[Congressional Record Volume 157, Number 20 (Wednesday, February 9, 2011)]
[Extensions of Remarks]
[Pages E186-E187]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




 INTRODUCTION OF LEGISLATION TO REFORM THE TREATMENT OF ALASKA NATIVE 
               CORPORATIONS UNDER THE SBA'S 8(a) PROGRAM

                                 ______
                                 

                        HON. BENNIE G. THOMPSON

                             of mississippi

                    in the house of representatives

                      Wednesday, February 9, 2011

  Mr. THOMPSON of Mississippi. Mr. Speaker, today, I am introducing 
legislation to level the playing field in the Small Business 
Administration's, SBA, 8(a) small and disadvantaged business program by 
eliminating the preferences and special rules that exist for Alaska 
Native Corporations, ANCs.
  The 8(a) program was established to improve participation rates for 
small, minority-owned and operated, economically and socially 
disadvantaged businesses in the Federal marketplace.
  Under the program, eligible businesses receive training, technical 
assistance, and Federal contracting opportunities through set-asides 
and contract awards without competition.
  In the current economic climate, 8(a) contracting opportunities can 
sometimes be the difference between success and failure for small 
struggling businesses all across America.
  Yet, all too often, small businesses are crowded out of the Federal 
marketplace by ANCs who, since 1986, have benefited from a carve-out 
which allows these firms to receive contracts under the 8(a) program 
with ``special procurement advantages''--including the ability to win 
uncapped no-bid contracts. These benefits are not conferred to other 
8(a) firms.
  As a result, ANCs, who only make up about 2 percent of eligible firms 
under the 8(a) program, actually receive more than a fourth of 8(a) 
contracts.
  Between FY2000 and FY2008, Federal contract dollars awarded to ANCs 
and their subsidiaries grew by 1,386 percent, and have more than 
tripled in recent years, from $1.1 billion in FY 2004 to $3.9 billion 
in FY 2008.
  The Washington Post, and more recently Pro Publica, have published 
exposes that reveal the inequities of the ANC carve-out and how it has 
contributed to government waste.
  My partner in the Senate in this effort is Senator Claire McCaskill 
of Missouri has done extensive oversight of the ANC carve-out through 
her work on the Senate Homeland Security and Governmental Affairs 
Committee Ad-hoc Subcommittee on Contracting Oversight.
  I have been interested in the distorting effect of the ANC carve-out 
since 2005, when FEMA disproportionately awarded post-Katrina recovery 
contracts to ANC.
  At my request, the Government Accountability Office studied the 
program and, in 2006, reported that the SBA's oversight of ANCs has 
``fallen short'' and as a result there is ``clearly the potential for 
unintended consequences or abuse.'' GAO further found that ``sizable 
8(a) revenues do not guarantee a higher level of shareholder benefits'' 
to Alaska Natives.
  The evidence for whether these revenues have benefited Native 
Alaskans is anecdotal at best but, interestingly, the poverty rate in 
Alaska has actually gone up since 1986, from 8.8 percent to 9.4 
percent.
  There are many glaring inconsistencies between the treatment of ANCs 
and all other 8(a) firms.
  For example: while awards to regular 8(a) firms are capped at $3.5 
million for services contracts (or $5.5 million for goods), they are 
uncapped for ANCs and are often awarded through sole-source, no-bid 
contracts; while regular 8(a) firms may not participate in the program 
for more than nine years, ANCs can remain in the program indefinitely 
as long as they keep creating new subsidiaries; while regular 8(a) 
firms have to prove every year that they are socially and economically 
disadvantaged, ANCs are presumed to be socially and economically 
disadvantaged; while regular 8(a) firms have to be run by an 
economically disadvantaged minority, ANCs do not have to be minority-
owned and operated and are actually often run by wealthy non-Native 
managers.
  My legislation will: (1) standardize the eligibility requirements for 
all 8(a) firms; (2) require ANCs to show that they are actually 
economically and socially disadvantaged, as is required by other 8(a) 
firms; (3) require all 8(a) firms, including ANCs, to show, on an 
annual basis, that they are owned and operated by social and economical 
disadvantaged persons;

[[Page E187]]

(4) require the SBA to ensure that the size of ANCs participating in 
the 8(a) program meet the same ``small business'' definition as other 
8(a) firms; (5) require ANCs to submit an annual report indicating 8(a) 
program-related payments, total revenue, and the total amount of 
benefits paid to ANC shareholders; (6) strike the provision that allow 
ANCs to receive sole-source contracts in excess of $3.5 million for 
services and $5.5 million for goods; and (7) remove the provision that 
allows ANCs to participate in the 8(a) program beyond 9 years, the 
limitation in place on other 8(a) firms.
  I urge Members to review my legislation and cosponsor this bill to 
ensure that eligible small businesses, in your community and mine, can 
reap the full benefit of the 8(a) program.

                          ____________________