ANCHORAGE — Alaska Native regional corporations are receiving a decreasing amount of their revenue from a government contracting program that gives preferential treatment to disadvantaged businesses.
The most recent annual report from the Alaska Native Claims Settlement Act Regional Association shows that total revenue earned through the 8(a) contracting program by the 12 corporations was $2.4 billion in 2014, down from $3.6 billion in 2010.
Obtaining contracts through the 8(a) program has become more difficult and costly due to budget cuts, reform legislation pushed by Congressional critics, government watchdogs, among other factors, The Alaska Dispatch News reported.
The Small Business Administration program allows businesses owned by socially or economically disadvantaged individuals to have a better chance at winning federal government contracts.
In 2014, the contracts made up 28.5 percent of the corporations’ total revenue. That figure was 43 percent in 2010.
“They see the writing on the wall,” said Kim Reitmeier, executive director of the ANCSA Regional Association, at a recent Anchorage Chamber of Commerce lunch. “And so the regional corporations have diversified.”
At Calista Corp., management “continues to take steps to lessen its dependence on government contracting by expanding its investments in real estate,” the company’s 2014 annual report said. Between 2012 and 2014, Calista Corp. earned most of its revenue from contracts or subcontracts with federal government agencies, with most coming from the 8(a) program.
As federal funds given to Alaska Native corporations under the program grew from $2.1 billion in fiscal year 2005 to $5.5 billion in 2010, the program faced criticism from members of Congress and the nonpartisan Government Accountability Office.
Despite pushback from Alaska’s Congressional delegation, federal legislation has since reduced the value and number of contracts awarded to Alaska Native and other tribal entities, according to the GAO.
The National Defense Authorization Act of Fiscal Year 2010 included a new requirement of a written justification for 8(a) sole-source awards over $20 million.
“This justification requirement brings more attention to large-dollar-value, sole-source contracts awarded through the 8(a) program,” GAO said in a 2014 report. “The number and value of these contracts at the Department of Defense and other federal agencies have declined since enactment of the requirement.”
