound choice for Native 
nations to make. Tribal enterprises often depend upon an Indian 
nation's patrimony--a forest, lake, river, or plain--whose development 
must take place within tribal cultural and environmental constraints. 
Private development of such resources often fails utterly, if only 
because of the outcry against inappropriate development institutions. 
In addition, trust land title, Native concerns about property 
alienation, geographic isolation, relative economies of scale, and a 
host of other market idiosyncrasies may favor tribal over individual 
ownership. And finally, it is often the case that the economic unit is 
and ought to be the whole community. This is particularly evident in 
shareholder tribes such as under the Osage headright system (or 
analogously the Alaska Native corporations), but it can also hold true 
for whole tribes owning all of a fishery, irrigation system, or hotel. 
Thus, while private enterprise takes hold on many Indian reservations 
and deserves more support and encouragement, especially considering the 
large income gap that remains to be closed, \8\ government ownership of 
enterprise is properly a feature of Indian economic development and 
will be for some time. The question is: How can tribes create value as 
efficiently as the private sector while operating within the 
constraints of government ownership.
    The answer hinges on getting corporate governance right. Enron and 
the Sarbanes-Oxley response illustrate the challenges of corporate 
governance without government ownership. Corporate governance under 
Indian nation ownership requires another level of care entirely. The 
problem arises because two competing sets of relationships become mixed 
and generate role confusion. On the one hand, we generally like our 
constituents and representatives to be closely connected through 
elections, correspondence, constituent service, and the like. On the 
other hand, we like it when the people we put in charge of our hard-
earned assets tighten the ship if standards of customer service are 
slipping or margins are lagging the industry.
    When constituents are employees and representatives are directors, 
all in the same institution--the tribal corporation--roles and 
relationships become unclear. Say I'm fired from the tribal company and 
I have a powerful uncle on the tribal council. Should I play 
``employee'' and go through the due process of the corporate personnel 
grievance system or should I play ``constituent'' and go through my 
uncle? Or say I'm a council representative with many constituents on 
the tribal housing waiting list and the corporation announces a new 
investment initiative. Should I to play ``representative'' and expand 
the housing budget at the expense of the investment or act as 
``director,'' focusing on the long-term prospects of the business? 
Tribal leaders around Indian Country have encountered problems like 
these in tribal enterprises repeatedly. The questions do not get 
resolved easily, and if they fester, profitability decays and even 
collapses. 2
---------------------------------------------------------------------------
    \2\ While the trappings of the foregoing questions are those of 
tribal councils and tribal housing programs, the underlying dynamic is 
not Indian per se. The imaginings that opened this section apply 
equally well to tribal enterprises as to AMTRAK, or British Airways 
before Margaret Thatcher privatized it.
---------------------------------------------------------------------------
    Successful tribal governments formally divide business affairs from 
elected leadership, usually via a chartered board of directors, but it 
does not simply serve to adopt a charter. I have seen one tribe copy 
the charter of a very successful company for its own company only to 
witness utter collapse. Tribal corporate governance requires: a) a firm 
governing foundation in the constitution of the tribe and related 
practice; b) a charter and corporate purpose that represent the Indian 
nation's priorities and commitments; and c) ongoing reinforcement of a 
new organizational culture supporting the elements of corporate 
governance.
Stable Civic Governance
    Without robust tribal governing institutions, a tribal charter may 
be a moot point. If, for example, corporate contracts are adjudicated 
by the tribal council, the enterprise may never attract investors. Or 
if the tribal council turns over every couple years, the corporate 
governance system will be perennially at risk of manipulation, if not 
dismantlement. Corporate governance systems benefit from a civic 
governance system that provides:
      Staggered council terms or other mechanisms of stability 
that permit the system of corporate governance to become enshrined in 
political institutional memory;
      Independent dispute resolution mechanisms that operate 
fairly and expeditiously to adjudicate contracts, personnel disputes, 
property rights, and disputes over the corporate charter;
      Well-defined checks and balances so that policy debates 
come to an end, reflecting accommodation across the branches of 
government;
      Clear and predictable rules that do not change with the 
whims of newly elected leaders or narrow majorities; and
      Civil service professionalism that helps create 
supportive economic policies such as uniform commercial codes or zoning 
codes and helps guide infrastructure development.
Corporate Charter and Purpose
    To have worth beyond the paper on which it is printed, a corporate 
charter must make clear the overarching purpose of the corporation and 
faithfully represent community compromises regarding the distribution 
of authority between the corporation and the government. All 
organizations benefit from clear purposes, of course, but tribal 
experience demonstrates that when tribal corporations exist to advance 
a deeply held or widely held community aim (aside from profitability, 
which is understood), their chances of success improve because 
constituents, representatives, directors, and employees do not choose 
roles as opportunistically. The charter must also pre-allocate 
decision-making authorities in a manner supportable by the citizens of 
the nation. Generally speaking, the more powers that can be allocated 
to the board of directors, the better; however, the allocation of 
authority also entails political questions whose answers are shades of 
gray rather than black and white. At a minimum, the charter must 
specify who will perform the following tasks:
      Recruit, nominate, hire, pay, and remove directors of the 
board;
      Set dividends and retained earnings;
      Set, apply, and adjudicate corporate personnel policy;
      Approve limited corporate waivers of sovereign immunity;
      Develop and use trust lands;
      Approve or reject investment decisions; and
      Reports corporate performance data.
The Practice of Corporate Governance
    And of course, paper documents do not necessarily govern behavior. 
For it to work, the charter must become a new way of ordering 
relationships. That takes leadership, behavioral change, and 
organizational culture. Once the charter is written, tribal political 
and corporate leaders need to alter the incentives actors face within 
the corporate governance system. If not, the centripetal forces 
confounding government ownership will work to drag performance down. 
Among other things, successful tribal enterprises:
      Maintain the engagement of their directors;
      Provide regular reporting from the corporation to the 
owners;
      Enforce conflict of interest rules;
      Limit the day-to-day interference of elected leaders in 
corporate decisions;
      Train newly elected leaders and newly appointed directors 
in the system of corporate governance; and
      Evaluate performance throughout the corporate governance 
system regularly.
Conclusion
    Closing the income gap in Indian Country and diversifying Native 
economies will entail tribes working on a variety of strategies 
simultaneously, including private sector development, individual 
financial literacy, social program support for workers, and more. 
Troubleshooting existing systems of corporate governance and developing 
new ones for tribally owned enterprises will be critical to the 
portfolio of strategies. Tribal ownership of business shows no signs of 
waning, yet it poses inherent challenges that must be faced.
    The characteristics listed above are shared by the Winnebago 
Tribe's Ho Chunk, Inc., the Louden Tribal Council's Yukaana Development 
Corporation, and other successful tribal companies around Indian 
Country. Adopting these characteristics does not guarantee the success 
these companies have had. Business is risky. One does not automatically 
arrive at good corporate governance via a lock-step process, nor is 
balancing political prerogatives against corporate requirements 
orderly. Nonetheless the challenges of tribally-owned corporate 
governance should not lead to despair. Tribes have succeeded precisely 
because they faced the challenges posed by government ownership 
directly. They took steps to reduce uncertainty and ambiguity in tribal 
business by managing the boundaries between government and business 
well. Continuing to diversify and expand Native economies will hinge on 
more tribes doing so.
    [NOTE: ``Native American Contracting Under Section 8(a) of the 
Small Business Act: Economic, Social and Cultural Impacts'' submitted 
for the record by Mr. Taylor has been retained in the Committee's 
official files.]
[GRAPHIC] [TIFF OMITTED] T7848.014

                                 
    The Chairman. Thank you. The Chair will yield to the 
Ranking Member, Mr. Young.
    Mr. Young. Good testimony. Sarah did a great job. I really 
don't want to ask anymore questions other than the fact that, 
Mr. Taylor, I had the privilege of reading your report before 
you put it up there. That is good information, and it is 
simple, and believe me, we need simple information in Congress 
before we digest it.
    [Laughter.]
    Mr. Young. And if we can, Mr. Chairman, I am going to 
suggest as time goes by, if there is someone that raises their 
heads in another committee about changing this program, that 
that information is available for them, everything we are doing 
here, and I think the suggestion of Tex of a report from this 
committee is very well taken.
    So good job, appreciate it, and it has been a long day. I 
just thank you. Thank you.
    The Chairman. Gentleman from Oklahoma, Mr. Cole.
    Mr. Cole. Thank you, Mr. Chairman. I don't know if we are 
in a committee meeting or a revival meeting because I feel like 
saying Amen so much.
    [Laughter.]
    Mr. Cole. But I have enjoyed this, and I want to begin by 
just frankly thanking you and thanking the staff. I think it 
has been excellent presentations and an excellent group here. I 
do have a couple of points I want to make and then a couple 
quick questions, and they will be quick.
    But as I listened to all three panels, it is just so 
abundantly clear that we actually have a program that works, 
that actually did what it was designed to do, much like IGRA 
worked, and every time we see this I think in Indian Country 
when we have something that works people get worried about it. 
You know, they get jealous, I guess. I think gaming is what oil 
was to the Osages a century ago. I guess all of them are rich 
and they don't need any help, or any opportunities, but these 
program, and particularly this, as Mr. McCaleb eloquently 
pointed out, give Tribes that don't have an opportunity to game 
real ability to go into the marketplace and compete, and to 
develop the skills that they need to be successful, and as all 
these panelists have pointed out, or several of them, this is 
money that is made privately in a sense, but it flows into 
public purposes. I see it in my district all over where I see 
health care clinics, and I see senior citizen centers, and I 
see job opportunities, and I see kids with scholarships and an 
opportunity to get an education that their parents and 
grandparents never had.
    So why in the world we would worry about changing a program 
that does that, and leaves lasting skills and infrastructure 
for business success in place, I will never ever know.
    But just let me ask you if I may, Neal. You made the point 
in your testimony very eloquently, or your written testimony, 
that no Indian Nation could be truly sovereign if it wasn't 
truly independent economically, and you have watched this for a 
long time and a lot of different ways, and I would like you to 
just expound on that theme a little bit if you would.
    Mr. McCaleb. Well, I think it is patently clear that if you 
are financially independent on someone else or another 
government, you don't have any true sovereignty, and to acquire 
that sovereignty, you have to develop an economic base. To 
acquire individual independent, you have to develop an economic 
base. You have to have a marketable skill or something, and 
that is what the SBA program is inculcating in the Tribes that 
are using it.
    The Chickasaw Nation has seen really meteoric growth 
economically over the last 20 years of Governor Anoatubby's 
leadership, and it is because he has been focused on economic 
sovereignty as well as political sovereignty that that has been 
so successful.
    Mr. Cole. I always like to point out, Mr. Chairman, that is 
a corporate headquarters from our standpoint that never goes to 
Dallas, and jobs that never go to China, and we have a very 
vested interest as a state in Tribes being successful. Goodness 
knows, and when I talk to Tribes I make this point all the 
time, we of all people ought to know don't trust the Federal 
government to keep their commitments. So you better get in a 
position where you can take care of yourself, and policies, and 
this is one of them that pushes in that direction are the 
things that we ought to be worried about. I am as fierce as 
anybody in making sure the Federal government keeps its 
obligations and its commitments, and does the things it says it 
is going to do financially, but again, 200 years plus of 
American history would tell you it doesn't do that very well. 
At the end of the day you have to depend on yourself more than 
anything else, and we have a unique opportunity to do that.
    This program has helped us, and I just again really want to 
thank you personally and professionally and politically for 
holding this and giving us an opportunity because there are 
other people in Congress that clearly need to be informed about 
this, and hopefully with the best of intentions are trying to 
do the wrong thing, but I think you have laid out a very 
convincing case at this hearing as to why it would be an 
enormous mistake as well as an injustice to lose the ability to 
do what we have been able to accomplish through Section 8[a] 
contract, and I appreciate it very much. Thank you.
    Mr. McCaleb. Thank you, Tom. Let me just ask, if I might, 
ask you, sir, one of the criticisms--following up on the 
gentleman from Oklahoma's suggestions of others in Congress 
having the wrong perceptions--some have criticized the Alaska 
Native participation in the 8[a] programs because of the high 
amounts of executive compensation. They argue that this causes 
an unfair advantage over the individually owned 8[a]s because 
they must manage their companies and show economic 
disadvantage.
    Why do you believe this is not an unfair disadvantage?
    Ms. Lukin. Thank you, Mr. Chairman.
    A couple of things. One, all ANCs are run and managed by a 
Native Board of Directors that is elected by the Native 
shareholders, and they, of course, in turn higher the most 
talented CEOs to operate our companies to the highest degree to 
provide benefits back to all of our shareholders.
    So do I think the CEOs are overcompensated? Absolutely not. 
Our boards are sophisticated. They go through extensive review 
processes of what other corporations and companies across the 
United States are paying to make sure that we are paying fair 
market value for the talent that we need to operate our 
companies appropriately.
    The Chairman. So you don't advocate any caps on executive 
compensation?
    Ms. Lukin. No, I do not.
    The Chairman. Mr. Secretary, let me ask you, Tribal and 
Alaska Native Corporation 8[a] companies operate under similar 
yet different rules as you are acutely aware. Should Congress 
require that the same rules apply to both tribally owned and 
ANC corporations?
    Mr. McCaleb. Well, that is the way the program is operated, 
largely as it relates to graduation from the program and caps 
on the program which are essential for the continuity, and that 
needs to be preserved. The differences that exist currently in 
the operation of the program between Tribes and Tribal 
governments and ANCs I think are fairly small differences in 
comparison to this idea that there is not any caps on the 
contract, and that they can have long-term continuity.
    The Chairman. OK. Mr. Taylor, your report shows that Native 
8[a] companies represent only a small share of the procurement 
dollars, yet other minority contractors claim this is unfair. 
What is your response to those who make this claim?
    Mr. Taylor. Well, I think that it goes back to the point I 
made earlier about there being a correspondence between the 
exemptions that exist for Tribal and ANC 8[a]s and the 
circumstances that have been set up by Federal Indian law, the 
Alaska Native Claim Settlement Act, and the Indian 
Reorganization Act and so on to set up these corporations as 
community-owned entities; that the benefits are flowing not to 
a family of shareholders, not to an entrepreneur, but really to 
an entire community, and I think that is the distinction that 
needs to be focused on, if you will. That is the distinction 
that makes the difference between the treatment under the 
Section 8[a] rules.
    I would comment to Mrs. Lukin's excellent remarks about 
directors and compensation of executives. It is a very 
difficult decision to choose how much an executive should be 
compensated and whether or not that executive should be Native 
or non-Native, and there is nobody better situated to make the 
decision and bear the consequences than a Native director.
    In countless cases around Indian Country, both corporate 
cases but also in the administration of government programs, 
our research finds that when outsiders make the decisions they 
don't make them nearly as well as when the Native people who 
bear the consequences directly make them themselves.
    The Chairman. Very good point.
    Gentlemen, lady, thank you very much for your testimony and 
the time and travel you have taken to be with us today. We 
appreciate it. And was suggested earlier, this will be a good 
report that our committee will make to ensure that those who 
perhaps question some of these programs will have fully at 
their disposal. Thank you.
    No further business, the Committee stands adjourned.
    [Whereupon, at 1:45 p.m., the Committee was adjourned.]

    [Additional material submitted for the record follows:]

    [A statement submitted for the record by Beasley Denson, 
Tribal Miko (Chief), Mississippi Band of Choctaw Indians, 
follows:]

           Statement of Beasley Denson, Tribal Miko (Chief), 
                  Mississippi Band of Choctaw Indians

    On behalf of the approximately 9600 enrolled members of the 
Mississippi Band of Choctaw Indians, I would like to thank and commend 
Chairman Rahall, Ranking Member Young and the Members of the House 
Committee on Natural Resources for holding this hearing on Diversifying 
Native Economies. My name is Beasley Denson, and I am Miko (Chief in 
our Choctaw language) of the Mississippi Band of Choctaw Indians.
    Mr. Chairman, I hope my testimony, in addition to those provided by 
many other Tribal leaders throughout Indian Country, will help you and 
your colleagues in Congress understand why economic development 
initiatives such as the 8(a) program are so important to every Tribe's 
goal of self-determination and self-sufficiency, and why Congress 
should not adopt misguided proposals that would endanger the proven 
success and positive results of these programs.
    For decades, the Mississippi Choctaw have taken an innovative and 
forward-thinking approach to business. From wire harness production and 
assembly, to entrepreneurial business ventures, the Tribe's business 
model has proven to be successful. However, the realities of the global 
marketplace forced us, just like many other entities throughout the 
United States, to change with the times. With the implementation of the 
North American Free Trade Agreement (NAFTA) and the loss of hundreds of 
manufacturing jobs to Mexico, the Tribe recognized that that we had to 
embark upon a path of economic diversification through the creation of 
other employment opportunities on the reservation
    The new economic mix includes gaming, hospitality, and 
entertainment resulting in a major family destination resort that 
attracts visitors from throughout the Southeastern United States and 
beyond. We are fortunate to have two casino properties that anchor our 
economic development plans. However, Mr. Chairman, I agree with you 
that Tribes also need to explore various, innovative non-gaming 
economic development opportunities, which is why it is so important 
that you are holding this hearing. It's even more important given that 
some Members of Congress have unfortunately proposed placing new 
restrictions and/or limits on the very same federal programs that have 
allowed Tribes like ours to pursue such non-gaming economic development 
initiatives.
    Our Tribe's new approach to industry involves the creation of 
partnerships that will lead the Mississippi Band of Choctaw Indians 
into the next generation of employment opportunities. Over six years 
ago, the Tribe made its move away from traditional manufacturing into 
more advanced, technical, and highly sophisticated work with the 
founding of Applied Geo Technologies, Inc. (AGT). AGT is a 100% 
Tribally-owned, 8(a), chartered corporation of the Mississippi 
Choctaws. We are very proud AGT has become one of the premier, 
Tribally-owned providers of advanced manufacturing and operational 
services solutions in the nation.
    Mr. Chairman, here a few examples of why we feel that way:
      In 2001, Lockheed Martin, the world's largest defense 
contractor, agreed to provide resources to augment AGT's management, 
technical, and new business development capabilities to stimulate its 
growth in the federal contracting market. At Lockheed Martin's Kelly 
Aviation Center in San Antonio, Texas, AGT supports the calibration and 
repair of assembly equipment for the U.S. Air Force's TF39, T56, F110, 
F118, and CF6-50 jet engines.
      At the John C. Stennis Space Center in Southern 
Mississippi, AGT provides precise calibration, metrology, and 
environmental laboratory services in support of the space shuttle's 
main engine, among other rocket engine testing services.
      In 2004, AGT entered into a mentor-protege relationship 
with AgustaWestland, one of the world's leading helicopter 
manufacturers. This association has already landed AGT a seat on TEAM 
US101, which will manufacture the next fleet of helicopters for the 
President of the United States. AGT is planning to manufacture a 
majority of the wiring harnesses for the US101 in the Choctaw Tech 
Parc.
      Also in 2004, AGT entered into an agreement with AAI 
Corporation to jointly build advanced hydraulic, pneumatic, and 
mechanical test equipment in the Choctaw Tech Parc. This program is 
currently serving our military forces with leading-edge manufacturing 
and engineering solutions to produce equipment that meets the needs of 
our troops.
      In 2006, the U.S. Army looked to AGT for Operational 
Services support of the Mississippi Army Ammunition Plant. Under this 
contract, AGT is responsible for the maintenance and management of 
industrial property, safety and quality, and environmental regulations.
      In 2007, AGT was awarded its largest contract to date, a 
5-year Indefinite Delivery Indefinite Quantity contract with a ceiling 
price of $69.9 million to support the U.S. Army's Program Executive 
Office for Simulation, Training and Instrumentation (PEO STRI) Project 
Manager for Instrumentation, Targets, and Threat Simulators (PM ITTS), 
Targets Management Office (TMO). Work to be performed by AGT will 
include field engineering, research and development, light 
manufacturing, and operational support of applicable target systems.
    With the changing manufacturing environment on the reservation, AGT 
has retained and created many new high-tech employment positions from 
former Tribal enterprises which resulted in an average wage increase of 
16% for the transferred employees. AGT now has 11 locations in five 
states and employs over 275 professionals. In a short time period, AGT 
has grown from revenues of $600,000 in its first year to an anticipated 
$46,500,000 in its sixth year. With growth comes the opportunity to 
reinvest in the local community--both on and off the reservation--in 
order to prepare a workforce that can deliver the quality products that 
are demanded by AGT's high-profile aerospace and defense clientele.
    Through a partnership with East Central Community College, AGT can 
now offer customized training programs through Mississippi's workforce 
development initiative, thus creating a strong, skilled Mississippi 
workforce allowing high-tech industries such as AGT ample opportunities 
for growth. AGT also offers 100% tuition reimbursement for our 
employees.
    As countless witnesses before this Committee have attested to, 
economic development, including our Tribe's vision of high-tech 
industry, reaches beyond job creation. It strengthens an entire 
economy, encompassing all aspects of our quality of life in Choctaw and 
in Mississippi. Successful economic development projects allow the 
Tribe to provide those essential government services that any city or 
State government provides to its citizens. The Tribe's ability to 
provide affordable housing, health care, law enforcement, education and 
so many other basic services is greatly enhanced by a strong, 
diversified economy.
    Every time one of our Choctaw youth see pictures of the Space 
Shuttle heading upwards away from the Earth, or when we see the 
President arrive at, or depart from, the South Lawn of the White House 
on the Marine One helicopter, he or she will know that the Mississippi 
Band of Choctaw Indians played an integral part in allowing these feats 
of American technological prowess to occur. And maybe, some of them 
will aspire to one day do the same. Because of companies like AGT, not 
only will they have that opportunity, but it will be right there on our 
reservation in east central Mississippi.
    When I learned that the Committee would be holding this hearing, I 
spoke with several employees who work at AGT and IKBI, Inc., 
Mississippi Choctaw's other 100% Tribally-owned 8(a) company, in order 
to get their perspective on what economic diversification has meant to 
them. Allow me to share the story of Ms. Sylvia Graves. Sylvia is an 
enrolled member of the Tribe who is the Human Resource Manager at AGT. 
Before AGT, Sylvia worked for an off-reservation out-of-state 
corporation with operations in the nearby city of Philadelphia, 
Mississippi. Sylvia told me that her insurance costs kept increasing 
while her benefits decreased. She said that she was unhappy because 
morale was low and her fellow employees were unhappy as well. According 
to Sylvia, AGT changed all of that for her. She says that she enjoys 
the atmosphere and knows that the benefits she currently receives are 
very good compared to other manufacturing companies in the area. Since 
she arrived at AGT, she has seen employment increase by more than 150 
workers, the majority of whom work on the reservation in Choctaw. She 
also told me about some of the employees of a manufacturing company in 
Carthage, Mississippi that AGT recently acquired. Workers there hadn't 
received a raise in more than five years and, as you can imagine, 
morale was low and turnover was high. When AGT took over, a sense of 
tribal pride was restored as wages and benefits have increased by 
approximately 16%.
    I know this is a simple account from one of our many tribal 
members, but it is a genuine testimonial of someone who is happy, and 
enjoys a dramatically improved quality of life, because of the 
opportunities that AGT and IKBI have created.
    Mr. Chairman, I sincerely hope that I do not have to tell our 
employees, including enrolled Members such as Sylvia, and the thousands 
of non-Tribal employees that make us the third largest employer in the 
State of Mississippi, that Congress has enacted proposals that would 
make it more difficult for, or even prevent, Native businesses like AGT 
and IKBI to create these much-needed economic development 
opportunities.
    Again, on behalf of the Mississippi Band of Choctaw Indians, I 
thank you for the opportunity to share our views on the importance of 
diversifying native economies, and we look forward to working with you 
and your colleagues in Congress to strengthen--not weaken--the various 
federal initiatives such as the 8(a) program that have done so much to 
benefit Native Americans throughout the United States.
                                 ______
                                 
    [The Native American Contractors Association Joint 
Legislative Proposal on Small Business Contracting submitted 
for the record follows:]

                       JOINT LEGISLATIVE PROPOSAL

                     ON SMALL BUSINESS CONTRACTING

                           SEPTEMBER 25, 2007

Expand Small Business Contracting Opportunities
    In reauthorizing the Small Business Act's contracting programs, 
Congress must include stronger provisions to ensure small businesses 
actually receive the federal contract support required by law for 
decades. While the federal contracting market has doubled in size since 
2000, small businesses' percentage share of that market has declined 
significantly due to:
      Bundling/consolidation of contracts into sizes beyond 
most small contractors' capabilities;
      Huge growth in emergency/overseas contracts not subject 
to small business contracting requirements or goals;
      Barriers to growth that make it difficult for small 
contractors to compete for larger contracts;
      Lax compliance with subcontracting plan requirements and 
limited enforcement; and
      Downsizing of the federal procurement workforce, 
compounding the above problems, as overworked contracting personnel 
must deal with higher volumes of contracting actions, pressures to meet 
deadlines and small business goals, and little or no time to monitor 
compliance with existing rules designed to prevent/reduce contract 
bundling/consolidation, enforce subcontracting plan requirements and 
other limits on subcontracting.
    To enable small businesses, particularly 8(a) firms, to compete for 
a larger share of government contracts, the federal government must 
take immediate actions to reverse these trends, including enhancing 
incentives for contracting officers to increase awards to 8(a) and 
other small businesses. In considering small business contracting 
legislation, Congress should adopt provisions to:
     1.  Fulfill Congressional intent to further the Indian Self-
Determination policy set forth in 25 U.S.C. 450a by preserving the 
provisions that promote the competitive viability of ``Native 
enterprises'' small business concerns certified by SBA as owned by 
Indian Tribes, Alaska Native regional or village corporations, or 
Native Hawaiian Organizations that help support their Native 
communities by developing more self-sufficient Native economies;
     2.  Support provisions that tighten limits on bundling and 
consolidation of contracts, break up such contracts for award to small 
businesses or employ procurement procedures to enable teams of Native 
enterprises and other small businesses to pursue larger contracts. 
Require contracting agencies to issue a Request For Information (RFI) 
to small businesses so they have a chance to form teams to pursue these 
larger contracting opportunities (sections 1001 and 1002 of S. 3778 of 
the 109th Congress proposed such teaming approaches);
     3.  Increase the Government-wide contracting goals for awards to 
small business (along the lines of section 201 of H.R. 1873) of not 
less than 30% of total contract awards to small business, and not less 
than 8% of total contract and subcontract awards to small disadvantaged 
business concerns;
     4.  Include overseas contracts within the Government-wide 
contracting goals (like section 202 of H.R. 1873), and require 
reporting of awards to small businesses as prime or subcontractors 
performing contracts overseas (as proposed in section 1306 of S. 3778);
     5.  Enhance the ability of individuals to qualify for 
certification as 8(a) program participants and to pursue larger 
contracts on a competitive or non-competitive basis (as proposed in 
sections 202 of H.R. 2532);
     6.  Increase the net worth thresholds, including annual 
inflationary adjustments, for individuals seeking to qualify and retain 
eligibility for certification as 8(a) program participants (along the 
lines of section 1242 of S. 3778, or section 202 of H.R. 2532);
     7.  Double each competitive thresholds specified in 15 U.S.C. 
637(d)(1)(D)(ii), (as proposed in section 202 of H.R. 2532);
     8.  Encourage small businesses with larger contracts to implement 
subcontracting plans to develop stronger business alliances among all 
types of small business contractors, including 8(a) and other small 
disadvantaged concerns, HUBZone, service disabled veteran-owned, women-
owned and other small businesses;
     9.  Revisit size standards (as both the Senate and House Small 
Business Committees have proposed), but leave in place the new 
requirements for small business recertification that just became 
applicable on June 30, 2007; and
    10.  Support legislative or administrative directives for SBA to 
accept certifications by other federal, state and local governments, 
under such criteria as SBA may prescribe by regulation or order, in 
certifying small disadvantaged businesses, and other subcategories of 
small businesses for which certifications are required (sections 1221, 
1232 and 1241 of S. 3778).
                                 ______
                                 
    [A statement submitted for the record by the National 
Center for American Indian Enterprise Development follows:]

                 Statement of the National Center for 
                 American Indian Enterprise Development

    Chairman Rahall and Ranking Member Young, the National Center for 
American Indian Enterprise Development (NCAIED) commends the House 
Committee on Natural Resources for convening this oversight hearing on 
``Diversifying Native Economies'' as a key goal. The NCAIED presents 
this testimony on the roles that Native business development and 
government contracting activities play in both diversifying and 
strengthening our Native economies.
    The National Center or NCAIED is the longest serving Native 
business development assistance provider in the United States. Our 
mission is to develop the American Indian private sector as a means to 
help our Native communities become self-sufficient. Formed in 1969 as 
the non-profit Urban Indian Development Association, we have evolved 
over the last 38 years from one office with an urban Indian focus into 
a national organization with supporting non-profit centers across the 
country. We provide technical assistance and business development and 
management consulting services nationwide to Indian tribes, Alaska 
regional and village corporations (``ANCs''), Native Hawaiian 
Organizations, and businesses owned by tribes, ANCs, and individual 
Native Americans, Alaska Natives, and Native Hawaiians.
    The NCAIED headquarters and supporting centers are staffed 
primarily by Native American business and procurement consultants with 
experience in dealing with such issues as tribal sovereign immunity, 
tribal trust lands and restricted allotments that are inalienable and 
therefore cannot be used as collateral for business loans, remoteness 
and lack of physical and technological infrastructure to support 
business development. The Minority Business Development Agency (MBDA) 
of the Department of Commerce began supporting our program many years 
ago because, unlike other small business service centers, NCAIED 
designs its centers and trains our staff to devote extra time and 
attention to help individual entrepreneurs and Indian tribes learn how 
to conduct business feasibility studies, develop business plans, 
establish banking relationships and lines of credit, begin marketing, 
expand operations, and even enter the challenging federal procurement 
market.
    The NCAIED's leaders have always played pivotal roles in spurring 
small business startups in the commercial and government marketplaces, 
and in breaking down barriers that impede economic development and 
diversification activities in our Native communities across the United 
States. We offer the following comments on such barriers, and also make 
several recommendations for future action.
Earlier Oversight Hearings on Indian Business Development
    In 1987, our then President, Steven Stallings, testified at the 
first of several important hearings of the Senate Indian Affairs 
Committee on Indian economic development. At the time, we operated five 
offices in the West assisting almost 600 companies, most owned by 
individual Native Americans and some by tribes. Mr. Stallings 
recommended expansion of the Buy Indian Act's application to more 
federal agencies, and adoption of a Buy Indian Act certification that 
could be accepted by all federal contracting agencies, and satisfy 
eligibility for the Small Business Administration (SBA) contracting 
programs. He urged that more contracts be issued as Buy Indian because 
what he called ``unchecked discretionary authority'' of the Bureau of 
Indian Affairs (BIA) was resulting in many valuable procurement 
opportunities being lost. Unfortunately, lack of Buy Indian Act usage 
and enforcement persist to this day.
    Mr. Stallings reported that Indian-owned firms were encountering 
great difficulty in getting certified in the SBA's section 8(a) 
Business Development Program. Of the few who achieved certification, 
most of them received no 8(a) contracts. The two largest contracts 
(representing the majority of 8(a) award dollars to Indian-owned 
companies) had been awarded to tribal-owned companies on the Devil's 
Lake Sioux and Fort Peck Reservations under special arrangements. Most 
of the 8(a) certifications resulted from a Memorandum of Understanding 
signed by SBA and the Department of Defense (DOD) in September 1983. 
The MOU committed SBA to ``receive'' 150 fully completed applications 
for 8(a) status and ``target'' 75 of them for certification. Mr. 
Stallings testified that while SBA did its part, DOD had not provided 
the contract support it had promised. He recommended improvements to 
the Buy Indian Act, the 8(a) program, and establishment of a National 
Center for Economic Development to provide assistance to Indian-owned 
businesses and tribal governments in Indian economic development, 
assessing needs for training, creating effective training models, 
implementing training programs, and operating technical assistance 
centers and a clearing house.
    When the Senate Committee held a later oversight hearing in 1988 on 
``Barriers to Indian Participation in Government Procurement 
Contracting,'' Mr. Stallings again testified in support of reform of 
the 8(a) program, especially for tribal-owned companies. He reported 
that the growth of contracting companies owned by Tribes and American 
Indian and Alaska Native individuals lagged far behind that of other 
groups (only 14,843 and generating gross receipts of just $646.7 
million). See Oversight Hearing on ``Barriers to Indian Participation 
in Government Procurement Contracting,'' Senate Select Committee on 
Indian Affairs, 100th Cong. 2d Sess. 80 (1988). These numbers 
represented only 1.8% of the total number of small businesses, and with 
a mere l.4% in gross receipts of all minority-owned businesses, 
combined. Comparative figures showed: 248,141 Hispanic-owned companies 
with gross receipts of nearly $15 billion; 339,239 African American-
owned firms with gross receipts of $12.4 billion; and 240,799 firms 
owned by Asian American and other minorities with gross receipts of 
nearly $17.3 billion. Id. To reach parity with these other groups on a 
per capita basis, he estimated that a 4,000% increase in Native 
business ownership would be needed. Id.
    Ronald Solimon, now Chairman of NCAIED's Board of Directors, also 
testified at the 1988 hearing as then CEO of Laguna Industries, Inc. He 
explained how his collaboration with Raytheon Corporation, SBA and DOD 
had led to a joint venture between Laguna Industries with Raytheon that 
was awarded a DOD contract. Mr. Solimon recommended that the Congress 
amend Section 8(a) to authorize 8(a) companies owned by Tribes or ANCs 
to joint venture with companies that could mentor them along the way.
    The low level of federal (particularly defense) contract awards to 
Native-owned firms greatly concerned then Committee Chairman Daniel K. 
Inouye. He emphasized that ``directing [the] purchasing power [of the 
U.S. Government] to accomplish social goals such as assisting 
disadvantaged members of society is well established'' and acknowledged 
that ``unfortunately, ...this public policy goal has not been achieved 
with respect to the participation of businesses owned by [N]ative 
Americans.'' Id. at 2. 1 In keeping with federal Indian 
policies, he acknowledged that it is Native groups' ``common trust 
relationship with the United States'' that ``allow[s] the Congress to 
legislate unique benefits and treatment for the Native Americans.'' Id.
---------------------------------------------------------------------------
    \1\ The public policy referenced in Chairman Inouye's 1988 
statement derives from the U.S. Constitution's grant to Congress of the 
power ``to regulate Commerce...with the Indian Tribes.'' Article I, 
Sec. 8, ] 3. This Constitutional provision, and its interpretation in 
subsequent landmark Supreme Court decisions, gave rise to the federal 
government's special political relationship with and trust 
responsibilities to the tribes. See Cherokee Nation v. Georgia, 30 U.S. 
1 (1831); Worcester v. Georgia, 31 U.S. 515 (1832). Thus Congressional 
enactments bestowing special rights to tribes and ANCs are based on 
this political relationship and trust obligation, not on a racial 
classification designed to remedy past racial discrimination.
---------------------------------------------------------------------------
    Responding to these recommendations, the Congress passed the 
Business Opportunity Development Reform Act in late 1988 (as well as 
amendments authored by Congressman Rhodes in 1990) that added the 
special provisions in Section 8(a) now applicable to companies owned by 
tribes and ANCs. Congress included these special 8(a) provisions 
recognizing that tribes and ANCs, as representative organizations, are 
responsible for generating continuing income and jobs for, and 
improving the livelihood of, hundreds or thousands of tribal members 
and Native shareholders.
    In parallel action in 1988, the Congress also amended the 
Procurement Technical Assistance Center (PTAC) Program to target 
assistance to Indian Country. It authorized creation of American Indian 
PTACs, or AIPTACs, designed to serve multiple Bureau of Indian Affairs 
areas. Many of these AIPTACs now operate within the network of the 
NCAIED's centers, and help Native-owned companies learn how to navigate 
the complex federal procurement marketplace using the 8(a) program and 
other procurement and business development tools available to them.
NCAIED and Indian Business Development Today
    For over 38 years, the NCAIED has been assisting tribes and 
individual Native American entrepreneurs seeking to form, or expand 
existing, business ventures. Under the leadership of current President/
CEO Kenneth Robbins, the NCAIED has expanded AIPTAC services funded by 
the DOD's Defense Logistics Agency and expanded Native American 
Business Enterprise Center (NABEC) services funded by the MBDA. These 
centers operate in the following locations: Mesa, Arizona, and El Monte 
and El Segundo, California, serving the West and Southwest; Seattle and 
Lynwood, Washington assisting the Pacific Northwest area and part of 
Alaska; Polson, Montana, and a satellite office in Bismarck, North 
Dakota, serving the Northern Plains area; Denver, Colorado, serving 
states south of the Plains area; and serving the East Coast and parts 
of the Midwest are three centers, in Marietta, Georgia, Reston, 
Virginia and a new center in Pembroke, North Carolina.
    These centers help the DOD, MBDA, SBA, the General Services 
Administration, and other federal agencies in implementing many 
programs, including the Mentor Protege programs, the HUB Zone Program, 
Electronic Commerce/Electronic Data Interchange, subcontract plan 
fulfillment and myriad other defense requirements. The centers also 
provide training on how to register electronically with the Federal 
Government, how to identify marketing opportunities and market goods 
and services, and how to navigate various procurement requirements 
(including the acquisition of commercial products). More general 
business services include helping companies develop business plans, 
secure financing, find business partners, learn the federal procurement 
ropes, apply for SBA program certifications, market their capabilities, 
identify contracting opportunities, prepare proposals, and win 
contracts.
    In addition to their existing responsibilities, the NCAIED's 
centers are implementing new procurement assistance projects. The most 
exciting is our new Native American Indian Business Development web 
portal called NativeEDGE (www.nativeedge.org), with a call center to be 
implemented, a publications clearinghouse of federal and private sector 
information on economic development and procurement opportunities and a 
wealth of other important and helpful information for tribes, ANCs, and 
individuals who are American Indians, Alaska Natives, and Native 
Hawaiians. The procurement information on NativeEDGE will make more 
accessible the contract opportunities available in the defense, 
homeland security and other federal sectors. To meet the corresponding 
increase in demands for procurement technical assistance from AIPTACs, 
the NCAIED and its supporting centers are playing vital roles in 
promoting greater use of contracting companies owned by tribes, ANCs, 
and other Native entities and entrepreneurs.
    As the above-mentioned cooperative agreements each require the 
federal dollars to be matched by a significant amount (as high as 25 
percent) of private funding, the NCAIED generally raises more than 50 
percent of its own funds. In addition to client work under these 
cooperative agreements, the NCAIED produces various events that train, 
promote and market Indian enterprises to the public and private 
sectors. One such event is the phenomenally successful Reservation 
Economic Summit & American Indian Business Trade Fair. At RES 2007, 
over 3,000 individuals and 300 exhibitors attended, including tribes, 
ANCs, federal and other government procurement officials, and corporate 
and Native business representatives.
    The NCAIED estimates that its operations have assisted 
approximately 80% of the tribes in the lower 48 states and more than 
25,000 Native enterprises, and have trained over 10,000 tribal members 
trained. Furthermore, due to its centers' bid matching and other 
business assistance efforts, as well as the networking opportunities 
produced at the RES and other similar conferences, NCAIED clients have 
received well over $3 billion in contract awards (translating to over 
60,000 jobs) in the last 4 years alone.
    The results of all these efforts demonstrate real progress. The 
U.S. Census Bureau reported in 1997 that its data (thought incomplete) 
showed 197,300 Native American-owned businesses in the United States, 
up 84% from 1992, employing 298,700 people and generating $34.3 billion 
in revenues. See 1997 Economic Census: Survey of Minority Owned 
Business Enterprises: Company Statistics Series (2001). By 2002, Census 
estimates were 206,125 Native-owned firms, up 4% from the 1997, but 
total revenues down 23% to $26.3 billion. See 2002 Survey of Business 
Owners, U.S. Census Bureau.
    Of the roughly 360 tribes in the lower 48 states, about several 
dozen have launched government contracting operations and applied for 
8(a) program certification. Some are very successful, while others are 
still struggling to break into the difficult federal market. The SBA's 
list of the top 8(a) firms include many owned by ANCs and Tribes, and 
many have appeared on the Top 25 8(a) list of information technology 
firms. See Wakeman, 8(a)s Still a hit with ANCs, tribally owned 
companies, 20 Washington Technology (Sept. 26, 2005).
    In short, after years of being encouraged by Congress to do so, and 
after seeing the success of other Native contractors, more tribes as 
well as ANCs are pursuing government sector opportunities.
Reports Confirm Native Business Successes
    Numerous reports, including the studies discussed in this 
Committee's hearing, confirm that the above-recited Congressional 
initiatives to spur Native economic development have been remarkably 
successful. One such report was issued in April 2006 by the Government 
Accountability Office entitled ``Increased Use of Alaska Native 
Corporations' Special 8(a) Provisions Calls for Tailored Oversight'' 
(GAO-06-399) (the ``GAO Report''). This GAO report provided helpful, 
balanced information on ANC 8(a) contracting as activities undertaken 
in response to the Alaska Native Claims Settlement Act that directed 
Alaska Native regional and village corporations to pursue economic 
development for the benefit of their Alaska Native shareholders. GAO's 
report also explained how ANCs' participation in the 8(a) program has 
helped them generate revenues to return benefits to their Alaska Native 
shareholders, and how the SBA and federal agencies need to improve 
their oversight of ANC and other 8(a) contracting.
    Also very helpful in presenting a clearer picture of economic 
development progress in Indian Country is the September 2007 report, 
entitled ``Native American Contracting Under Section 8(a) of the Small 
Business Act--Economic, Social and Cultural Impacts,'' by Jonathan B. 
Taylor of Taylor Policy Group, Inc., who is associated with the Harvard 
Project. His analysis confirms what NCAIED's network of centers has 
learned anecdotally from working with Native-owned businesses across 
the country. That is: the special 8(a) provisions have succeeded, as 
Congress intended, in facilitating Native communities' diversification, 
self-determination and economic self-sufficiency. The Mentor-Protege 
Programs of the various federal agencies (e.g., SBA, DOD) also have 
helped in strengthening tribal- and ANC-owned companies.
    The NCAIED is proud of the role it has played in fostering informal 
types of mentoring and partnering by helping tribes and ANCs find 
teaming partners and subcontractors. A good example is the support that 
the NANA Development Corporation and its subsidiaries have provided to 
several of our centers in fulfilling contract requirements by 
subcontracting with a variety of client firms. To help expand such 
partnering, not only among Native contractors but also with other small 
business partners, the NCAIED has been conducting special 8(a) panel 
discussions at the various Indian business development and procurement 
technical assistance conferences hosted or co-hosted by its centers 
over the last two years. These sessions have focused on the special 
8(a) provisions, their history, purpose, and results. The CEOs of many 
8(a) companies owned by tribes or ANCs have described their 8(a) 
experiences as part of procurement training workshops. And, to 
memorialize the importance of partnering results, the NCAIED negotiated 
and executed a Memorandum of Understanding (MOU) with the Native 
American Contractors Association (NACA) last year, and just renewed the 
MOU for another year. This joint effort has launched a partnering and 
subcontracting demonstration program to encourage greater collaboration 
among Native and other contractors in bid matching, joint venturing, 
teaming and performing federal contracts.
    The NCAIED has been working with NACA and the National Congress of 
the American Indians (NCAI) to develop joint statements, and to reach 
out to other organizations representing 8(a) and other small 
contractors to find common ground. We believe it is imperative to 
discuss, work together and agree on joint efforts that will succeed in 
persuading the federal agencies to meet (and possibly even exceed) 
their 23% small business contracting goals.
Recommendations for Additional Improvements
    The NCAIED recommends appropriate corrective actions by SBA and 
federal procurement agencies to strengthen their oversight of 
contracting activities under the 8(a) program as well as SBA's other 
small business programs. All of the recommended actions will require 
more Native American and other personnel to determine, for example, how 
to collect better, more complete data on 8(a) companies' revenues in 
their primary and secondary industry codes, or how to monitor 
compliance with subcontracting limitations, and so on. The NCAIED, 
NACA, NCAI and other organizations representing small business 
contractors can and should work with SBA to improve oversight.
    Below are NCAIED's specific recommendations:
1. Create an SBA Office of Native American Affairs:
    The NCAIED recommends the creation of an SBA Office of Native 
American Affairs. Of the legislative proposals offered, the NCAIED 
supports the approach in S. 1671, the Entrepreneurship Development Act 
of 2007. This bill, ordered reported to the Senate in late July, 
contains Senator Tim Johnson's proposal to create an Office of Native 
American Affairs and new Native American Business Centers. This Office 
would provide the additional administrative and procurement support and 
oversight that are becoming increasingly important as contracting 
companies owned by tribes, ANCs and other Native entities expand in 
number. The Office would enable the SBA to implement the GAO's 
recommendation that SBA tailor its policies and practices to deal more 
effectively with the complexities of ANCs' and tribes' business 
structures, joint ventures and other partnering arrangements. This 
Office also could coordinate the provision of business development 
assistance to Native entities. The NCAIED recommends involvement of 
tribes, ANCs, AIPTACs, NABECs, SBDCs, Native Community Development 
Financial Institutions (NCDFI's) and tribal colleges to expand the 
delivery of business development services to Native communities most 
efficiently, and without duplication of efforts and costs. NCAIED is 
already contributing its experience with its network of AIPTACs and 
NABECs in joint working group discussions with NCAI, NACA and the SBA 
to develop better ways to assist small businesses of all types enhance 
data collection, and improve oversight of small business contracting.
2. Improve Implementation of the 8(a) Program:
    The NCAIED recommends, and is partnering with NCAI and NACA, in 
working group discussions with SBA on better implementation of the 
special 8(a), SDB and other small business contracting issues by:
    a)  advising on needed improvements to the 8(a) certification 
process for Tribes, ANCs and other eligible applicants; and
    b)  increasing and improving data collection for better monitoring 
of contracting activities by 8(a) firms within their primary and 
secondary industry categories and in their mix of federal contracting 
versus commercial business activities.
3. Ensure that Government Agencies Meet (or Exceed) Small Business 
        Contracting Goals:
    Tribes, ANCs, NCAI, NCAIED, NACA and the other national 
organizations representing 8(a) and other contractors must rally 
together to focus much more attention on the question of what can be 
done effectively to improve the record of all federal agencies in 
meeting both their prime and subcontracting goals for awards to small 
and minority businesses. With the significant growth in the federal 
market, there is no good excuse for the continual decline in the 
percentage of contract awards to small businesses. The NCAIED 
recommends that all the key players in the small business community 
come together, meet, discuss openly their different perspectives, and 
reach a consensus on how best to ensure that all the federal 
procurement agencies develop, publish and implement more aggressive 
policies and procedures to meet, and possibly even exceed, their goals 
for contract awards to small and minority businesses. The NCAIED, NACA 
and NCAI have developed the following joint policy positions that we 
are still vetting but wish to share with the House Resources Committee:
      Fulfill Congressional intent to further the Indian Self-
Determination policy set forth in 25 U.S.C. 450a by preserving the 
provisions that promote the competitive viability of 8(a) companies 
owned by Indian tribes, Alaska Native regional or village corporations, 
and Native Hawaiian Organizations that help support their Native 
communities by developing more self-sufficient Native economies;
      Support limits on bundling and consolidation of 
contracts, break up such contracts for award to small businesses, or 
employ procurement procedures to enable teams of Native-owned and other 
small businesses to pursue bundled or consolidated contracts;
      Increase the Government-wide contracting goals for awards 
to small business (to not less than 30% of total contract awards to 
small business, and not less than 8% of total contract and subcontract 
awards to small disadvantaged business and 8(a) concerns), and 
strengthen SBA's authority to negotiate with individual contracting 
agencies to establish goals higher than their current levels, and to 
require the agencies to be more accountable for their past performance 
and future plans for making more small business awards in each 
subcategory of small business contracting;
      Increase the net worth thresholds above $250,000 for 
individuals seeking to qualify for 8(a) certification, and above 
$750,000 for continued eligibility for the 8(a) and SDB programs, and 
include annual inflationary adjustments to any new thresholds 
established;
      Increase the competitive thresholds to enable individual 
owned 8(a) companies to pursue larger contracts;
      Encourage small businesses with larger contracts to 
implement subcontracting plans to develop stronger business alliances 
among all types of small business contractors, including 8(a) and other 
small disadvantaged concerns, HUBZone, service disabled veteran-owned, 
women-owned and other small businesses;
      Increase size standards with adjustments at least for 
inflation, if not also to take into account the capital requirements 
for each industry;
      Establish a reporting and monitoring mechanism for 
compliance with the prime contractor performance requirements, for all 
direct award 8(a) contracts and for task order and delivery order 
contracts.
      Establish milestones and reporting for all direct award 
joint venture contracts approved by SBA; and
      Strengthen the mentor-protege program requirements so 
that more emphasis is placed on mentoring and providing benefits to 
proteges other than just contract support.
4. Actions by the House Resources Committee:
    The NCAIED commends the Committee for holding this important 
hearing on the importance of helping tribes and ANCs diversify their 
native economies. In addition to making the hearing record available to 
the Congress and the public, we urge the Committee members to share 
what they have learned with their colleagues on other committees. 
Committee members should explain why Congress enacted the special 
economic incentive and contracting provisions for enterprises owned by 
tribes and ANCs, and how these programs are fulfilling their purpose, 
and the federal government's trust responsibility.
    This Committee also can play a major role in urging the SBA and 
other departments and agencies to increase contracting opportunities 
for Native and other small businesses, and continue to work 
collaboratively with NCAIED, NACA and NCAI to develop more effective 
reporting and monitoring mechanisms. The Committee certainly should 
urge the various federal contracting agencies over which it has direct 
jurisdiction (e.g., the Departments of the Interior, Energy, etc.) to 
meet and exceed their individual agency's small and minority business 
contracting and subcontracting goals, using Buy Indian Act contracting 
authority to the fullest extent possible. Just as the 1987 and 1988 
hearings witnesses emphasized, the federal departments and agencies 
that disburse funds ``for the benefit of Indians'' (e.g., Bureau of 
Indian Affairs, other Interior agencies, the Indian Health Service, the 
Army Corps of Engineers, the Departments of Transportation, Housing, 
Agriculture, etc.) should be using the Buy Indian Act authority to 
contract with Native-owned businesses, small or large.
    To ensure that more ``teeth'' are put into Buy Indian Act 
implementation, the Committee should request briefings by the agencies 
and conduct oversight hearings to receive status reports from these 
contracting agencies on their past performance in contracting with 
Native contractors of all types, and their plans for increasing that 
contracting support. Witnesses from Indian country also should be 
invited to report on their efforts, successful and unsuccessful, to 
convince these agencies to award contracts and other arrangements (such 
as park concessions) qualified Native contractors.
    The NCAIED thanks the House Resources Committee for the opportunity 
to present these remarks and recommendations.

Headquarters:
953 East Juanita Avenue--Mesa, AZ 85204--800-4NCAIED--www.ncaied.org
Regional Offices:
Atlanta, GA--Los Angeles, CA--Polson, MT--Seattle, WA--Washington, DC

                                 
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