Alaska Native Corporations (ANCs) will no longer receive preferential treatment over other small businesses under proposed legislation from Senator Claire McCaskill (D-Mo.) and Representative Bennie Thompson (D- Ms.). If passed, this legislation will make ANCs no different than other small businesses in the Small Business Administration’s 8(a) Program, such as those owned by minorities, women, and disabled veterans.
ANCs were created in 1971 as part of the Alaska Native Claims Settlement Act. Each corporation represents a different region of the state, and Native Alaskans own the corporations through privately-owned shares of stock. Currently, ANCs are automatically designated as socially and economically disadvantaged while most other 8(a) small businesses must demonstrate that they suffer from these disadvantages. Additionally, ANCs can receive sole-source contracts for any dollar amount while other 8(a) businesses are capped at $3.5 million for service contracts or $5.5 million for manufacturing contracts.
The proposed legislation is designed to prohibit this special treatment and apply the same rules to ANCs that are applied to other 8(a) businesses. If enacted, the legislation will also prohibit ANCs from having a majority interest in more than one subsidiary, and the subsidiary’s size will be a factor in determining the ANC’s eligibility for the 8(a) program. The proposed legislation only applies to ANCs and not organizations or corporations owned by Hawaiian Natives or Native American tribes, which also currently receive the same preferential treatment as ANCs.
According to McCaskill, a long time critic of the ANC program, a very small portion of these companies’ profits have reached Native Alaskans, so the program is not effective. A current loophole in the program allows non-Natives to manage many of these corporations from distant places like Washington, D.C. and keep most of the profits from the work. The proposed legislation will close this loophole and require managers to be Native Alaskans.
Supporters of the ANC program say that this legislation will “suffocate America’s native people” and kill “one of the only successful indigenous economic development programs in U.S. history.” The Native American Contractors Association strongly disagrees with McCaskill’s claims about the program’s ineffectiveness.
The proposed legislation has been referred to the Senate Committee on Small Business and Entrepreneurship and the House Committees on Small Business and Natural Resources. Because of the results of the recent midterm elections, it is likely that the legislation will face stiff opposition.
Written By: Katie Calogero