Panel will review Alaska Native set-asides

The House Small Business Committee intends to examine the role of Alaska Native Corporations in the Small Business Administration’s 8(a) contract set-aside program after allegations of fraud were raised.

The SBA inspector general's auditors found managers of two ANCs were not native Alaskans. However, the managers secured millions of dollars from government contracts set aside for the ANCs, according to the IG's report from last August.

The 8(a) program aims to help small businesses owned by socially and economically disadvantaged people compete in the federal procurement market with set-aside contracts. ANCs are among those eligible for the program. Generally, sole-source 8(a) contracts are capped at $5.5 million. However, ANCs can receive sole-source government contracts of any value.

In the alleged fraud, the IG said two ANCs violated the terms of their agreements with SBA to join the 8(a) program. By doing so, the companies kept SBA officials at bay, preventing them from checking on their companies’ ownership status, the report states.

The committee, chaired by Rep. Nydia Velázquez (D-N.Y.), said Jan. 28 that wants to check on SBA’s oversight of the program to stop further attempts at fraud. The committee said it also plans to follow up on regulations concerning the Historically Underutilized Business Zone program. Last year, the Government Accountability Office revealed alleged scams by companies to gain HUBZone eligibility. GAO then set up several fake HUBZone companies to prove SBA’s lack of oversight.

“The committee will examine the SBA’s contracting and business development to ensure that the agency’s efforts are meeting the needs of small businesses,” according to the committee’s priority list.

The panel also said it wants to examine recent GAO award protest decisions regarding small business set-asides and the effects of various acquisition regulatory changes on small firms.

About the Author

Matthew Weigelt is a freelance journalist who writes about acquisition and procurement.

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Reader comments

Mon, Feb 23, 2009 Parkway Patriot SB Capital Beltway

I think the ANC's have uplifted their constituents sufficiently after several years of many sole-source awards, some in the HUGE category. Now just have them compete within their own set-aside programs like Service-Disabled Veteran-Owned Small Businesses and 8(a) companies have to. Enough aloready.

Fri, Jan 30, 2009 Judy Bradt Alexandria, VA

Any program that offers contract preferences can also have problems. The Administration has agreed with many of GAO's calls for improvement to the ANC program in the past, and the suggestions were warranted. When you look at the WHOLE of what the ANC program has achieved in building a major positive economic force, and for a relatively tiny percentage of overall contract awards, the program gets high marks from me. It's NOT like other set aside programs. Its objectives are different -- and it achieves them. See my report on ANC's and teaming with them, at www.summitinsight.com/tools.htm.

Thu, Jan 29, 2009 Dagpotter HSV, AL

If you guarantee work to certain types of corporations you will have fraud. People will set up front companies, dummy companies or just lie to get the money.

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