Legislation aims to crack down on Alaska Native Corporations

By Robert O'Harrow
Thursday, November 18, 2010; A10

Sen. Claire McCaskill proposed a legislative crackdown Wednesday on the government's multibillion-dollar Alaska Native Corporation program, saying that contracting "loopholes" intended to help the state's indigenous people have led to waste and abuses.

The legislation is the most direct attack yet on a program promoted by the late Sen. Ted Stevens (R-Alaska), who pushed rules through Congress giving the corporations' subsidiaries the right to receive federal contracts of any size without competition, as well as other benefits.

More than 200 of the corporations, known as ANCs, were created by Congress in 1971 to settle land claims and help improve life for tens of thousands of impoverished native people. Almost 300 more subsidiaries have been created to win federal contracts.

The Pentagon and other agencies have spent more than $29 billion over the past decade on deals with those subsidiaries, some of which had virtually no experience. Annual spending on ANC contracts soared from $506 million in 2000 to $5.5 billion last year.

Relatively little of the money from the contracting boom has gone into shareholder pockets, according to a Washington Post investigation. But the subcontractors and non-native executives of the subsidiaries, most of them based in the Washington region and across the continental United States, sometimes made millions.

"We've seen that a very small portion of these companies' profits are reaching native Alaskans, so it's time to acknowledge the fact that this program is not effective for either native Alaskans or taxpayers," McCaskill (D-Mo.) said in a statement.

Under the legislation, the native corporations would no longer be able to receive contracts of any size without competition. Instead, they would face the same caps as other small and disadvantaged businesses, topping out at $5.5 million per deal.

The firms also would have to be managed by native executives, eliminating an exemption that has led to the vast majority of the subsidiaries being almost entirely run by non-natives, some of them former executives of traditional government contractors.

Some ANC executives said the premise of McCaskill's proposals are incorrect in some cases.

ANCs rallied behind the election campaign of Sen. Lisa Murkowski, who has been one of the staunchest supporters of ANCs in Congress.

Murkowski has said that she favors reforms but that McCaskill's proposals are untenable.

"I would oppose and fight any legislation that strips Alaska Native Corporations, Indian tribes and native Hawaiians of the contracting preferences afforded to them," she said last month. "We must reform the program to ensure it works the way it was intended."

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