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65–771 PDF 2011

S. HRG. 112–33

PROMISE FULFILLED: THE ROLE OF THE SBA

8(A) PROGRAM IN ENHANCING ECONOMIC

DEVELOPMENT IN INDIAN COUNTRY

HEARING

BEFORE THE

COMMITTEE ON INDIAN AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

APRIL 7, 2011

Printed for the use of the Committee on Indian Affairs

(

(II)

COMMITTEE ON INDIAN AFFAIRS 

DANIEL K. AKAKA, Hawaii, Chairman 

JOHN BARRASSO, Wyoming, Vice Chairman 

DANIEL K. INOUYE, Hawaii 

KENT CONRAD, North Dakota 

TIM JOHNSON, South Dakota 

MARIA CANTWELL, Washington 

JON TESTER, Montana 

TOM UDALL, New Mexico 

AL FRANKEN, Minnesota 

JOHN MCCAIN, Arizona 

LISA MURKOWSKI, Alaska 

JOHN HOEVEN, North Dakota 

MIKE CRAPO, Idaho 

MIKE JOHANNS, Nebraska 

LORETTA A. TUELL, Majority Staff Director and Chief Counsel 

DAVID A. MULLON JR., Minority Staff Director and Chief Counsel 

(III)

C O N T E N T S 

Page 

Hearing held on April 7, 2011 ................................................................................ 1

Statement of Senator Akaka ................................................................................... 1 

Statement of Senator Barrasso ............................................................................... 2

Statement of Senator Begich .................................................................................. 7

Statement of Senator Crapo ................................................................................... 57

Prepared statement .......................................................................................... 57

Statement of Senator Johanns ............................................................................... 6 

Statement of Senator McCain ................................................................................. 21

Statement of Senator Murkowski ........................................................................... 3

Statement of Senator Tester ................................................................................... 3

Statement of Senator Udall .................................................................................... 5

Prepared statement .......................................................................................... 6

WITNESSES

Allan, Hon. Chief James, Chairman, Coeur d’Alene Tribe .................................. 58

Prepared statement .......................................................................................... 59

Hall, Larry, President/General Manager, S&K Electronics, Inc. ......................... 83

Prepared statement .......................................................................................... 85

Johnson-Pata, Jackie, Executive Director, National Congress of American Indians ...................................................................................................................... 24

Prepared statement .......................................................................................... 26

Jordan, Joseph G., Associate Administrator for Government Contracting and 

Business Development, U.S. Small Business Administration .......................... 9

Prepared statement .......................................................................................... 10

Kitka, Julie E., President, Alaska Federation of Natives; Accompanied by 

Byron I. Mallott, Director, Sealaska Corporation ............................................. 32

Prepared statement .......................................................................................... 34

Byron Mallot, prepared statement .................................................................. 41

McClintock, Peter L. Deputy Inspector General, Office of the Inspector General, U.S. Small Business Administration ......................................................... 13

Prepared statement .......................................................................................... 14

Morgan, Lance, Chairman, Native American Contractors Association; President/CEO, Ho-Chunk, Inc. ................................................................................... 61

Prepared statement .......................................................................................... 64

APPENDIX

Hall, Hon. Tex, Chairman, Mandan, Hidatsa and Arikara Nation, prepared 

statement .............................................................................................................. 95

Inouye, Hon. Daniel K., U.S. Senator from Hawaii, prepared statement ........... 93

Johns, Ken, President/CEO, Ahtna, Inc., prepared statement ............................ 107

Klein, Christine E., A.A.E., Executive Vice President/Chief Operating Officer, 

Calista Corporation, prepared statement ........................................................... 126

Parnell, Hon. Sean, Governor, State of Alaska, prepared statement .................. 104

Response to written questions submitted by Hon. Daniel K. Akaka to: 

Larry Hall ......................................................................................................... 130

Julie E. Kitka .................................................................................................... 136

Peter McClintock .............................................................................................. 131

Lance Morgan ................................................................................................... 134

Response to written questions submitted by Hon. John Barrasso to: 

Larry Hall ......................................................................................................... 130

Julie E. Kitka .................................................................................................... 139

Peter McClintock .............................................................................................. 132

Lance Morgan ................................................................................................... 135

Page

IV

Smith, Hon. Chad ‘‘Corntassel’’, Principal Chief, Cherokee Nation, prepared 

statement .............................................................................................................. 94

Trevan, Eric S., President/CEO, National Center for American Indian Enterprise Development, prepared statement ............................................................ 119

Ward, Virginia, Chairwoman, Board of Directors, Afognak Native Corporation, prepared statement ..................................................................................... 105

(1)

PROMISE FULFILLED: THE ROLE OF THE SBA 

8(A) PROGRAM IN ENHANCING ECONOMIC 

DEVELOPMENT IN INDIAN COUNTRY 

THURSDAY, APRIL 7, 2011

U.S. SENATE, 

COMMITTEE ON INDIAN AFFAIRS, 

Washington, DC. 

The Committee met, pursuant to notice, at 2:28 p.m. in room 

628, Dirksen Senate Office Building, Hon. Daniel K. Akaka,

Chairman of the Committee, presiding. 

OPENING STATEMENT OF HON. DANIEL K. AKAKA,

U.S. SENATOR FROM HAWAII 

The CHAIRMAN. I call this hearing of the Committee on Indian 

Affairs to order. 

Again, aloha and thank you for being with us today. Before we 

begin, I want to welcome Senator Begich who is joining my Indian 

Affairs colleagues on the dais. I want to thank all of my colleagues 

for taking time out of their schedules to be here with us as we discuss this very important topic. 

Today’s hearing is called Promise Fulfilled: The Role of the SBA 

8(a) Program in Enhancing Economic Development in Indian Country. We will examine the nexus between the Federal policy on selfdetermination and the trust responsibility to American Indians, 

Alaska Natives and Native Hawaiians and the role of SBA 8(a) 

Program in enhancing economic self-determination for these 

groups. 

For over 45 years, we have committed ourselves to the policy of 

self-determination and self-sufficiency for native communities. We 

have deliberately turned from the paternal policies of the past to 

ones that emphasize respect for native decision-making and partnerships between the American Indians, Alaska Natives, Native 

Hawaiians and the Federal Government. 

We have found that when we do business with the tribes and 

other native organizations, whether that be through 638 contracting or procurement of other goods and services, the Federal 

Government achieves two goals. We enhance our ability to do the 

people’s business, the business of good government and promises 

kept, and we strengthen the ability of native communities to be 

self-sufficient. 

2

The SBA 8(a) Program has become an integral part of the way 

we advance these two goals with one program. This 8(a) Program 

has had successes, and of course, some challenges. I look forward 

to the discussion on how to build upon this program’s ability to advance self-determination and self-sufficiency for native communities, while meeting the needs of the government customer. 

I want to extend a special mahalo or thank you to all of those 

who have traveled far, from Hawaii and Alaska and other places, 

to join us today. I appreciate your presence at these proceedings. 

Vice Chair Barrasso, would you like to comment? 

STATEMENT OF HON. JOHN BARRASSO,

U.S. SENATOR FROM WYOMING 

Senator BARRASSO. Well, I would, Mr. Chairman. 

I want to thank you for holding this important hearing today, 

and I want to welcome all of those who are going to be sharing 

their thoughts and their ideas with us. 

The Committee is quite familiar, as you said, Mr. Chairman, 

with the challenges of high unemployment and poverty rates in 

many of our Country’s Indian communities. For decades, the Congress and the Executive Branch have sought to create sustainable 

economies and employment opportunities in Indian Country. 

I am afraid that we have achieved, as you said, only limited success, too limited. The 8(a) Program for small businesses represents 

one of the Federal initiatives to create economic development in Indian Country, and it is fair to say that the SBA program has 

worked in many cases. Though, to be sure, certainly as you said, 

Mr. Chairman, not in all cases. 

The fundamental purpose of this program is to assist small businesses to become self-sufficient and capable of competing effectively 

in the marketplace. In theory, that purpose fits quite well with the 

needs of Indian Country. 

Now, I understand that some of our witnesses today will illustrate the benefits of the 8(a) Program, what it can accomplish when 

it is done right. However, according to the Government Accountability Office and the Inspector General reports, there have been 

some problems in the oversight and implementation of the program. So I am hoping to hear some specifics about what steps have 

been taken by the Small Business Administration and the 8(a) 

community to deal with these specific problems. 

The Indian 8(a) contracting is only a small fraction of all the 

small business contracting, and an even smaller fraction of all Federal contracting. However, the program must fulfill its basic purposes, not simply operate as a way that benefits firms or individuals that the program is not intended to help. And it must be 

transparent and accountable to taxpayers and tribal members that 

the businesses support. 

So I look forward to the testimony, Mr. Chairman. And I would 

say that Senator McCain, I visited with him a little earlier today, 

he is unavoidably detained. I know he does have some questions for 

Mr. Jordan and Mr. McClintock, so I am hoping that they could 

stay and remain available, and hopefully Senator McCain’s delay 

will not be too long. 

Thank you, Mr. Chairman. 

3

The CHAIRMAN. Thank you, Senator Barrasso, my partner here. 

Would any of the other Members of the Committee like to make 

any opening statement? 

Senator Tester? 

STATEMENT OF HON. JON TESTER,

U.S. SENATOR FROM MONTANA 

Senator TESTER. Yes, thank you, Mr. Chairman. 

First of all, the Native Hawaiian Recognition bill, congratulations on moving it forward. I think it is a bill that we need to continue fighting for. The Carcieri fix, as the Vice Chairman pointed 

out, is an important bill. And to you also, Mr. Chairman, we need 

to move that forward. Its time has long passed and we need to 

move it. 

I would just say just very briefly, the 8(a) Program is a very, 

very critically important program. In Indian Country, I hear about 

it whenever I go around Montana. And I think reports that there 

are some unscrupulous folks that may be taking advantage of the 

program, we need to get cleaned up and cleaned up as soon as possible. And I look forward to hearing from the witnesses in looking 

for solutions to move it forward. 

Unemployment in our neck of the woods is pretty doggone high 

in Indian Country and this is one of the programs that helps offset 

that unemployment problem. It could be a better program. Let’s 

make it a better program and move forward in that direction. 

Thank you. 

The CHAIRMAN. Thank you very much, Senator Tester. 

Senator Murkowski? 

STATEMENT OF HON. LISA MURKOWSKI,

U.S. SENATOR FROM ALASKA 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

And if I may ask the Committee’s indulgence, I typically do not 

like to make much more than a minute opening statement, but if 

I may have just a few minutes this afternoon to speak. I have a 

lot of Alaskans here and, of course, a great deal of interest in this. 

I will try to go as quickly as possible. 

First, I want to thank you. I want to thank you and Vice Chairman Barrasso for convening this hearing to explore the role of the 

Small Business Administration’s 8(a) Program in promoting economic development in our native communities. It was about a year 

and a half ago that several on this dais participated in a hearing 

before Senator McCaskill’s Subcommittee to examine what was referred to as the Alaska Native Corporation 8(a) Program. 

In my opening remarks before that hearing, I pointed out that 

there is no such thing as an Alaska Native Corporation 8(a) Program. Rather, that there are specific contracting opportunities 

within the SBA’s 8(a) Program that are available to Indian tribes, 

to Alaska Native corporations, and to Native Hawaiian organizations. 

And moreover, there are specific rules that apply to the participation of Indian-owned entities in the 8(a) Program, and these opportunities and rules are rooted in Federal Indian policy to address 

the unique challenges that face our Indian tribes, our Alaska NaVerDate 0ct 09 2002 12:43 Dec 12, 2011 Jkt 065771 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 S:\DOCS\65771.TXT JACK
4

tive corporations, and our Native Hawaiian organizations in developing viable businesses. 

So I welcome the decision of this Committee to examine the 8(a) 

Program through the lens of Federal Indian policy because we are 

uniquely positioned to undertake that task, uniquely positioned to 

inform our colleagues on the significant and unique handicaps that 

have historically made it difficult or impossible for tribes, Alaska 

Native corporations, and Native Hawaiian organizations to engage 

in sustainable business practices. 

And this Committee is best positioned to evaluate how ending or 

substantially restricting these special contracting opportunities 

would affect the future of our tribes, our native corporations and 

our Native Hawaiian organizations. 

I would like to take just a moment to mention a few of the difficulties that have faced the native people of Alaska as they entered the world of business. Participation in the business world 

didn’t come naturally to the native people of Alaska. Alaska Native 

people were hunters. They are fishers. They are whalers. They are 

living off the land and marine resources. And we are not just talking about ancient times, past times. 

This reliance on subsistence for sustenance remains true today 

in more than 200 native villages of bush Alaska, most of which lack 

road connections to the remainder of the American continent. 

These are isolated, remote communities which have some of the 

highest poverty rates in the Nation. In some of these communities, 

multiple grades of elementary school are still taught within a single classroom. There is no broadband Internet access, very few 

year-round employment opportunities. 

And so in 1971, Congress settled the aboriginal lands claims of 

the native people of Alaska, which gave Alaska’s native people title 

to some 44 million acres of land. But it also directed them to form 

businesses to help succeeding generations of native people bridge 

the gap between the subsistence lifestyle which was customary and 

traditional, and the challenge of surviving and succeeding in modern America. 

The businesses that were formed at the direction of Congress are 

called Alaska Native Corporations. And this year, we observed the 

40th anniversary of the formation of the ANCs. And as we will 

hear today, the ANCs have enjoyed some remarkable successes, 

and these successes have occurred in spite of the substantial handicaps that those businesses have to overcome. Nearly all of the first 

generation of Alaska Native Corporation leaders lacked a college 

education and most had no prior experience in business. But many 

have earned a place in Alaska history among our State’s most respected individuals for the way that they have grown their native 

corporations. 

And today, we have legions of young Alaska Native people who 

are graduating from school. Some are getting advanced degrees 

thanks in part to the scholarships from their corporations. Some 

have gone to work for their corporations and are employed in 8(a) 

businesses today. Others like Kristi Williams on my staff, an 

Athabascan Indian, she is cutting her teeth here in Washington, 

D.C. Some are working in native health, education, social services. 

5

And some choose to return to their villages and continue the traditional. All of these roads are good and culturally appropriate. 

In addition to the scholarships, native corporations are using the 

fruits of their 8(a) involvement in culturally appropriate ways, like 

funding special benefits for the traditional elders or investing in 

cultural preservation programs or ensuring that their aboriginal 

land base remains intact. And on top of that, many native corporations pay annual cash dividends to the shareholders. Some are paying these dividends for the first time in 40 years, and only because 

of the 8(a) business opportunity. 

But it must also be noted that on the road to success, many have 

stumbled, and even 40 years after the passage of the land claims 

settlement, it is apparent that some are still stumbling, but few 

have failed. And what is remarkable is that Alaska’s native people 

simply don’t give up, not even when they are talked about, the 

spotlight is put on them by The Washington Post, USA Today, and 

ProPublica.

When they discover that they have made mistakes in the selection of business partners, they correct those mistakes, and they remember the lessons that they have learned. And when they discover that they have been ripped off by business partners, they 

don’t sweep things under the rug and hope that nobody is going to 

notice. They go to court. They recover what is rightfully theirs, and 

they regain control of their businesses. 

In my view, our objective today should be to celebrate the resilience of our Indian businesses. But we must also look to how we 

can improve the 8(a) Program. And to improve, we must identify 

the lessons of failure and find ways to help Indian 8(a) businesses 

succeed going forward. If reforms are needed to ensure that the Indian 8(a) Program achieves its objectives, let’s get them out on the 

table. 

And I want to commend the Small Business Administration for 

taking a stab at doing just that in the comprehensive regulations 

that they have recently released. If the SBA needs to be doing more 

as part of its educational and coaching mission to ensure that Indian 8(a) businesses don’t fall into a trap, let’s identify those resources needed to accomplish that. 

I thank you, Mr. Chairman, for the indulgence of some additional 

time, and again I so appreciate that you have brought this hearing 

forward. 

The CHAIRMAN. Thank you very much, Senator Murkowski. 

Senator Udall? 

STATEMENT OF HON. TOM UDALL,

U.S. SENATOR FROM NEW MEXICO 

Senator UDALL. Mr. Chairman, I would just ask unanimous consent to put my opening statement in the record and look forward 

to the hearing. 

The CHAIRMAN. It will be included in the record. 

[The prepared statement of Senator Udall follows:]

6

PREPARED STATEMENT OF HON. TOM UDALL, U.S. SENATOR FROM NEW MEXICO

As my colleagues before me, I’d like to thank you all for being here. We appreciate 

your taking the time to be with us here today and your perspectives on the impact 

and significance of the 8(a) program. 

New Mexico tribes and pueblos have contacted me expressing their support for the 

8(a) program and for the participation of ANCs. And especially for how these preferences help fulfill our trust responsibilities to foster economic development opportunities. 

My interest in this issue then, is in how ANCs are working with other tribal and 

native entities across the country; in the partnerships and relationships they have 

built to promote economic development in Indian Country across the country. 

I believe that ANCs have worked to help other native and tribal entities develop 

their own economic development capacity and look for that to continue. 

I look forward to hearing your testimony.

The CHAIRMAN. Senator Johanns? 

STATEMENT OF HON. MIKE JOHANNS,

U.S. SENATOR FROM NEBRASKA 

Senator JOHANNS. Thank you, Mr. Chairman. I will be extremely 

brief. 

Let me also say to the SBA thank you. I think we are all convinced that there were some needed changes to bring some sunshine and better regulation to what was happening here, and you 

grabbed a hold of it and I applaud you for that. And I am anxious 

to hear your testimony as to how you feel that is going to improve 

the situation. 

But I do want to take just a brief moment to talk about a success 

story in this program. I am guessing each of our first witnesses will 

be familiar with this success story. 

Let me roll the clock back to the 1990s. One of our tribes in Nebraska, the Winnebago Tribe, literally was experiencing unemployment at a 70 percent rate. Everybody was unemployed. It was that 

difficult. 

But they decided they didn’t want the world to be that way, and 

so they went to work. They rolled up their sleeves. They took advantage of the opportunities that were presented. And today, I am 

able to tell you that the unemployment rate on the reservation has 

fallen to less than 10 percent. That is because of an entity called 

Ho-Chunk, which now employs 1,400 people. 

Ho-Chunk provides a diverse range of industries, information 

technology, construction, professional services, office products, just 

to name a few. Ho-Chunk’s profits have been used to provide scholarships, to expand the tribal college, and to develop a native workforce. 

The leader of Ho-Chunk was recently recognized as the regional 

Small Business Association minority small business person of the 

year, and he is sitting at the end here. Lance and I have known 

each other for a long time and worked together dating back to my 

time as Governor. 

It is just a remarkable success story. Now, just in the last few 

years, this kicked off during my time as Governor, he led efforts 

to develop a 40-acre Ho-Chunk village in Winnebago, Nebraska. I 

have driven through Winnebago many times on my way to other 

places. I have spent time on the reservation. To describe this as a 

miraculous turnaround just simply doesn’t do it justice. 

7

This is truly a case where I think we have a model here for others to look at and ask the question: How did they do it? And can 

we learn from what they have done? Certainly, in any program, 

there is going to be some fits and some starts and some ebbs and 

some flows. 

And that is why I will end my comments where I started, and 

just say thank you to the SBA for not giving up on this program, 

for realizing how important it is, for recognizing that there are success stories out there like Ho-Chunk, and also recognizing that we 

just need to do things a bit better. And I think everybody is willing 

to do that. 

Mr. Chairman, thank you. 

The CHAIRMAN. Thank you very much, Senator Johanns. 

Senator Begich? 

Following Senator Begich, I will call on Senator Tester to make 

an introduction. 

STATEMENT OF HON. MARK BEGICH,

U.S. SENATOR FROM ALASKA 

Senator BEGICH. Thank you, Mr. Chairman, and thank you for 

the ability to be here on the dais with you and the Members. 

I want to echo the comments of Senator Murkowski and Senator 

Johanns. These are great examples of why the program and the 

many members that I know within the 8(a) corporations are incredibly successful. 

In Alaska, as Senator Murkowski laid out, there were great challenges in the early days and we have come a long ways since the 

early days of Alaska Land Claims Settlement Act to what is now 

companies engaged in incredible opportunities for the Alaska Native people. 

Just to say a couple of things just to put it in perspective, when 

you think of Alaska and when you think of the situations that we 

deal with, especially in our Indian Country, and you think of gas 

prices at $10 a gallon; 46 communities still using the honey bucket; 

one-third of the rural communities haul water from a community 

source; 20 percent of Alaska Natives living in poverty, this is actually an improvement from what it was 40 years ago and where we 

are today. 

A big and sizable piece of that was 8(a) corporations and the establishment of them. There is no question that there have been 

challenges in years past on making sure the 8(a) corporations are 

successful. The SBA has stepped to the plate, as Senator Johanns, 

you have mentioned, and that is they have seen this program to 

be a success and want to make sure it is modified and make sure 

it works well. 

The rules and regulations they put forward, the 8(a) corporations 

have been asking for for more than 10 years—asking for assistance 

to make sure they have the right oversight, the right accountability, so they can become even more successful and be a successful program for SBA. 

So in a lot of ways, the work that SBA has done with the tribal 

consultation has brought forward some rules and regulations that 

will not only enhance the efforts already, but really grow the opporVerDate 0ct 09 2002 12:43 Dec 12, 2011 Jkt 065771 PO 00000 Frm 00011 Fmt 6633 Sfmt 6601 S:\DOCS\65771.TXT JACK
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tunities not just in the few that have already done the SBA 8(a) 

program, but all across this country. 

And I think it is clearly one of the programs that when you think 

about it, is not one of these Federal programs that is a hand-out 

to anybody. It is really a step to help create opportunity, of selfsufficiency. And what I find always interesting when I hear about 

the SBA program and some of the critics on the 8(a) Program complaining it’s an entitlement, well, to be very frank with you, it is 

not. It is an opportunity for people to create their own successes 

in their small and large communities. And many of these corporations pay taxes, lots of taxes to the Federal Government. I am not 

sure I know an entitlement program that pays taxes. 

This is clearly a program that has great success. As Senator 

Murkowski has said, there have been challenges, but we have 

achieved a great deal in Alaska, especially with the 8(a) corporations. So as we have seen in newspapers over the last year, taking 

information that I consider somewhat old and making them sound 

fresh, I think has been somewhat irresponsible. 

So today is maybe a chance to shed the full light on the success 

of 8(a) corporations. So I thank the Chairman and the Ranking 

Member for holding this hearing because I think it will really, 

clearly from Alaska’s perspective, from the first people of the Country, for Native Hawaiians, this is an incredible program to advance 

not only this generation, but multiple generations in employment 

and self-sufficiency. 

So again, thank you, Mr. Chairman, for holding this and I look 

forward to the testimony. And my view is probably when we are 

done here, we will have more positive light on a great program that 

needed some tweaking, which has been done, and now we will see 

some additional success in the future. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Senator Begich. 

I want to thank the Members of the Committee for your statements which will be included in the record. 

We only have limited time to conduct the hearing and therefore 

had to limit the number of witnesses we invited. But as Chairman, 

it is my goal to ensure that we hear all who want to contribute to 

the discussion. So the hearing record is open for two weeks from 

today, and I encourage everyone to submit your comments through 

written testimony. 

I want to remind the witnesses to please limit your oral testimony to five minutes today. 

Before we begin with the witnesses, I would like to call on Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman. I appreciate the latitude. 

On the third panel, which I am not going to be able to be here 

for, I apologize for that ahead of time, a gentleman from Polson, 

Montana by the name of Larry Hall, who is sitting in the front row, 

will be testifying. Larry has just done an incredible job creating 

jobs and creating an economy in western Montana, particularly on 

the Salish-Kootenai Indian Reservation. And he has developed a 

company that is a jewel in western Montana and really benefits not 

9

only the folks in Indian Country, but the economy impacts people 

outside that reservation, too. 

Thank you for being here, Larry. 

The CHAIRMAN. Thank you. 

I want to welcome Joseph Jordan, the Associate Administrator 

for Government Contracting and Business Development with the 

SBA. And also from the SBA, we have Mr. Peter McClintock, Deputy Inspector General from the Office of the Inspector General. 

Welcome to both of you. 

Mr. Jordan, please proceed with your testimony. 

STATEMENT OF JOSEPH G. JORDAN, ASSOCIATE

ADMINISTRATOR FOR GOVERNMENT CONTRACTING AND 

BUSINESS DEVELOPMENT, U.S. SMALL BUSINESS

ADMINISTRATION 

Mr. JORDAN. Thank you, Mr. Chairman. 

Chairman Akaka, Vice Chairman Barrasso and Members of the 

Committee, thank you for inviting the U.S. Small Business Administration to testify regarding the utilization of the SBA 8(a) Business Development Program in Indian Country. 

My name is Joseph Jordan and I am the Associate Administrator 

for SBA’s Office of Government Contracting and Business Development. My office has primary responsibility for the 8(a) Program 

from both the policy and programmatic execution perspective. 

As you know, in response to Congressional findings that disadvantaged individuals did not play an integral role in America’s 

free enterprise system, and did not share in the community redevelopment process, the 8(a) Business Development Program was 

created during the 1960s. Beginning in 1986, significant changes 

were made to the 8(a) Program when Congress enacted legislation 

that allowed Alaska Native corporations, Native Hawaiian organizations, community development corporations and tribally owned 

funds to participate in the 8(a) Program. 

This was intended to allow these organizations to benefit from 

the community development opportunities available through the 

8(a) Program. The utilization of the program by these entities to 

improve community and economic development is consistent with 

tribal self-determination policies and strategies supported by the 

Administration. 

SBA’s primary responsibility in regards to the 8(a) Program is to 

oversee and execute the program as intended by Congress. As it is 

currently operating, the 8(a) Program is simultaneously intended to 

provide business development opportunities to disadvantaged individuals, while also fostering regional or community economic development for firms owned by ANCs, tribes, and NHOs. In addition, 

the SBA has been working diligently to ensure that oversight of 

these programs is strong and that SBA programs are operating free 

of fraud, waste or abuse. 

Over the course of the last two years, the Administration has 

done extensive reviews on the program and has implemented comprehensive regulatory reforms. This regulatory overhaul is the first 

of its kind in the 8(a) Program in more than 10 years. The regulatory package has addressed many of the issues raised in previous 

10

years’ Government Accountability Office and SBA Inspector General audits. 

During the formulation of the SBA regulatory package, we 

worked closely with the tribal community. SBA held six tribal consultations during the formulation and drafting of the new 8(a) regulations. Additionally, SBA has been proactive by engaging with 

the tribal community outside of formal consultations, including participating in the White House Tribal Nations Summit. 

Many of the SBA’s recent regulatory changes were made to ensure that the program benefits flow to the intended recipients, and 

to help reduce the potential for fraud, waste and abuse. SBA works 

closely with the GAO and Inspector General to ensure that their 

recommendations are properly addressed. For example, in response 

to the I.G.’s July, 2009 report, SBA published these revised 8(a) 

regulations, is in the process of conducting a program review to 

evaluate the impact of the growth in ANC 8(a) obligations, and has 

updated the business development management information system to allow native subsidiaries to apply for the program and undergo portions of their annual review electronically. 

While we have been responsive to many of the points raised in 

various audits, we would also like to note the following. The I.G. 

report correctly points out that 8(a) contracting dollars to ANCs 

have increased, but neglects to also note that 8(a) dollars have increased to all program participants over that same period. 

Further, many of the concerns identified in these reports were 

not due to any wrongdoing by the 8(a) Program participants, but 

were in fact permitted under previous regulations. 

As I noted, SBA has attempted to eliminate any of these perceived loopholes in our new regulations. As with any program, 

there are bad actors who will attempt to gain entry. The agency 

takes seriously any actions that negatively affect the integrity of 

the 8(a) Business Development Program. We appreciate the I.G.’s 

recommendations to curb abuses and we welcome the opportunity 

to work further with them to fully ensure that the benefits of the 

program flow only to its intended beneficiaries. 

Despite the actions of a small number of program participants, 

the agency has seen the benefits of the 8(a) Program to many entity-owned participants in the development of both their businesses 

and their respective communities in the forms of dividends, jobs, 

scholarships and community pride, just to name a few. 

These benefits have been fully authorized by the current statutory provisions and provide economic and community development 

opportunities for some of the most under-represented populations 

in the United States. 

Thank you for allowing me to share SBA’s views with you today 

and I will be happy to answer any questions you may have. 

[The prepared statement of Mr. Jordan follows:]

PREPARED STATEMENT OF JOSEPH G. JORDAN, ASSOCIATE ADMINISTRATOR FOR

GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT, U.S. SMALL BUSINESS

ADMINISTRATION

Chairman Akaka, Vice Chairman Barrasso, and Members of the Committee, 

thank you for inviting the U.S. Small Business Administration (SBA) to testify regarding the utilization of the SBA 8(a) Business Development (BD) Program in Indian Country. My name is Joseph Jordan, and I am the Associate Administrator for 

11

1P.L. 99–272, Sec. 18015 added ANCs and tribes; P.L. 100–656, Sec. 207 added NHOs; and 

P.L. 97–35, Sec. 626(a)(2) added CDCs. 

the SBA’s Office of Government Contracting and Business Development. My office 

has primary responsibility for the 8(a) BD program from both a policy and programmatic execution perspective. 

In response to Congressional findings that disadvantaged individuals did not play 

an integral role in America’s free enterprise system and did not share in the community redevelopment process, the 8(a) BD program was created administratively 

during the 1960s to help eligible small businesses compete in the American economy. Congress provided statutory authority for the program in 1978, and shifted the 

program’s focus to business development. The Small Business Act authorized the 

SBA to develop business ownership among underserved groups that own and control 

little productive capital. 

Beginning in 1986, significant changes were made to the 8(a) program when Congress enacted legislation that allowed Alaska Native Corporations (ANCs), Native 

Hawaiian Organizations (NHOs), Community Development Corporations (CDCs), 

and tribally-owned firms to participate in the 8(a) BD program. 1 Participating in 

the 8(a) BD program would allow these organizations to benefit from the community 

economic development opportunities available through the 8(a) BD program. 

A primary difference between ‘‘entity-owned’’ participants and traditional 8(a) participants owned by one or more disadvantaged individuals is the motive for participation. On one hand, individual socially and economically disadvantaged small business owners participate in the program to receive individual business development 

assistance and to increase their firm’s success for themselves and their dependents. 

On the other hand, it is assumed that entity-owned participants utilize the business 

development opportunities for economic and community development purposes. In 

other words, entities are beholden not to one or two business owners and their families, but to their entire shareholder base, tribal base, and community. The utilization of the 8(a) BD program by entities to improve community and economic development is consistent with tribal self determination policies and strategies supported 

by the Administration. 

As a result of this distinction, firms participating in the 8(a) BD program that 

are owned by tribes, ANCs, and NHOs are not subject to the same rules as individually-owned companies participating in the program. First, a firm applying to, or 

participating in, the 8(a) BD program that is owned by a tribe, ANC or NHO may 

qualify as a small business without being considered affiliated with the tribe, ANC, 

NHO or any other business owned by the tribe, ANC or NHO. In other words, in 

determining size, the Agency qualifies each xcxentity-owned applicant or 8(a) participant individually, without aggregating the employees or revenues of that firm with 

the employees or revenues of any other firm owned by the tribe, ANC or NHO. For 

individually-owned firms applying to, or participating in, the 8(a) BD program, the 

size of a firm would include the revenues or employees of all entities with common 

ownership. 

Second, a tribe, ANC or NHO may own and control more than one firm that participates in the 8(a) BD program at the same time. In contrast, an individual who 

qualifies one firm to participate in the 8(a) BD program may not participate again 

in the program as a disadvantaged individual. Thus, such an individual may not 

own more than one firm that participates in the 8(a) BD program. 

Third, firms owned by tribes, ANCs or NHOs that participate in the 8(a) BD program generally are not subject to the sole source contract limitations as those 8(a) 

firms owned by individuals. Under the Small Business Act, an individually-owned 

8(a) participant cannot receive a sole source 8(a) contract in an amount exceeding 

$6,500,000 for contracts assigned manufacturing NAICS codes and $4,000,000 for all 

other contracts. As a result of legislation enacted in 1988, there is no cap on the 

value of an 8(a) contract that may be awarded to an 8(a) participant owned by a 

tribe or ANC. This means that these companies are able to receive an 8(a) contract 

in any amount without competition. Similarly, in 2003, Congress authorized NHOs 

to receive 8(a) contracts above the competitive threshold amounts for Department 

of Defense procurements. 

Lastly, companies owned by tribes, ANCs, NHOs and CDCs do not have the same 

requirements pertaining to control by non-disadvantaged individuals as do firms 

owned by one or more disadvantaged individuals. For individually-owned 8(a) firms, 

one or more individuals claiming social and economic disadvantage must control 

both the long term strategic policy setting and the day-to-day management and administration of the company. In contrast, firms owned by ANCs and NHOs need not 

have any disadvantaged managers in order to be eligible to participate in the 8(a) 

BD program. Although a firm owned by a tribe must generally be managed by one 

12

or more members of a tribe, non-disadvantaged individuals may manage such a 

firm, provided a written management development plan exist. This plan must show 

how tribal members will develop managerial skills sufficient to manage the concern 

or similar tribally-owned concerns in the future. 

SBA’s primary responsibility in regards to the 8(a) program is to oversee and execute the program as intended by Congress. As it is currently operating, the 8(a) BD 

program is simultaneously intended to provide business development opportunities 

to disadvantaged individuals while also fostering regional or community economic 

development for firms owned by ANCs, tribes and NHOs. In addition, the SBA has 

been working diligently to ensure that oversight of these programs is strong and 

that SBA programs are operating free of waste, fraud and abuse, within their statutory designs. 

Over the course of the last two years, the Administration has done extensive reviews on the program and has implemented comprehensive regulatory reforms. This 

regulatory overhaul is the first of its kind in the 8(a) BD program in over 10 years. 

The regulatory package has addressed many of the issues raised in previous years’ 

Government Accountability Office (GAO) and SBA Inspector General (IG) audits. 

During the formulation of the SBA regulatory package, we worked closely with the 

tribal community. Under President Obama’s directive to engage in regular and 

meaningful consultation with tribal governments whenever the Federal Government 

intends to implement policies that have tribal implications, the SBA held 6 tribal 

consultations during the formulation and drafting of the 8(a) BD regulations. Additionally, SBA has been proactive by engaging with the tribal community outside of 

formal consultations, including participating in the White House Tribal Nations 

Summit at which Deputy Administrator Johns heard concerns voiced by tribal leaders on topics related to economic and community development and the role of small 

business in Indian Country. 

Many of SBA’s recent regulatory changes were made to ensure that the program 

benefits flow to the intended recipients and to help reduce potential fraud, waste 

and abuse. For example, SBA’s regulations previously allowed a large, non-disadvantaged mentor to unduly benefit from the 8(a) program by allowing such a firm 

to perform the majority of work on an 8(a) contract through a joint venture with 

a small 8(a) prote ́ge ́ firm. The new regulations require an 8(a) firm to perform at 

least 40 percent of all work done by a joint venture and generally prohibit the joint 

venture from subcontracting additional work back to any non-8(a) joint venture 

partner. 

Additional changes were also made to the provisions affecting firms owned by 

tribes, ANCs and NHOs. Specifically, SBA amended the rules pertaining to tribal, 

ANC-owned, and NHO firms to add a provision that a firm owned by a tribe, ANC 

or NHO may not receive a sole source 8(a) contract that is a follow-on contract to 

an 8(a) contract performed immediately previously by another participant (or former 

participant) owned by the same tribe, ANC or NHO. In response to audits of the 

8(a) BD program conducted by GAO and SBA’s OIG, SBA added a provision to the 

regulations requiring each participant owned by a tribe, ANC, NHO or CDC to submit information demonstrating how 8(a) participation has benefited the tribal or native members and/or the tribal, native or other community as part of its annual review submission. The regulation requires that each firm submit information relating 

to how the tribe, ANC or NHO has provided funding for cultural programs, employment assistance, jobs, scholarships, internships, subsistence activities, and other 

services to the affected community. 

After receiving extensive public comment on this provision, SBA has delayed the 

implementation of this reporting requirement for six months. SBA seeks to strike 

a balance between its responsibility to monitor and oversee the 8(a) program and 

the concerns raised by entity-owned 8(a) participants regarding their ability to generate meaningful information. This delay will allow further discussions with the 

tribal/ANC/NHO community through consultation and dialogue to determine how 

best to implement this rule. 

SBA works closely with the GAO and IG to ensure that their recommendations 

are properly addressed. For example, in response to the IG’s July 2009 report, SBA 

published the revised 8(a) BD regulations, is in the process of conducting a program 

review to evaluate the impact of the growth in ANC 8(a) obligations, and has updated BDMIS to allow ANC subsidiaries to apply for the 8(a) BD program and undergo annual review electronically. 

While we have been responsive to many of the points raised in various audits, 

we would also like to note the following. The IG report correctly points out that 8(a) 

contracting dollars to ANCs have increased, but neglects to note that total 8(a) dollars have also increased to all participants. Further, many of the concerns identified 

13

in the reports were not due to any wrong-doing by 8(a) program participants, but 

were permitted under the previous regulations. 

As previously noted, SBA has attempted to eliminate many of the perceived loopholes in its new regulations. As with any program there is the potential for bad actors to gain entry. The Agency takes seriously any actions that negatively affect the 

integrity of the 8(a) BD program. We appreciate the IG’s recommendations to curb 

abuses and welcome the opportunity to work further with the IG to more fully ensure that the benefits of the 8(a) BD program flow to its intended beneficiaries. 

Despite the actions of a very small number of program participants, the Agency 

has seen the benefits of the 8(a) program to entity-owned participants in the form 

of increased business development of these firms, and to their respective communities in the forms of dividends, jobs, scholarships, and community pride, just to 

name a few. These benefits have been fully authorized by current statutory provisions, and provide economic and community development opportunities for some of 

the most underrepresented populations in the United States. 

Thank you for allowing me to share the SBA’s views with you today, and I will 

be happy to answer any questions you may have.

The CHAIRMAN. Thank you very much, Mr. Jordan, for your testimony. 

Mr. McClintock, will you please proceed with your testimony? 

STATEMENT OF PETER L. MCCLINTOCK, DEPUTY INSPECTOR 

GENERAL, OFFICE OF THE INSPECTOR GENERAL, U.S. 

SMALL BUSINESS ADMINISTRATION 

Mr. MCCLINTOCK. Chairman Akaka, Vice Chairman Barrasso 

and distinguished Members of the Committee, thank you for this 

opportunity to testify. 

I was asked to discuss two audit reports my office issued several 

years ago concerning Alaska Native Corporations and the 8(a) Program. One report concerned non-native managers securing millions 

of dollars from ANC 8(a) firms through unapproved agreements. 

And the other report identified ANC contracting trends related to 

economic benefits for Alaska Natives and SBA’s limited monitoring 

of ANC compliance with program rules. 

We reported that ANC participation in the 8(a) Program resulted 

in a number of benefits, to include paying dividends to ANC’s 

shareholders, funding cultural programs, employment assistance, 

jobs, scholarships, internships and other services. However, dollar 

for dollar, these benefits were not directly traceable to participation 

in the 8(a) Program. 

In audit report 8–14, we found that non-native managers of several ANC firms obtained millions of dollars through management 

and other agreements that had not been adequately disclosed to or 

approved by SBA, raising questions, among other things, over who 

else was benefitting from the program. 

We are therefore encouraged that SBA recently published a regulation requiring ANCs, tribes and NHOs to report annually to SBA 

on how 8(a) participation is benefitting tribal members. We are 

concerned, however, that SBA delayed its implementation for at 

least six months and we urge SBA to implement this requirement 

as soon as possible. 

In report 9–15, we found that 8(a) contract obligations awarded to ANCs more than tripled from $1.1 billion in fiscal year 2004, or 

about 13 percent of the total 8(a) contract dollars that year, to $3.9 

billion in fiscal year 2008, or about 26 percent of 8(a) dollars. 

Also in fiscal year 2008, ANC firms which had received this 26 

percent of the total 8(a) obligations, constituted just 2 percent of 

14

8(a) companies. Further, in 2007, just 11 ANC firms received half 

of the contract obligations to all ANC participants. Of note, one of 

these firms had only 750 shareholders or less than 1 percent of all 

Alaska Natives, but accounted for nearly 20 percent of the 8(a) obligations made to active ANC firms. Also, the top four ANC firms 

accounted for less than 4 percent of the more than 100,000 ANC 

shareholders. 

We also reported that most ANC 8(a) contracts were obtained on 

a sole-source basis. These top 11 ANC-owned firms received 82 percent of their 8(a) obligations through sole-source awards, which do 

not always provide the government with the best value. Three 

firms had received sole-source contracts in excess of $100 million 

over a two-year period and one firm received about $422 million in 

sole-source awards. 

The Small Business Act limits sole-source manufacturing contracts to $6.5 million and other sole-source contracts to $4 million. 

However, ANCs and tribes are not subject to these limitations. 

They are also exempt from a $100 million cap on cumulative solesource awards that apply to other 8(a) participants. 

ANC firms have other advantages as well. Because ANC firms 

are conditionally exempt from size affiliation rules, they often enjoy 

access to capital resources and management expertise not available 

to other 8(a) firms. In reality, ANC firms are large businesses with 

significant competitive advantages over other 8(a) firms. 

Despite this growth, SBA had not determined whether it had adversely affected other 8(a) participants. Under the Small Business 

Act, the exemption from the size affiliation rule is allowed unless 

SBA determines that it results in a substantial unfair competitive 

advantage. SBA had not done much analysis of this issue. 

Lastly, SBA had not dedicated sufficient resources to oversee the 

often complex ANC corporate and ownership structures, and ANC 

partnerships with other firms to include mentor prote ́ge ́ and joint 

venture arrangements. SBA has taken some recent steps to improve oversight, but it is too soon to assess their effectiveness. 

This concludes my statement. I am happy to answer any questions. 

[The prepared statement of Mr. McClintock follows:]

PREPARED STATEMENT OF PETER L. MCCLINTOCK, DEPUTY INSPECTOR GENERAL, 

OFFICE OF THE INSPECTOR GENERAL, U.S. SMALL BUSINESS ADMINISTRATION

Chairman Akaka, Vice Chairman Barrasso, and distinguished members of the 

Committee, thank you for this opportunity to testify. 

As the Deputy Inspector General for the Small Business Administration (SBA), 

I oversee an independent office that was established to deter and detect waste, 

fraud, abuse and inefficiencies in SBA programs and operations. My testimony today 

focuses on several audits the SBA Office of Inspector General (OIG) conducted regarding on the issue of Alaska Native Corporation (ANC) participation in the SBA 

8(a) Business Development Program (the ‘‘8(a) Program’’). 

The 8(a) Program is designed to help small, minority-owned businesses gain access to Federal contracts and to obtain other business development assistance so 

that they can successfully compete in the economy. Under the program, 8(a) firms 

owned by ANCs, American Indian Tribes, and Native Hawaiian Organizations 

(NHOs) enjoy special procurement advantages beyond those afforded most 8(a) businesses. These advantages were intended to provide economic development opportunities for Alaska natives and other tribal members. Our audits were initiated based 

on complaints about ANC-owned firms and issues identified by a prior Government 

Accountability Office (GAO) audit related to SBA’s oversight of ANC 8(a) activity. 

15

As an initial matter, I want to emphasize that the OIG is not taking a position 

on the issue of whether ANCs, Tribes or NHOs should be able to participate in the 

8(a) Program. That is a policy determination for Congress to make. There is also 

no question, as stated in our audit report, that Alaskan natives have benefitted from 

ANC participation in the 8(a) Program. However, our audit report numbered 9–15, 

Participation in the 8(a) Program by Firms Owned by Alaska Native Corporations,

did raise several questions about ANC participation in the 8(a) Program:

• Is the large percentage of 8(a) contracts obtained by a relatively small number 

of ANC-owned firms consistent with Congress’ objectives for the program?

• Are the revenues from ANC participation in the 8(a) Program going to a broad 

array of ANC firms or concentrated among only a few ANC-owned companies?

• Are non-disadvantaged individuals inappropriately benefitting from ANC participation in the program and to what extent are benefits from program participation effectively reaching tribal populations?

8(A) Advantages for Firms Owned by ANCS, Tribes and NHOS 

ANCs, Tribes, and NHOs enjoy special procurement advantages over most other 

8(a) Program participants. Arguably, the most significant of these advantages is 

their ability to obtain unlimited sole-source awards. Under SBA’s recent revisions 

to the program regulations, 8(a) firms are not entitled to obtain contracts on a sole 

source basis if the contract exceeds $6.5 million for manufacturing contracts or $4 

million for other contracts. However, companies owned by ANCs or Tribes are exempt from this requirement, and firms owned by NHOs are exempt for contracts 

awarded by the Department of Defense. Additionally, 8(a) firms that receive $100 

million in 8(a) awards (awarded on a sole source and/or competitive basis) are not 

eligible for additional 8(a) sole source awards under SBA regulations. Participants 

owned by ANCs, Tribes and NHOs, however, are not subject to this cap. These exemptions have allowed certain ANC-owned firms to obtain hundreds of millions of 

dollars of non-competitive awards. 

Another advantage enjoyed by firms owned by ANCs, Tribes and NHOs is that 

the determination of whether they are considered to be small under SBA regulations 

is made without regard to the size of their parent company or any other firm owned 

by the parent company. These entities can own multiple 8(a) companies as long as 

each business is in a different primary industry, and SBA has determined that the 

firm does not have or is not likely to have a substantive unfair competitive advantage within an industry. Our 2009 audit confirmed that this advantage has allowed 

ANC firms that are really large businesses through affiliation with their parent corporations, and which have access to the capital and credit of their parents, to compete against truly small disadvantaged firms. Thus, Congress may want to consider 

whether the goal of the 8(a) Program—to help small-disadvantaged firms compete 

in the American economy—is impeded by allowing larger ANC companies participate in order to provide benefits to native populations. 

Benefits ANCS Derive From These Advantages 

Although ANC firms enjoy substantial advantages over other 8(a) firms, such advantages were intended to help ANCs fulfill a mission that is broader than the bottom line of the corporations; namely to help Alaska Natives achieve economic selfsufficiency. Understandably, ANC firms have attempted to maximize the opportunities afforded them under the 8(a) Program. We visited eleven ANC parent corporations, eight of which told us that they derived at least 50 percent or more of their 

revenues from the 8(a) Program. Two of the eight relied on the program for 90 percent or more of their revenues. 

Unlike other 8(a) businesses whose profits generally go to one or more socially 

and economically disadvantaged persons, profits from ANC-owned firms go to hundreds, and sometimes thousands, of Native shareholders. ANCs have used profits 

to pay shareholder dividends, fund cultural programs, and provide employment assistance, jobs, scholarships, internships, subsistence activities, and numerous other 

services to native communities. 

Dollar for dollar, however, there has been no way to trace exactly how much ANC 

participation in the 8(a) Program has benefited their members. In audit report 8–

14, we found that non-native managers of several ANCs were able to obtain millions 

of dollars through management and other agreements that had not been disclosed 

to, or approved by, SBA. A similar arrangement was highlighted in the articles that 

appeared in the Washington Post last Fall. This raises a question as to whether 

more of the money that is derived from 8(a) participation could be going back to 

the native members. In the past, ANCs have not been required to report to SBA—

16

or to any other government agency as far as we could tell—how they use the 8(a) 

share of their profits to support Alaska Natives. 

We are encouraged that SBA has included in its new regulations for the 8(a) Program a requirement that ANCs, Tribes and NHOs must submit annual reports to 

SBA discussing how their program participation has benefitted the tribal members. 

This requirement will shed light on the benefits going to tribal members and help 

SBA—and Congress—make more informed decisions about ANC, Tribal and NHO 

participation in the 8(a) Program. 

The SBA OIG believes that this transparency in the 8(a) Program is long overdue. 

We are troubled, therefore, that SBA has decided to delay implementation of this 

reporting requirement for six months, and that the Agency has stated in its regulatory preamble that there is a possibility that it will delay implementation even 

further if ‘‘delay is necessary.’’ We recommend that SBA not extend this implementation date any further. 

Growth of ANC Activity Within the 8(A) Program 

Long-term 8(a) contracting trends show a continued and significant increase in obligations to ANC-owned participants, both in value and as a percentage of total obligations to 8(a) firms. Our audit found that from FY 2000 to FY 2008 obligations 

to ANC-owned participants increased by 1,386 percent, and more than tripled from 

$1.1 billion in FY 2004 to $3.9 billion in FY 2008. 

Although the amount of Federal contracting as a whole increased significantly 

during this time, what stood out from our review was the growth in the percentage 

of 8(a) contracting dollars going to ANC-owned companies as compared to other participants in the program. Between FYs 2004 and 2008, the percentage of 8(a) obligations to ANC firms doubled. In FY 2008, ANC firms received approximately 26 percent of total 8(a) obligations—even though they constituted just 2 percent of companies performing these 8(a) contracts. These trends suggest that ANC-owned firms 

may be receiving a disproportionate share of obligations to 8(a) firms. 

An additional noteworthy finding from our audit was that a significant portion of 

the 8(a) obligations made to ANC-owned firms went to a small percentage of the 

ANC participants. In fact, 50 percent of 8(a) obligations to current ANC participants 

in FY 2007 went to just 11 (or 6 percent) of the ANC firms reported by SBA to Congress that year. One of these firms accounted for nearly 20 percent of the 8(a) obligations made to active ANC firms, but had only 750 shareholders, or less than 1 

percent of the total population of ANC shareholders. The top four firms, which received collectively about $600 million in FY 2007, accounted for less than 4 percent 

of the 105,344 Alaska native shareholders represented by all of the ANC participant 

firms. Thus, revenues earned from ANC participation in the 8(a) Program may not 

be evenly distributed to the ANC population. 

Finally, of note is that sole-source contracts were the major contracting mechanism used by procuring agencies when obligating 8(a) funds to ANC participants. 

We found that in FY 2007 the top 11 firms received 82 percent of their 8(a) obligations through solesource awards. As I have mentioned, ANC participants, like other 

tribally-owned firms, are exempt from SBA’s cap on total sole-source awards. Generally, 8(a) firms that receive $100 million in total 8(a) awards are ineligible for additional sole-source contracts. Of the top 11 firms, 3 had received contracts in excess 

of $100 million over just a 2-year period. One firm received approximately $527 million, $422 million of which was sole sourced. 

As reported by GAO and others, Federal agencies often made sole-source awards 

to ANC participants because it is a quick, easy, and legal method of meeting their 

small business goals. While sole-sourcing contracts to ANC firms may provide an 

expedient means of meeting small business goals, due to the lack of competitive bidding, such awards often do not result in the best value for the government. Reports 

by OIGs and GAO have shown that noncompetitive contracts have been misused, 

resulting in wasted taxpayer resources, poor contractor performance, and inadequate accountability for results. In March 2009, the President issued a memorandum discouraging the use of sole source awards unless their use can be fully justified and safeguards put in place to protect taxpayers. Recently, the Federal Acquisition Regulations were amended to put into place special rules for contracts awarded on a sole source basis that exceed $20 million. It is unclear what effect the President’s memorandum or this $20 million threshold will have on the scope of sole 

source awards obtained by ANC participants in the 8(a) Program. 

SBA’S Management and Oversight of ANC Participant Activity 

Despite the growth in ANC participation in the 8(a) Program, SBA has not performed a review to determine whether such growth is adversely affecting other 8(a) 

participants. For example, in FY 2008, ANC-owned participants received 66 percent 

17

of the 8(a) obligations made under the ‘‘facilities support services’’ industry code, 

which was the second largest industry code for 8(a) purchasing that year. However, 

SBA has not assessed the impact this has had on non-ANC-owned program participants. Neither has it determined whether procuring agencies are meeting their 

small-disadvantaged business procurement goals primarily through sole-source 

awards to ANC firms that essentially are large through affiliation with their parent 

and other affiliated companies. 

Further, although SBA officials recognize that ANCs typically enter into more 

complex business relationships than other 8(a) participants, it has not tailored its 

policies and oversight practices to account for ANCs’ unique status and growth in 

the program. Audits issued by GAO in 2006 and by our office in 2008 and 2009 

identified shortcomings in SBA’s oversight of ANC 8(a) activity. These involve monitoring the issues discussed below. 

Secondary lines of business for multiple 8(a) participants owned by a single ANC.

GAO reported that SBA did not track the business industries in which ANC subsidiaries had 8(a) contracts to ensure that ANCs did not have more than one subsidiary 

obtaining its primary revenue under the same industry code. GAO recommended 

that SBA collect information on ANC-owned participants as part of its 8(a) monitoring, to include tracking the primary sources of revenue. In July 2008, SBA began 

development of a system to collect primary revenue generators for ANC participants, and, in February of this year, we were advised that this system became operational. Neither GAO nor my office has yet had a chance to evaluate this system. 

Changes in ownership of ANC participants and review of financial statements for 

firms owned by ANCs. SBA regulations require that ANC participants be majorityowned or wholly owned by an ANC, and that ANCs must seek SBA’s approval before making ownership changes. However, SBA has had difficulty managing the 

large volume of ownership change requests requiring approval. Our audit report 8–

14 identified an instance where an ANC was in violation of SBA’s ownership rules 

and had not reported the ownership change to SBA. Our audit report 9–15 disclosed 

that approving ownership change requests had dominated the workload of the Alaska District Office, leaving little time for monitoring other aspects of ANC compliance with 8(a) rules or for identifying where ANC-owned firms had not reported 

ownership changes. 

In Report 8–14, we also reported weaknesses in SBA’s review of financial information reported annually by ANC participants. Because of these weaknesses, SBA had 

failed to identify that non-native managers of two 8(a) ANC-owned firms had secured millions of dollars of 8(a) revenue for companies they owned through management agreements that SBA had not approved, as discussed above. 

These reports questioned whether SBA’s Alaska District Office, which oversees 

the majority of the ANC participants, was adequately staffed. At the time, the office 

had only two full-time and one-part time employees to oversee 166 ANC participants. Since then, SBA has advised that it has hired two more employees for this 

office. We have not had an opportunity to determine whether the additional staff 

is sufficient to manage the current ANC participant level. 

Whether ANC-owned firms have a substantial unfair competitive advantage within 

an industry. The Small Business Act provides that the size of a tribally owned firm 

will be determined without regard to its affiliation with the tribe or any other businesses owned by the tribe unless the SBA Administrator determines that one or 

more of the tribally-owned businesses may have or may obtain a substantial unfair 

competitive advantage within an industry. GAO reported that SBA was not making 

these determinations and had no policy or procedures in place to make them. It recommended that SBA clearly articulate in regulation how it would comply with existing law. SBA reported that it had adopted a different approach involving training 

of its Business Development Specialists and Federal agencies to ensure that a previous procurement history is provided to facilitate such determinations, which did 

not appear to adequately address GAO’s recommendation. Recently, SBA advised 

the OIG that it was undertaking a study, with a target completion date of December 

31, 2012. 

Whether partnerships between ANC participants and large firms are functioning 

as intended. GAO reported that SBA’s oversight of ANC partnerships with other 

firms and mentor-prote ́ge ́ arrangements was not adequate. When entering into joint 

ventures, ANC firms must manage the joint venture and receive at least 51 percent 

of venture profits. However, GAO identified instances either where mentors abandoned ANC participants after the contracts were not won or where mentor firms exploited the ANC partner for its 8(a) status. SBA has acknowledged that 8(a) joint 

ventures between mentors and their ANC prote ́ge ́s may be inappropriate for solesource contracts above competitive thresholds. 

18

In response to our 2009 audit, we were advised that SBA headquarters was collecting information to identify the number of joint ventures involving ANC firms. 

We are currently conducting an audit to determine whether SBA’s information collection and monitoring efforts are adequate. 

We also are pleased that SBA’s new 8(a) regulations contain strengthened requirements for mentor prote ́ge ́ and joint venture agreements and limit certain subcontracting by joint ventures in an effort to limit abuse in the program. However, 

it is too early to tell whether these provisions will effectively address problems arising from some joint venture arrangements in the 8(a) Program. 

Conclusion 

In conclusion, ANC participation in the 8(a) Program has undeniably benefitted 

Alaska natives. However, long-term 8(a) contracting trends showed a continued and 

significant increase in obligations to ANC-owned participants, which may be limiting the ability of firms that are not owned by ANCs, Tribes or NHOs to obtain 

8(a) contracts. Further, our audit found that a very small number of ANC participants received a disproportionate share of the 8(a) obligations, and the procurement 

advantages that ANCowned firms enjoy, including the relationship between these 

firms and their parent and other affiliated companies, may be working to the disadvantage of other 8(a) participants. 

Our audit report presented several matters for congressional consideration and a 

number of recommendations to SBA, many of which have now been implemented. 

SBA has not, however, taken effective action in response to the audit recommendation that the Agency determine whether ANCs have obtained a substantially unfair 

competitive advantage over other 8(a) participants in particular industry codes. 

This concludes my prepared statement. I would be happy to answer any questions 

you may have.

The CHAIRMAN. Thank you very much, Mr. McClintock. 

I would like to ask for any questions that we may have for our 

witnesses. 

Senator Murkowski? 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

And gentlemen, thank you for your testimony here this afternoon. 

Mr. Jordan, I want to start with you. Thank you for all your activity within the SBA. Included in the final 8(a) program regulations that were published in February, it is stated that, ‘‘The tribal 

and Alaska Native Corporation component of the program serves a 

valuable economic and community development purpose, in addition to its business development purpose.’’

Now, as you know, Senator McCaskill has introduced some legislation which would eliminate the opportunity for ANCs to participate in the 8(a) Business Development Program. So I guess a twofold question to you. 

First of all, you have this language within the report that SBA 

clearly has identified that there is valuable economic and community development purpose. Is it justifiable, in your mind, to single 

out ANC corporations that represent a single group of America’s 

first people to say that you are no longer eligible. You are no longer 

eligible to participate in this program, while Lower 48 tribes would 

be able to continue to participate under the current rules. 

Given the statement that has come out of the SBA regs, do you 

think that this proposed legislation is reasonable that specifically 

singles out the ANCs? 

Mr. JORDAN. Well, I can’t comment on the proposed legislation. 

But what I will say is, two things. One, we do view the 8(a) Program as having two distinct groups: one, the individual owners who 

are in the program for the nine-year period to develop their own 

skills and their business; and then the community development 

19

component in which we look at ANCs, Native Hawaiian organizations, community development corporations and tribes in much the 

same way. They have many shareholders. They have a different set 

of goals and outcomes and definitions of success. And we want to 

be cognizant that we need to serve both of those communities and 

have them both be successful. 

To your point about us recognizing the benefits that this program 

has delivered to many of the folks on the community development 

side of the house, that is why we added in the regulatory requirement that those groups report to us on some of those benefits. 

Now, the Inspector General referred to the six-month period between when the regulations went final and when that one component of them becomes or is implemented. The reason for that is because we need to work collaboratively with the community to figure 

out how to do that. We have clearly articulated that we need to do 

that reporting, but we want to make sure that, one, the government gets the best data, that we get the most pertinent, highestquality data from these firms. But we also don’t want to over-burden these firms, which are by definition socially and economically 

disadvantaged, by just going forward without their input and consultation. 

So that is the conversation that we are entering into now and we 

are excited for the results. 

One other point is that we are not looking at SBA to make any 

pejorative judgments on what is a positive benefit or not. We are 

not going to say scholarships and burial services are in one category and language preservation and health care is in another. We 

just want to have a fact-based conversation and that is why we put 

that in there. 

Senator MURKOWSKI. Then recognizing the comments that came 

from the I.G.’s report, do you think that what you have laid out 

with the new regulations there, do you think that these adequately 

address the criticisms that have been expressed by not only the Inspector General, but the media as well? We have all read these reports that are out there. 

And then a further question to that is if you feel that we have 

addressed that, shouldn’t we allow these regulations an opportunity to work, to go into effect, to play out? 

Mr. JORDAN. We are very proud of the regulations from both a 

fraud, waste and abuse prevention standpoint and ensuring that 

the program’s benefits are maximized for the intended recipients. 

We are doing an analysis at the I.G.’s recommendation of what the 

growth in ANC 8(a) awards means for other participants. But as 

yet, we have seen no data that would say it disadvantages other 

program participants. 

From 2007 to 2010, for example, every single category of 8(a) 

participant saw their 8(a) awards increase by at least 50 percent. 

So at this point, it is a very tricky analysis both because of data 

quality and because of the nuance that we are looking at. So we 

are doing the analysis, but as yet we have seen no evidence of that. 

Senator MURKOWSKI. Mr. McClintock, let me ask you a question. 

Do you believe that or does your office believe that the Indian 8(a) 

Program as it is currently structured should be eliminated or 

changed legislatively? And I will ask you the same question that 

20

I asked Mr. Jordan, which was do you see any justification for singling out all of the Alaska Native corporations for effective elimination within the program? 

Mr. MCCLINTOCK. Like Mr. Jordan, I am not that familiar with 

the legislation, and I really don’t have a——

Senator MURKOWSKI. I am not asking you to comment about the 

legislation specifically, but do you see that there would be any reason that you would specifically and purposely exclude ANCs from 

within the Indian 8(a) Program? 

Mr. MCCLINTOCK. No. 

Senator MURKOWSKI. And you don’t think that it should be eliminated, then, or legislatively changed? 

Mr. MCCLINTOCK. Our report did have some considerations for 

Congress to amend the program. So again, perhaps there is room 

for changes. I guess the question is—certainly I am not familiar 

with anybody trying to exclude ANCs 100 percent from the program. I am just not aware of that as being ever on the table. Our 

office has never taken a position that ANCs should not participate. 

Senator MURKOWSKI. Let me ask you one final question, then. In 

your testimony, written and what you have stated here, you have 

identified that there have been certain difficulties that your office 

encountered in determining how the 8(a) Program actually benefits 

the native people. 

The query for you today is in reaching this conclusion that this 

has been a tough job, I am wondering what level of expertise your 

office has in assessing a question like this? Do you have staff that 

are experienced in Federal Indian policy? Have you worked extensively within reservations or within Alaska Native villages? Did 

you travel to some of these significant meetings like NCAI—we 

have Jackie Johnson will be testifying later—or AFN? 

I am just trying to understand exactly how you reached the conclusions that you did. 

Mr. MCCLINTOCK. We reached the conclusions by trying to track 

the money flow. In other words, some ANC corporations have significant numbers of 8(a) participants who are owned by holding 

companies. And as we were trying to trace the money flow and the 

profits that came out of 8(a) contracts through that extremely complex set of organizations, it loses its identity. Cash is fungible. 

So I think in order to actually be able to demonstrate the benefits, there is going to be a need to actually separately account for 

the money, the profits from 8(a), and show how it directly is either 

included in dividends or used to fund some of these other programs. 

Senator MURKOWSKI. So I take it from your answer, then, you 

stayed back here in Washington. You didn’t have the consultation 

with either AFN or NCAI? 

Mr. MCCLINTOCK. We didn’t consult, but we did have our auditors go to Alaska and they did meet with people in some of the corporations. 

Senator MURKOWSKI. We will follow up on this later. I have extended my time, Mr. Chairman. Thank you. 

The CHAIRMAN. Thank you very much, Senator Murkowski. 

Because it eliminates time, I will send my questions in for the 

record. 

21

Senator Begich, do you have a question? 

Senator BEGICH. I just want to follow up on what Senator Murkowski just asked. I like the way you did that, Mr. Chairman. I 

will have other questions for the record. 

But let me understand this. So you want to track the profits of 

the 8(a) Alaska Native corporations and how they utilize those 

profits. Do you think we should be doing the same thing with the 

individual 8(a) companies that are owned by individuals, too? Do 

you follow my question here? 

Mr. MCCLINTOCK. Well, there are rules for the individual 8(a) 

companies that limit how much money they can use personally. 

There are limits on how much money they can take out of their 

company. There are limits on their salaries. There are limits on 

their net worth, personal net worth and their total assets. 

So they actually may argue that they have stricter limits than 

the tribal 8(a) companies. 

Senator BEGICH. If I can just say one more half of a question to 

the question, do you recognize there is a clear difference between 

the individual 8(a)’s and these larger organizations like the ANC 

8(a)’s that ensure that the distribution of their profits, which may 

end up in a larger corporation, which then benefits through scholarships, burials, many other things? Do you recognize there is a 

huge difference there? 

Mr. MCCLINTOCK. Yes. 

Senator BEGICH. Okay. I will end there, Mr. Chairman. I will 

have questions for the record. 

Senator AKAKA. Thank you very much, Senator Begich. 

Senator Johanns? 

Senator JOHANNS. I thank both of you. 

Mr. McClintock, in a previous life, as you probably know, I 

worked with an Inspector General, and sometimes we would agree, 

sometimes I guess we wouldn’t agree, but I have a good respect to 

the services of the Inspector General. 

The impression I get as I look at what you have done is that very 

definitely this was a program that needed some review, digging in 

to seeing what was going on here, and you folks did that; made 

some recommendations. 

But it is equally my impression that no one is testifying today, 

either you or Mr. Jordan, that the program should be thrown out. 

Because I think we all agree that the goals of the program have 

a lot of merit. And if we can clean up the abuse, we are headed 

in the right direction. Is that fair to say? 

Mr. MCCLINTOCK. Yes. 

Senator JOHANNS. Great. That is all I have. Thanks. 

The CHAIRMAN. Thank you. 

Senator McCain? 

STATEMENT OF HON. JOHN MCCAIN,

U.S. SENATOR FROM ARIZONA 

Senator MCCAIN. Thank you, Mr. Chairman. 

Mr. Jordan, is it true that in fiscal year 2009, the Federal Government spent about $18 billion on contracts with 8(a) firms and 

ANCs received about $3.9 billion? Is that pretty accurate? 

22

Mr. JORDAN. Total contracting to all 8(a) firms in 2009 was about $26 billion or $27 billion. Of that, ANCs received about $3.8 billion. 

Senator MCCAIN. And ANCs represent 100,000 Alaska Natives 

and there are 300 million people. 

Does SBA have any discretion in establishing whether an ANC 

is in fact ‘‘economically disadvantaged’’ compared to establishing 

that an Indian tribe or NHO is economically disadvantaged? 

Mr. JORDAN. No. ANCs are statutorily deemed economically disadvantaged. 

Senator MCCAIN. No matter where they are or what their composition are, they are economically disadvantaged? 

Mr. JORDAN. Yes, sir. 

Senator MCCAIN. Do you believe that some ANCs are more economically disadvantaged than an Indian tribe in all cases? 

Mr. JORDAN. I will leave the presumption of economic disadvantage to Congress. 

Senator MCCAIN. Under the new SBA regulations, ANCs will 

have to report how native shareholders are benefitting from the 

contract. The deadline was extended by six months. Why did you 

need to extend the deadline? It seems to me it is pretty straightforward. 

Mr. JORDAN. The issue in extending is we wanted to work out 

collaboratively with the tribal communities how to implement this. 

We wanted to ensure that SBA gets the highest quality and most 

pertinent data without overburdening these socially and economically disadvantaged firms. 

Senator MCCAIN. Do you have a firm date now? 

Mr. JORDAN. Yes, we said that we will implement this part of the 

regulation in September of this year. We went to 10 different cities 

to hold a listening tour; held two tribal consultations; received 

2,500 public comments which we read and responded to every single one. 

And the issue around the benefits reporting that we heard when 

I personally led tribal consultations in Seattle, in New Mexico and 

rural Alaska, was that it wasn’t a complaint with instituting this. 

It was how we do it. And we wanted to work, make it a workable 

regulation. 

Senator MCCAIN. But you expect to finalize those regulations 

soon? 

Mr. JORDAN. Yes, sir, in September of this year. 

Senator MCCAIN. September. 

Mr. McClintock, dollar for dollar, how does the SBA trace how 

much ANC or tribal participation benefits its members? 

Mr. MCCLINTOCK. Dollar for dollar, as I said, we are not able to. 

We did visit with organizations. They gave us examples. We were 

able to trace money from 8(a) participants into other subsidiaries 

or to the parent organization, but at that point its loses its identity. 

Senator MCCAIN. Mr. Jordan, does it concern you that only about 

5 percent of ANC contract jobs actually went to Alaska Natives? 

Mr. JORDAN. That is not something that we track. No other 8(a) 

participant or government contractor, as far as I am aware, has a 

restriction on what geography they can pull their employees from. 

Senator MCCAIN. I wasn’t talking about restriction. I thought the 

intent of SBA loans was to go to the recipients that needed it. ApVerDate 0ct 09 2002 12:43 Dec 12, 2011 Jkt 065771 PO 00000 Frm 00026 Fmt 6633 Sfmt 6601 S:\DOCS\65771.TXT JACK
23

parently, only 5 percent of the contract jobs actually went to Alaska Natives. Do you dispute that number? 

Mr. JORDAN. I would have to look and get back to you. I am not 

aware of that number. 

Senator MCCAIN. You absolutely should be, Mr. Jordan, and I am 

astonished you don’t. This is not a new issue. 

In 2009, Eyak ANC joined with a large government contract GTSI and secured a $409 million in Federal contracts. Of that 

amount, Eyak received only $18 million for its operations and their 

native shareholders got direct dividend payments totaling about 

$109,000. I am sure you are aware of all of these things. If you are 

not, you should be. A non-native ANC consulted in Washington, 

D.C. and made $500,000 a year helping secure $500 million in defense contractor with large foreign-owned corporate partners. Less 

than 1 percent of that returned to Alaska Native shareholders. 

Now, if you dispute these figures, facts, I would very much like 

to hear the rebuttal. If you don’t dispute these facts, then there is 

something obviously fundamentally wrong. That is not the intent 

of SBA for a lobbyist to get $500,000 a year. That certainly didn’t 

benefit any Alaska Native that I know of. 

Mr. JORDAN. I agree, Senator, that there have been abuses of 

this program. That is why we are very proud of the regulatory 

changes that we made. We are also proud of the enforcement actions that we have taken. 

Senator MCCAIN. Are you proud of what has happened? 

Mr. JORDAN. I am proud of where the program is headed. 

Senator MCCAIN. Are you proud of what has happened was my 

question. 

Mr. JORDAN. More specifically, which part of what——

Senator MCCAIN. That a lobbyist would get $500,000 a year, a 

non-native. Are you proud of that? 

Mr. JORDAN. No. And that is why in the regulations that finalized on March 14th, we clearly articulate that agents and representatives cannot get a gross of any contracts; that that is going 

forward a prohibited practice. 

Senator MCCAIN. In its series, The Washington Post reported 

that even some ANC executives agree the system is flawed: ‘‘We 

have seen things that show some organizations have broken the 

law,’’ said Aaron Schutt, Chief Operating Officer of Doyan, Limited, 

a native-owned company that is the largest landowner in Alaska 

with more than 12 million acres in the heart of the State. 

Well, I could go on and on here, but I guess, Mr. McClintock, I 

am sure you realize that part of your obligation is to track this, 

and somebody in your shop hasn’t been. So I hope you will start 

doing your job a little more assiduously because what has been 

going on is obviously an unacceptable use of my taxpayers’ dollars 

in the State of Arizona. I would be glad to hear your response to 

that. 

Mr. MCCLINTOCK. Well, I do think that we were responsible for 

uncovering some of the issues that you just referred to, and while 

I can’t go into any details, we are looking at some of these issues. 

Senator MCCAIN. I hope so, and I will look forward to hearing 

your report. This is fundamentally at the end of the day most unfair to the people who were supposed to be the recipients of this. 

24

This is most unfair, wouldn’t you agree, to Native Alaskans who instead of getting the $500,000 a year that was given to a non-native 

consultant, they should have gotten the money. Would you agree 

that the most unfair aspect of this is to the people that it was most 

intended to help? 

Mr. MCCLINTOCK. I would agree. 

Senator MCCAIN. Thank you, Mr. Chairman. 

Senator AKAKA. Thank you very much, Senator McCain. 

I want to thank our witnesses. There may be other questions 

that we will submit and move on here to our other witnesses. 

Thank you very much for your responses. 

I would like to invite the second panel to the witness table. 

Today, we have Jackie Johnson-Pata, the Executive Director of the 

National Congress of American Indians, and Julie Kitka, President 

of the Alaska Federation of Natives. 

Welcome to both of you to this Committee hearing. 

Ms. Johnson-Pata, will you please proceed with your testimony? 

Welcome. 

STATEMENT OF JACKIE JOHNSON–PATA, EXECUTIVE 

DIRECTOR, NATIONAL CONGRESS OF AMERICAN INDIANS 

Ms. JOHNSON-PATA. Thank you, Chairman Akaka and Members 

of the Committee on Indian Affairs. I want to thank you for this 

opportunity to be able to testify today. 

Before I get started, I also want to thank you for the actions that 

you took earlier in your business meeting. The Carcieri bill, of 

course, is Indian Country’s number one priority, and we look forward to your continued support in getting that to passage. 

NCAI has a long history of supporting the Native Hawaiian bill 

and we look forward to continuing to supporting you in those efforts. 

As you know, my testimony is quite detailed and so I am going 

to do something quite different from that and just talk a little bit 

about the benefits of the program. This is a Committee that I don’t 

need to spend any time talking about the social and economic demographics of Indian Country. You are all really well aware of 

that. 

And so I want to call upon the Committee to consider today the 

context of the Small Business Administration’s native 8(a) Program 

as it operates as an important tool in fostering economic development and growth within our tribal and native communities across 

the Nation. 

Many Members of this Committee can recall past Federal policies 

that sought to attract businesses and industries to our remote 

rural areas, and most of those were where most of our native communities are located. And many of those initiatives failed in Indian 

Country. 

And during that same time, Congress began to turn away from 

the Indian reservation template that had long been the foundation 

of Federal Indian policy towards a new business model when it enacted and authorized the native corporations to manage the native 

lands and resources on behalf of native people in Alaska. And I 

know that Julie’s testimony, Alaska Federation of Natives, provides 

25

more background on the formidable conditions under which this 

new policy experiment had to take root before it could grow. 

We all know that in order to attract businesses and industry to 

remote rural areas, we need to have a climate that is conducive to 

business development: modern infrastructure, access to transportation, and commercial corridors. Just as important are those community-based resources including business acumen, managerial 

strength, tight fiscal controls, a skilled workforce, and a stable government and corporate institutional capacities. 

In fact, building these community-based assets were the focus of 

an Alaska Native Claims Settlement Act and the Alaska Natives 

Corporations Act. 

Indian Self-Determination Act helped tribes to develop the fiscal 

management and the accounting systems, but it wasn’t based upon 

the business model. And it wasn’t until tribal governments were 

able to participate in the Native Small Business 8(a) Program that 

tribes were able to come into contact with experienced business 

mentors and joint venture partners who could assist them in developing the necessary core competencies or community-based assets 

to succeed in the world of commerce and Federal contracting systems which serve the needs of a global economy. 

So it is with that context that our member tribes and native organizations firmly believe that the Native 8(a) Program is working. 

They see the evidence on a daily basis on just how the Native 8(a) 

Program is building capacities within their communities among 

their people. And that is why long after revenues have been realized and expended for greater good, the sustained legacy of the Native 8(a) Program is the creation of a workforce of native professionals, highly skilled native-trained managers, business development specialists, creative entrepreneurs, skilled laborers, accountants and fiscal managers. 

The perception that the Native 8(a) Program is working is reflected in every single report issued by the Federal agencies and instrumentalities. It works because 8(a) firms are turning in quality 

work and transparency, accountability and executing government 

contracts with cost-effective and timely performance. 

No contracting officer would be expected to be retained in this 

Federal government if each and every one of those thresholds were 

not met by the native 8(a) firms. 

As our testimony suggests, the Federal procurement marketplace 

is global and in the marketplace, although traditionally dominated 

by large corporate concerns, there is plenty of room for tribal, Alaska Native, and Native Hawaiians and all minority businesses to 

make meaningful contributions. 

Fostering the development of successful small business contractors advances the government’s interest in broadening and diversifying our industrial base of service providers and suppliers. More 

competition in that marketplace will increase the value of the products and services and drive prices down. 

While the new rules promise greater accountability and transparency, Congress in its oversight role should ensure that the regulations are implemented and enforced in a manner that sets new 

standards for program participants without distracting from the 

program’s intent or detering contractors from using the program. 

26

1 Jonathan Taylor, ‘‘Native American Section 8(a) Contracting,’’ p. 6 (October 2007). 

We want to thank you for giving us the opportunity to address 

the importance of the 8(a) Business Development Program to tribal 

communities. We look forward to your continued support and your 

efforts to be able to help us use this effective economic development 

tool to make a difference in our tribal communities. 

[The prepared statement of Ms. Johnson-Pata follows:]

PREPARED STATEMENT OF JACKIE JOHNSON-PATA, EXECUTIVE DIRECTOR, NATIONAL

CONGRESS OF AMERICAN INDIANS

Introduction 

The National Congress of American Indians (NCAI) is the intergovernmental body 

representing American Indian and Alaska Native tribal governments. For more than 

60 years, tribal governments have come together as a representative congress 

through NCAI to deliberate issues of critical importance to tribal governments and 

endorse consensus policy positions. NCAI is honored to participate in the Senate 

Committee on Indian Affairs hearing to discuss the history, structure, and benefits 

of the Native 8(a) Business Development program that our membership has deemed 

critical to growing tribal economies and creating career paths for Native people 

where few existed before. 

The Native 8(a) program demonstrates Congress’ commitment to promoting tribal 

selfdetermination and self-sufficiency. This business development program reflects 

the unique character of Native communities and their responsibility to provide governmental services and other benefits to their members. 

To promote economic development for American Indian tribes and Alaska Native 

Regional and Village Corporations (ANCs), Congress authorized their participation 

in the Small Business Act’s Section 8(a) Business Development program. When certified as an eligible 8(a) participant, American Indian tribes or ANCs may contract 

with the Federal Government under unique terms, which permit a federal agency 

to award a contract not subject to the competitive threshold that applies to individually-owned 8(a) companies and allows tribes and ANCs to operate multiple 8(a) 

firms. Congress purposefully created these distinctions to further its federal trust 

obligation to American Indian and Alaska Native tribes, and to provide tools to combat escalating poverty in tribal communities and to remedy the low level of American Indian and Alaska Native participation in the government contracting industry. 

Due to the recent public and Congressional attention on sole-source contracting, 

a number of investigations and press coverage unfortunately have cast an unfair 

and harsh light on tribal and ANC sole source contracting. The U.S. Government 

Accountability Office’s (GAO) 2006 report of Alaska Native Corporation’s (GAO–06–

399) participation in the 8(a) Program recommended that the Small Business Administration (SBA) and contracting agencies exert greater oversight and monitoring 

of ANC sole source contracting. It did not recommend legislative changes that would 

effectively disband the program and reverse all of its positive contributions to advancing American Indian and Alaska Native policy. American Indian tribes and 

Alaska Native Corporations unique 8(a) provisions are consistent with other Congressional policies that advance Indian self-determination and economic development. The 8(a) Business Development program has demonstrated that it brings revenue growth, employment, profits, and social investment to tribal communities. 

Indian Country is a world of economic extremes. There are a few high profile examples of tribes and ANCs who have prospered economically. These examples of 

tribes and ANCs with some wealth receive public attention. However, there are several hundreds more who remain nearly invisible, who are struggling economically 

to preserve their lands and community. The social and economic conditions in many 

Native communities are comparable to those in developing nations around the 

world. 

Generational poverty among American Indians and Alaska Natives remains a serious challenge. American Indians and Alaska Natives are among the most economically distressed populations in the United States. Nationwide, this population experiences a poverty rate of 25.7 percent, exceeding that of all other racial categories 

and more than double the national average of 12.4 percent. Indians living on reservations face poverty rates more than three times the national average. 1 Reservation poverty is so pronounced it can be clearly seen on national maps, with hot spots 

of poverty in the northern plains, eastern Arizona, southeastern Utah, and western 

New Mexico, which overlap directly with Indian reservations. Real per-capita inVerDate 0ct 09 2002 12:43 Dec 12, 2011 Jkt 065771 PO 00000 Frm 00030 Fmt 6633 Sfmt 6621 S:\DOCS\65771.TXT JACK
27

2Matthew Fletcher, ‘‘In Pursuit of Tribal Economic Development as a Substitute for Reservation Tax Revenue,’’ 80 North Dakota Law Review 759 (2004). 3 Article I, § 8, ¶ 3. 4See 43 U.S.C § 1601, et seq. 5See Id. at § 1601. 6 43 U.S.C. § 1629(e)(4)(A). 

come of American Indians living on reservations is still less than half of the national 

average. In 2000, American Indian and Alaska Native unemployment stood at twice 

the national average and was more than three times as high on Indian reservations. 

In addition, tribal governments have a severely limited tax base. Tribes cannot 

impose property taxes on trust land, and an income tax on impoverished people is 

not feasible. Recent U.S. Supreme Court cases have compounded this problem by 

permitting state taxation on Indian land while at the same time limiting the ability 

of tribes to tax non-members. In addition, tribes are hamstrung in their ability to 

access other traditional governmental revenue streams, such as tax exempt bond financing, in order to raise revenue for governmental services and are limited to what 

can be developed from tribal businesses. 2 In sum, tribal citizens often have greater 

service needs than their non-Native counterparts, and at the same time, tribal governments have fewer resources with which to fulfill their governmental responsibilities to their citizens. Meaningful economic development is sorely needed. 

Economic growth in our nation’s tribal communities remains a substantial challenge, and until this improves significantly, the unique 8(a) contracting benefits extended to tribes and ANCs should be part of the Federal Government’s arsenal of 

policies, promoting economic development and working to alleviate dire poverty. The 

8(a) program provides tribes and ANCs with critical tools needed to compete in the 

federal marketplace and enhances market-based competitive capabilities. 

Federal Indian Policy 

The U.S. Constitution and many statutes establish rights for American Indian 

and Alaska Native tribes based on their trust relationship with the Federal Government. In exchange for Native peoples ceding over 500 million acres of land, the 

United States entered into a trust relationship with American Indians and Alaska 

Natives. Treaties, the supreme law of our land, were originally the primary way 

that this trust relationship was expressed. Today, the trust relationship is carried 

out through the U.S. Constitution and the many statutes enacted by Congress, including the Alaska Native Claims Settlement Act (ANCSA) and the Native 8(a) 

business development provisions. The Federal Government’s unique relationship 

with American Indian and Alaska Native tribal governments derives from the U.S. 

Constitution’s grant of power to Congress ‘‘to regulate Commerce. with the Indian 

Tribes.’’ 3 This Constitutional provision, and its interpretation in landmark Supreme 

Court decisions, gave rise to the Federal Government’s special political relationship 

and trust responsibilities to American Indians and Alaska Natives. 

The Federal Government has enacted numerous policies that are aimed at reducing poverty and creating economic opportunities for Indian tribes and Alaska Natives. Congress was even more specific about strategies to realize these goals when 

articulating, in the Alaska Native Claims Settlement Act (ANCSA), the Federal 

Government’s relationship with Alaska Natives. 4 This law required compensation to 

settle land claims, and Congress mandated that for-profit corporations be used to 

implement the settlement. In ANCSA, Congress declared: 

(a) there is an immediate need for a fair and just settlement of all claims. . . 

based on aboriginal land claims; and (b) the settlement should be accomplished 

rapidly, with certainty, in conformity with the real economic and social needs 

of Natives, without litigation, with maximum participation by Natives in decisions affecting their rights and property... 5

Furthermore, in ANCSA, Congress confirmed that federal procurement programs 

for tribes and Alaska Native Corporations are enacted under the authority of the 

Commerce Clause, Article I, Section 8 of the U.S. Constitution. 6 Among the most 

successful of these laws are the special provisions implementing Section 8(a) of the 

Small Business Act. These rules have helped tribal and ANC businesses overcome 

economic barriers. Competitive businesses have been created in both the private and 

federal markets. New business opportunities and career paths have been created in 

remote rural communities that are far removed from major markets, and profits, 

when earned, are invested to ensure future sustainability or returned as benefits 

to their communities. 

28

7 US GAO, (GAO–06–09) 2006, 81. 

Community Benefits 

Because of the high unemployment rates in tribal communities, capacity building 

for Native people is often the key goal of tribal governments and ANCs. In its 2006 

Report, the GAO found that one-third of the ANCs interviewed had management 

training programs in place that encourage the recruitment, training, and development of Native employees. 7 Tribes and ANCs use internships, scholarships, on the 

job training, and subcontracting opportunities to build their own talent. This process 

can be slow and arduous as multi-generational poverty has taken its toll on worker 

preparedness, but success can be significant when it is achieved. 

For example, the General Manager of Sealaska Environmental Services and a 

shareholder of Sealaska Corporation earned a bachelor and graduate degree with 

Sealaska Corporation. He interned at the company and eventually started a new 

8(a) subsidiary of Sealaska, which is a certified environmental remediation firm, 

providing a number of support services to federal facilities. Former scholarship recipients also have earned positions at Sealaska as: Vice President and Financial Officer; Vice President, Corporate Secretary, and Human Resources; Vice President 

and Chief Investment Officer; and Vice President and General Counsel. Sealaska 

Corporation has provided scholarships to 3,000 tribal shareholder recipients since 

the inception of its scholarship program, and from 2000–2008, it provided $5.7 million in scholarships. Since the inception of its internship program in 1981, Sealaska 

has provided 200 internships, with 23 of these interns currently employed by 

Sealaska. 

Benefits derived from the government contracting program go beyond developing 

local Native capacity through scholarships, internships, and employment. Other 

benefits, which are just as important, have begun to take hold and advance selfdetermination, ensure cultural preservation, and ameliorate dire social conditions. 

For example:

• One Alaska Native Corporation has aligned its cultural values with its dividend 

payments. A special dividend program has been developed to provide additional 

support for elders, who hold a highly respected position in Native communities. 

When elder shareholders reach age 65, they are offered a special dividend along 

with additional shares,that provide a larger dividend payment in the future.

• Community-based non-profit organizations, supported through 8(a) business 

revenues, are carrying forward cultural values through such wide-ranging activities as youth camps, leadership trainings, curriculum development, and language preservation.

• Cultural values and practices are reinforced through social and community programs funded by tribal and ANC 8(a) businesses, such as learning a traditional 

dance or language. These practices focus on preserving cultural values and traditions for Native communities, with an emphasis on providing youth with positive environments and influences.

• Native people serve as role models for fellow tribal members and are valued for 

their contribution to community. Tribal and ANC 8(a)s provide an opportunity 

for American Indians and Alaska Natives to see one of their own go to college, 

get a job, or work toward a career. These positive role models can increase community and individuals’ hope for the future as well as provide inspiration.

• Business capacity is developed in the local community when tribal members 

and shareholders gain transferable business skills, such as financial literacy, 

strategic planning, and management. These skills are necessary for all aspects 

of economic and community development. Native community members may 

choose to utilize their skills in variety of ways: to start a local business as a 

supplier or provide a service that has been lacking in the community.

• Leadership capacity is developed when Native boards and tribal councils gain 

experience in making decisions that will directly affect the lives of their family, 

neighbors, and communities. Important investment and sustainability decisions 

are made in each tribal community: hiring, budgeting, dividend allocation, 

meeting community needs, and business and cultural sustainability.

This needed business development program has enabled tribal communities to 

participate in the mainstream economy as intended, and the capacity building component has reaped real rewards as infrastructure and human capital have been 

built in local communities. 

As Congress monitors measures, both legislative and administrative, to bring 

more transparency and accountability to the 8(a) Business Development program, 

29

8 In 1988, Congress passed amendments to the Alaska Native Claims Settlement Act, P.L. 

100–241, which granted presumptive minority status to ANCs, as defined in 43 U.S.C. 

§ 1626(e)(2). The intent was to grant qualifying ANCSA corporations or ANCSA corporationowned firms the status of ‘‘a minority owned and controlled corporation for purposes of federal 

law.’’ In 1992, the Alaska Land Status Technical Corrections Act, Public Law 102–415, amended 

§ § 1626(e)(1) and (2) by granting ANCSA corporations or ANCSA corporation-owned firms ‘‘economically disadvantaged’’ status. 

it also needs consider the legal, policy, and economic context for the special 8(a) provisions while gauging their effectiveness as regulatory policies are implemented. 

Native 8(a) Contracting History 

Since World War II, the Federal Government has adopted policies to increase the 

diversity of suppliers to the Federal Government. The intention is to assist businesses that have substantial barriers to capital formation and allow them to effectively compete in a highly concentrated market. The Small Business Act’s Section 

8(a) Business Development program directs the government to purchase from small 

businesses. In 1987 and 1988, the Senate Indian Affairs Committee held hearings 

to determine why so few Native American-owned firms participated in government 

contracting and why a Presidential Commission on Indian Reservation Economies 

found that existing procurement policies created substantial obstacles to Indian reservation economic development. As a result of these Congressional inquiries, 

changes to federal laws were made to ensure that American Indian and Alaska Native tribes could more effectively compete in the federal market place in a manner 

that reflects the unique federal obligations and different legal frameworks that 

apply in Indian Country. 

Except in a few important ways, the rules and regulations that are applicable to 

all 8(a) companies owned by individuals, women, and minorities apply to American 

Indian tribal enterprises and to Alaska Native Corporations. Congress altered this 

legal framework to take into account the unique ownership structures of enterprises 

owned by tribal governments and by Alaska Native Corporations created under the 

Alaska Native Claims Settlement Act. These ownership structures distinguish them 

from all minority-owned businesses and other types of private sector firms. Thus, 

tribal and ANC contracting differs from private 8(a) contracting. 

Tribal enterprises are owned by tribal governments. Tribal citizens determine who 

governs them and ultimately how their government will carry out economic activities through a tribally-owned business. The authority to create a tribal enterprise 

is typically governed by a tribe’s constitution or governing authorities. A tribal governing council usually determines the officers of a tribal enterprise and hires a manager to oversee the day-to-day operations of the business. Usually, the tribal governing body will retain overall strategic direction of the enterprise, have the authority to acquire or distribute assets, and reinvest or distribute profits for the benefit 

of its tribal membership. Often, the sole shareholder of tribal enterprise is the tribal 

governing body itself. 

The corporate structures created under ANCSA represented a new approach to 

settling land claims between the United States and Alaska Natives. ANCSA established a framework in which village and regional corporations would manage the 

assets, land, and natural resources that Alaska Natives received under the settlement. 

Under ANCSA, shareholders may not sell their shares to non-Natives. Congress 

explicitly intended the use of corporate structures to give Alaska Natives greater 

control of their economic destiny—to achieve self-sufficiency as well as self-governance. In fact, in furtherance of this economic settlement, the opportunity to participate in federal procurement programs, including the 8(a) program, was embedded 

in ANCSA by amendments passed by Congress making it clear that ANC participation in these programs business development opportunities would be an integral 

part of the ANCSA settlement and contribute to the development a sustainable 

economy. 8

The ownership structures of both tribally-owned enterprises and ANCs create a 

much broader mandate to address a wider range of interests than other minorityowned 8(a)s; tribal and ANC firms must operate and provide benefits that go far 

beyond the bottom-line of profitability. The special provisions which apply to tribal 

and ANC 8(a) contracting were tailored to take into account these differences and 

to take into account the federal Indian policy of promoting selfdetermination and 

economic self-sufficiency. 

The special provisions include different criteria which govern the admission of 

tribal and ANCs into the 8(a) program, and they exempt tribal and ANCs from 

30

9 Justification and Authorization needed for all contracts over $20 million as passed in the 

National Defense Authorization Act of 2010, Section 811, P.L. 111–84 [H.R. 2647] 10Section 602 of the Business Opportunity Development Reform Act of 1988, P.L. 100–656 

[H.R. 1807], November 15, 1988. 

lower 9 competitive threshold that applies to individually-owned firms 10 and also establish different affiliation rules, which permits tribal governments and ANCs to 

have multiple 8(a) companies. However, many of the other rules that apply to all 

8(a) firms apply equally to tribes and ANCs. For example, all 8(a) firms have a maximum 9-year participation term in the 8(a) Program. Likewise, all 8(a) firms must 

be small to receive an 8(a) contract. When an ANC 8(a) firm grows out of its applicable size standard, it graduates out of the program, just like other 8(a) firms. 

Tribes and ANCs are permitted to form new 8(a) firms in different industries because of their responsibility to improve the livelihood of hundreds or thousands of 

community members. Accordingly, tribes and ANCs can operate multiple 8(a) firms 

and do not have a limit on the size of contract that can be awarded to them on a 

sole source basis. These provisions were intended to prepare tribal enterprises and 

ANCs to compete with others in their industry, particularly large contractors who 

have established relationships with government customers and possess capital and 

proposal capability sufficient to dominate the federal procurement market. 

In order to compete effectively, Congress provided tribes and ANCs flexibility to 

hire experienced staff and management and the ability to use partnerships and subcontracting tools that are available to other contractors. Tribes must present a plan 

for Native managers to assume operations, while Alaska Native participants have 

the flexibility of hiring both Native and non- Native managers. However, the direction of the company and the management of assets and distribution of profits are 

ultimately determined by a tribal governing council or Alaska Native Board of Directors. The governing council or board of directors is elected by tribal members or 

by Alaska Native shareholders. Top managers are tasked with the responsibility of 

improving the assets and profitability of the company, while at the same time carrying out cultural and broader social goals of the Native community. 

Additionally, tribes and ANCs, like other individually-owned 8(a) companies, have 

the ability to form partnerships or subcontract in order to complete jobs and make 

profits. SBA regulations permit all 8(a) contractors to subcontract a portion of the 

work under certain conditions. This can create benefits for local businesses where 

a contract is awarded by permitting tribes and ANCs to work with local companies 

while still fulfilling its own goals of self-sufficiency. 

Similarly, tribes and ANCs can form joint ventures with large companies in the 

same manner available to all 8(a) firms. All 8(a) firms can form joint ventures under 

SBA’s Mentor-Prote ́ge ́ Program. The use of teams and joint ventures are encouraged 

by the Federal Government as a means to stimulate growth, forge new business relationships, and develop expertise. 

For example, Mandaree Enterprise Corporation faced bankruptcy in 1994. The 

tribal government owners, the Mandan, Hidatsa, and Arikara Nations of the Ft. 

Berthold Reservation in North Dakota, hired a CEO to develop a turn-around strategy. Mandaree Enterprise became certified in the 8(a) Business development program and grew rapidly as it expanded into government contracting. Part of its success was due to its participation in U.S. Department of Defense’s Mentor-Prote ́ge ́

Program, which encourages major defense prime contractors to work in tandem with 

small disadvantaged businesses to develop their business and enhance their technical capabilities. The ultimate goal is to enhance the potential contributions of 

prote ́ge ́s, like Mandaree Enterprise Corporation, thus allowing them to more effectively compete for defenserelated work. Through this program, Mandaree Enterprise 

Corporation developed a relationship with Northrop Grumman, which contributed to 

their capabilities in manufacturing cables, wire harnesses, and circuit boards. During two separate occasions, the Mandaree Enterprise Corporation and Northrop 

Grumman received special recognition from the U.S. Department of Defense by winning the Nunn-Perry award. 

The criticism about tribal and ANC contracting success from some in the small 

business community is misplaced and misguided. It distracts from the many issues 

that all small contractors have in common. While the federal contracting market has 

increased substantially, many small businesses believe they have been shut out of 

the market. The size of the market has increased; however, the Federal Government’s statutory goals, which are intended to ensure small business participation, 

have remained stagnant, not keeping pace with the potential for greater small business participation. Additionally, the overall small business share has declined due 

to a number of reasons, such as bundling, the consolidation of contracts beyond the 

reach of many small business capabilities. The federal procurement market is huge, 

31

and there is plenty of room for tribal and ANC and all minority businesses to participate. NCAI has worked with other small business organizations, such as the Minority Business Roundtable and Women Impacting Public Policy, to urge Congress 

to increase opportunities for all small businesses by increasing agency contracting 

goals and size standards, as well as increasing the thresholds for individually owned 

8(a) companies. The Administration has acted to increase size standards for some 

industries and is undertaking an effort to unbundle contracts, last least in the information technology arena. All are positive steps for all 8(a) participants. 

Fostering the development of successful small business contractors advances the 

government’s interests by broadening and diversifying its industrial base of service 

providers and suppliers. More competition can result by combating the consolidation 

of the government contracting industry into a few dominant large businesses. By 

providing different contracting provisions to qualified tribal enterprises and ANCs, 

Congress increased the likelihood of sustaining business opportunities, ownership, 

and revenues for American Indians and Alaska Natives. These provisions are helping to alleviate poverty, provide economic growth, and increase the business capacity of tribes and ANCs. 

Recommendations for Program Improvement 

We feel it is important for this Committee and Congress to know that these tools 

created to promote economic self-sufficiency in Native communities are working as 

the Federal Government intended. The 8(a) program is still a long way from universally building local tribal economies and offering hope to tribal citizens. However, 

even its infancy, it has already proved to be an effective tool for those tribes and 

ANCs who have the ability and tenacity to compete and profit in the federal market 

place. 

Our member tribes, ANCs, and Native communities have all given us input on 

this issue, and their message has been simple and clear: Keep the program in place. 

It is working. While a handful of tribes and ANCs have achieved significant success 

in government contracting, the vast majority of tribes and ANCs remain in desperate need of meaningful, diversified economic development opportunities. Tribal 

communities face many obstacles to economic development, including lack of access 

to capital, inadequate infrastructure, remote locations, complicated legal and regulatory status, and insufficient access to training and technical assistance, among 

others. In fact, given its proven success in a limited number of communities, we 

should all be working towards ways to strengthen the 8(a) program so more communities can benefit from the purchasing power of the Federal Government. 

With this directive from our member tribes, ANCs, and Native communities, 

NCAI set out to evaluate the program, listen to those who had concerns, and try 

to correct misperceptions. During a national summit held jointly with the U.S. Department of the Interior, NCAI heard from tribal leaders about these economic challenges and opportunities. In addition, a joint working group was formed with NCAI, 

the Native American Contractors Association, and the National Center for American 

Indian Enterprise Development to ensure that we were speaking with a unified 

voice and representing the issues and concerns of all American Indian and Alaska 

Native entities. 

NCAI evaluated concerns about the program by carefully reviewing the April 2006 

GAO report on Alaska Native Corporation 8(a) contracting (GAO–06–399). The GAO 

recommendations centered on the need for greater oversight activities by the Small 

Business Administration (SBA) and federal agencies. In response, we held a series 

of government-togovernment tribal consultations with the SBA Administrator to discuss the GAO and other SBA Inspector General (IG) recommendations and to identify potential solutions to address these concerns. 

Through this process, we developed two comprehensive sets of administrative recommendations to improve oversight in response to the recommendations made in 

the GAO report (GAO–06–399) and other 8(a) SBA IG reports. We submitted these 

reports as part of the administrative record for the tribal consultation process that 

the SBA undertook as part of its 8(a) rulemaking on the SBA mentor/prote ́ge ́ program. Additionally, we have urged Congress to increase funding for the SBA to provide additional staff resources and to conduct an SBA assessment on re-engineering 

the Native 8(a) program with the goal of providing more transparency, accountability, and training. This effort was undertaken to ensure that this program remains one of the critical tools available more broadly in Indian Country as a way 

to generate revenue and build business capacity. These recommendations were developed to strengthen reporting systems and provide improved transparency and accountability for many of the concerns that have been raised. 

Since these recommendations were developed, both Congress and the Administration acted to address a number of concerns regarding how Native and all other firms 

32

participate in the SBA 8(a) program. Congress, through the National Defense Authorization Act for Fiscal Year 2010, enacted legislation that directly and disproportionately impacts Native 8(a) firms. The Act requires all federal agencies to justify 

and approve all contract awards over $20 million. 

The Office of Management and Budget, through the Federal Acquisitions Regulatory (FAR) Council hosted consultations before releasing the regulations that will 

guide the level of justification and approval. The Far Council should be commended 

for hosting its first tribal government consultation and for drafting regulations that 

adhere to those specifically included in the legislation. These regulations are not intended to cap sole source contracting to a $20 million limit, but should add a layer 

of tax payer protection for all large contracts. 

The Administration, through the SBA, released regulations earlier in 2011 that 

will add additional oversight and accountability. The SBA held a number of consultations with tribal governments before the regulations were drafted and is promising to conduct further consultations to give guidance on the new rules and discuss 

a delayed regulation governing benefits reporting. The regulations answer concerns 

raised over the years by NCAI and our partner organizations, participants, administrative officials, and Congress. Among other things, the new rules add accountability 

by clarifying mentor-prote ́ge ́, joint venture, and sub-contracting relationships. The 

rules also provide new guidelines for NAICS codes and size standards and provide 

greater transparency for excessive or executive compensation. 

While all of these new rules promise greater accountability and transparency, 

Congress, in its oversight role, should ensure the regulations are implemented and 

enforced in a manner that sets new standards for program participants without detracting from the programs’ intent or deter contractors from using the program. 

Additionally, Congress should ensure that the benefits reporting regulations being 

developed are done so in a way that reflects current federal Indian policy. Tribes 

and ANC’s, by nature of their governing systems, are already responsive their respective citizen and shareholder interests and for the well-being of their communities and culture. The reporting mechanisms should not favor certain expenditures 

or limit the use of revenues to what may be acceptable to external interests. 

We want to thank you for giving us the opportunity to address the importance 

of the 8(a) Business Development program to tribal communities. We look forward 

to your continued support of tribal self-determination efforts and our use of effective 

economic tools.

The CHAIRMAN. Thank you very much, Ms. Johnson-Pata. 

Ms. Kitka, please proceed with your testimony. 

STATEMENT OF JULIE E. KITKA, PRESIDENT, ALASKA

FEDERATION OF NATIVES; ACCOMPANIED BY BYRON I. 

MALLOTT, DIRECTOR, SEALASKA CORPORATION 

Ms. KITKA. Thank you, Mr. Chairman and Members of the Committee. It is wonderful to be here. On my right is one of our most 

respected native leaders, Byron Mallott, who was Founder of the 

Alaska Federation of Natives, as well as a President of one of our 

native corporations, a former CEO with a lot of experience. I have 

asked him to join me to share my opening remarks time and also 

to be available for questions as far as early background or any 

questions that you have on that. We will try to keep our comments 

very short. 

Thank you for taking my written statement into the record. We 

are more than happy to respond to any and all questions that the 

Committee may have. 

The 8(a) Program from our experience is one of the most successful programs we have ever seen this Congress enact. It allows us 

to build capacity. It is not an entitlement program and a handout. 

It builds capacity for the long term. I cannot underestimate what 

that means to us. 

If you are required to have tight financial and accounting systems, if you are required to deliver services on time, under budget, 

33

whatever, the skills that that develops with your people and your 

managers are transferrable to every type of business that you are 

involved in. 

So you should be very proud of the program and the success. And 

we want to build on that. We see aspects that could be surrounded 

around the program that wouldn’t necessarily be in the 8(a) Program, but other areas that could support the capacity-building of 

native people, support the reduction of poverty and elimination of 

marginalization of our people, and that includes such areas as the 

investment climate in our home communities and reservations. 

Unless our investment climate is favorable to business development, many of the business opportunities will be outside of our 

communities, so we have to pay attention to investment climate. 

We have to pay attention to tax policy and tax incentives and tax 

credits. That will directly influence and encourage more opportunities on our reservation and in our villages, and is just essential. 

The idea of patient capital, some of our communities are landrich, but cash-poor. If they are to succeed in business enterprises, 

if you are to see local results on that, we need patient capital that 

people can use to build up their capacity, especially in the smaller 

areas. Again, they don’t really fit into the 8(a) thing, but in the big 

picture, they will have just as important a benefit for our people. 

And again, they are not hand-outs. They are not entitlements. They 

are investing in the native community building their enterprises 

and improving the standard of living. 

I also wanted to share one critically important result of the experience in Alaska with our native corporations and our land claims. 

I bring this to your attention because I think it has application for 

many of your considerations you deal with in the Congress. One of 

the most important aspects of our experience with corporations is 

the ability to organize separately for political purposes and separately for business and economics. It is that ability to organize economically to engage in economic activities with other businesses 

which is critically important. And I think our participation in the 

8(a) proves that that separation of organization and purpose on 

that is just a keystone of our success and our participation. 

And I bring that to your attention because I do think that that 

has application to decisions you make in nation-building in countries like Afghanistan, Iraq, even the Middle East and things like 

this. 

Taking a look at building communities and building stability and 

the capacity of people who are in poverty and they are 

marginalized, that ability to organize separately economically 

versus just political organization is an important lesson that we 

contribute, that the Congress and the United States should be very 

proud of. And we would be glad to work with you on being able to 

showcase that. But I can’t underestimate how timely and relevant 

our experience in the 8(a) government contract has in these other 

arenas that you deal with. 

With that, I would like to ask Byron Mallott to share some comments. 

[The prepared statement of Ms. Kitka follows:]

34

PREPARED STATEMENT OF JULIE E. KITKA, PRESIDENT, ALASKA FEDERATION OF

NATIVES

Mr. Chairman, and distinguished Members of this Committee, I appreciate the opportunity to present testimony on behalf of the Alaska Federation of Natives (AFN) 

regarding SBA’s 8(a) program, an important legal tool which is intended to help us 

escape poverty and marginalization, and empower our people to compete in the federal marketplace, deliver value to our federal partners and learn during the whole 

process. 

On behalf of AFN Co-Chairs State Senator Albert Kookesh and Ralph Andersen, 

and our 37-Member Board of Directors—we want to express our appreciation for 

these hearings, and your support of programs that provide economic opportunities 

to Native Americans. I offer this testimony to speak to the legal and equitable basis 

and importance of the Small Business Administration’s 8(a) program to the Native 

people of Alaska and to offer several recommendations. 

I submit this testimony in my capacity as President of the Alaska Federation of 

Natives (AFN). By way of background, AFN is the largest statewide Native organization in Alaska representing more than 125,000 Alaska Natives residing in Alaska, 

and more than 120,000 Alaska Natives scattered over the rest of the 49 states. Alaska Native leadership organized AFN in 1966 to facilitate bringing the various regional and village associations together, to advocate with one voice for a fair settlement of our aboriginal land claims. Congress approved the Alaska Native Claims 

Settlement Act (ANCSA) in 1971, and for the last 40 years we have been involved 

in implementation and adapting both the settlement and our relationships to meet 

the real needs of our people. 

As President of AFN, I have seen where AFN is both an organization and a movement of Native people who are striving for self-determination. Our decision making 

process is shared with a 37 member Board and an annual convention of elected Native representatives of approximately one delegate for each 25 members of our villages, communities and Native institutions. It is a formalized process, which has 

served us well, and continues to adapt. The AFN convention is the largest annual 

gathering of Native people in the United States and generally numbers about 5,000 

people. The AFN convention is a representative and inclusive Native gathering for 

Alaska Native people. 

At our annual convention we work hard to maintain unity of purpose, recognizing 

we have a great diversity within the state, different ethnic and cultural experiences. 

We focus on statewide priorities, and debate and decide our positions on critical 

issues. The AFN convention has repeatedly voted to support the SBA 8(a) program 

as a viable economic tool for Native Americans and have urged us to do everything 

in our power to protect the opportunities for participation, and to ensure that Alaska Natives are at the table for any discussions that affect our people. 

I would like to make clear that the AFN has zero tolerance for abuses of this program, or for media hype, which is not grounded in fact. AFN and I candidly recognize that there have been isolated instances of abuse or lapses in judgment by some 

involved in the 8(a) program. We do not condone such abuses or lapses and are committed to helping ensure that they are not repeated. We believe that the implementation of the new SBA regulations will go a long way toward making sure that they 

are not. We are committed to ensure the long-term benefits of this program are 

shared between the federal agencies for whom we do work, and for our young growing population, which is continually building their experience and expertise. By the 

same token, we urge this Committee and others in Congress to not let a few such 

instances be misused to destroy this highly meritorious and effective program for 

others in need of the opportunity it affords Native Americans. 

I would like to note that we appreciate your leadership of this distinguished Committee in the administration of laws designed to benefit Alaska Natives and Native 

Americans. This Committee serves a very important role in the lives of our people, 

protecting commerce with, and among, Native American tribes, corporations and 

other organizations, while recognizing our unique role and relationship with the 

U.S. government. We welcome and appreciate your leadership in reviewing the 8(a) 

programs. We also appreciate the efforts of our elected representatives, Senators 

Murkowski and Begich, and Congressman Young, who have stood with us to see 

that the truth is told about 8(a) contracting, and about its great importance to our 

people. 

The work you and your Colleagues have done over the years have improved the 

lives of Native Americans—our people live longer, we have greater access to health 

care and educational opportunities, poverty is being reduced, and we are hopeful for 

the future and our place in society as contributing members. Thank you for all you 

35

1 In 1971 when the Alaska Native Claims Settlement Act (ANCSA) was enacted by the Congress, Alaska was a fledgling state, not even 15 years old. 

have done and the sacrifices you have made in your lives to take on public service. 

It really matters and we appreciate it more than you will ever realize. 

Now, I will focus on the 8(a) program. First and foremost, it is important to recognize that the 8(a) amendments, as they relate to Alaska Natives, are the result of 

congressional amendments to ANCSA, and to further understand that ANCSA is a 

fundamental federal law that was intended to establish a fair and equitable relationship between the Federal Government and Alaska Native people. ANCSA is the 

foundation of much of our economic and legal relationships with the Federal Government, but it is much more than that. ANCSA embodies most of our economic and 

relational agreements with the Federal Government, agreements approved by the 

United States Congress for which our people relinquished valid legal claims to lands 

and resources in Alaska, our homeland. Our leaders took a tough stand. We accepted a settlement that freed the State of Alaska 1 to receive its lands and the Federal 

Government to manage its lands. 

And we should recognized that the citizens of the United States, and the Federal 

Government, received a bargain: by settling Alaska Native land claims, title to 

lands in northern Alaska was cleared, paving the way for the Trans-Alaska oil pipeline to be built, which this summer will deliver the 18th billion barrel of oil to domestic consumers, from U.S. fields. These 18 billion barrels of domestic oil are directly attributable to the agreements that were made possible by ANCSA. The fields 

of Prudhoe Bay alone have delivered several hundred billions of dollars of goods, 

services and taxes to the Federal Government. ANCSA made this possible by addressing the status and claims of Alaska Natives. 

ANCSA remains one of the largest and most complex land settlements in U.S. history. In December 1971, after years of effort by Members of the U.S. Congress and 

Alaska Native leadership, the Alaska Native Claims Settlement Act (P.L. 92–203) 

was signed into law by President Richard Nixon. In return for extinguishing their 

aboriginal claims to Alaska’s 360 million acres, Alaska Natives were allowed to retain fee simple title to 44 million acres of land and received $962.5 million for lands 

transferred to the State, federal and private interests. The Act created 13 regional 

for-profit corporations and more than 200 village corporations to receive and oversee 

the land and monetary entitlements. It took decades to get the promises of ANCSA 

implemented. 

The structure of ANCSA, and the creation of corporations to be owned and operated by Alaska Natives, was—and remains—of lesser importance to Alaska Native 

people than protecting our land and our traditional way of life, and surviving in the 

modern world. 

The basis of the treatment of Alaska Native corporations under the Small Business Act stems from amendments to ANCSA and to the Small Business Act—it is, 

today, a critical component of the Alaska Native Claims Settlement Act. In 1986 and 

1987, I was working on behalf of AFN in Washington D.C. on a package of amendments to ANCSA called the ‘‘1991 Amendments’’ when the 8(a) amendment was debated and enacted. 

For those unfamiliar with ANCSA, the ‘‘1991 Amendments’’ were a result of five 

years of internal discussion and debate within the Alaska Native community, and 

with Members of Congress. This legislative effort modified ANCSA and addressed 

fundamental land protections, the ability to provide special benefits to our Elders 

and to our younger generations, and the legal structure of Alaska Native Corporations. For example, one major provision would have allowed Native corporation 

stocks to be sold on the public market. 

We knew at the time of the debates regarding the 1991 amendments that, if 

ANCSA was allowed to remain as it originally was enacted, the Alaska Native people were in danger of losing their corporations, those legal entities created by Congress to manage Alaska Native lands and resources. 

Amendments to the SBA 8(a) program were included as part of the ‘‘1991 Amendments’’ because the program was viewed as necessary to the ability of Native Corporations—based in remote, rural areas of Alaska—to transition into the U.S. business world. And, as has been the experience of many minority peoples in our nation’s history, we saw that Natives corporations were sometimes excluded or ignored 

as potentially viable business entities. 

The ‘‘1991 Amendments’’ were fully considered by Congress in 1987, passed without opposition, and were signed into law. The 8(a) amendments also were passed 

by Congress without opposition and signed by the President. As you well know, the 

8(a) amendments provided contracting authority that applies equally to all Native 

36

2 In 2004, AFN commissioned a 30-year trend analysis on all major socio-economic and health 

indicators of the Alaska Native population. The University of Alaska, Institute of Social and 

Economic Research prepared the report. Key findings show that Alaska Natives have more jobs, 

higher incomes, and better living conditions, health care and education than ever. But they reAmerican tribes as well as Alaska Native corporations. The contracting opportunity 

available under 8(a) is not unique to Alaska Native corporations. 

Also, it is worth considering the basis for the distinction between laws differentiating between Native American relationships and others. In a great many cases, 

Native Americans entered into agreements with the Federal Government relinquishing ownership and use and occupancy of lands for treaties and statutes. In our 

case, Alaska Natives relinquished claims to approximately 320 million acres of land 

in Alaska with the passage of ANCSA. The agreements embedded in these treaties 

and statutes across the United States properly provide a basis for differential treatment under the law. Congress can properly distinguish between Native American 

and non-Native American contracting opportunities. Congress’ authority to do so 

comes from the unique status of Indian tribes under federal law and the plenary 

power of Congress to legislate on behalf of federally recognized tribes and Alaska 

Native corporations. This principle is well established in federal law and was recognized by the United State Supreme Court in a leading case, Morton v. Mancari,

417U.S. 535, 551–52 (U.S. 1974). The Supreme Court has upheld legislation that 

provides for unique application of laws to Native Americans due to the unique history and role of dealings with Indians and has stated that as long as the special 

treatment can be tied rationally to the fulfillment of Congress’ unique obligation toward Indians, legislation regulating commerce with Indian tribes will not be disturbed. Mancari, 417 U.S. at 555. That is the correct and constitutional basis for 

the Indian and Alaska Native treatment under the 8(a) program. 

To look back now and seek to separate the economic treatment of Alaska Natives, 

or any other Native American tribe or group, from the settlement of aboriginal 

claims would not be just or fair. As you meet here today, in this hearing, not all 

the lands that were promised to Alaska Natives have been conveyed to our people 

and our corporations 40 years after ANCSA was enacted. What is the net present 

value of the lost use of our lands, delayed in some cases by decades? 

To Alaska Native people, ANCSA is as important as the fundamental human 

rights statutes of the Civil Rights Act and Voting Rights Act. ANCSA is based on 

recognition of the validity of the claims of Alaska Natives to lands and waters in 

Alaska, where our people resided for thousands of years. To pull out pieces of the 

Act now and examine them out of context would be wrong. ANCSA corporations are 

not merely for-profit corporations; they are stewards of the Native homeland, sponsors of education and training opportunities, employers of ‘‘first resort’’ for our aboriginal people. There is so much more tied into these corporations than some people 

understand. Most of our entire land base—our land is key to our heritage, culture 

and future—is held by the corporations, just as Congress intended in passing 

ANCSA. The corporations have broader responsibilities than many other corporations, for in their hands are our settlement lands, lands which we can not afford 

to lose. Alaska Native corporations were not started as ordinary corporations, and 

were not intended to function as ordinary corporations. 

These corporations were required to be formed by federal law, ANCSA, a requirement not applied elsewhere in other aboriginal land settlements, or to many, if any, 

other corporations in America. The corporations were a foreign-type entity to our 

people, but we worked hard, and did what the law instructed us to do with the corporations. Our people struggled in many cases to overcome social and economic disadvantages of operating new corporations in what to the business world is remote 

Alaska, and to run the corporations as intended. Our people persevered to seek the 

success Congress intended. Contracting under section 8(a) is, and has been an important aspect of the success of some of our ANCSA corporations, and through them, 

we have seen important socioeconomic benefits to thousands of our people, as intended. Again, our corporations hold the keys to our heritage, our lands, and economic base, which are essential to our well-being. 

As these corporations began to succeed, many of the indicators of a healthy society 

began to improve. For example: Alaska Native life expectancy for both men and 

women has increased, infant mortality has decreased, poverty has been reduced 

from over 60 percent to 20 percent—a major accomplishment. Key findings in a report commissioned by AFN shows dramatic improvements in positive indicators; 

dramatic decreases in negative indicators; and a continuing thread of disparity between the Alaska Native population and non-Alaska Native population, both in 

Alaska and in the U.S. in all indicators. 2 Overcoming this disparity must be a targeted focus of all our efforts. 

37

main several times more likely than other Alaskans to be poor and out of work. All the economic 

problems Alaska Natives face are worst in remote areas, where living costs are highest. AFN 

has made the request available to Members of the Committee. 

Of course, AFN does not assert that ANCSA and our Native corporations are the 

source of all the improvements in the last thirty years. Other significant impacts 

on well-being have been federal and state appropriations in health, education and 

social services; and the Alaska Permanent Fund dividend. However the impacts of 

ANCSA are very substantial. 

I believe that it may be tempting to look at some of the greatest success of Alaska 

Native Corporations and see only success. From where we started, with small, new 

start-up corporations, beginning with a people that had not operated corporations 

before, our corporations have come a long way. We have asked other members of 

Congress and other committees not to skip over what we started with, living and 

working in what is to most businesspeople the most remote corner of America, in 

one of the harshest climates in the world: A history of extreme prejudice toward, 

and lack of understanding of, our people. A history of wariness toward a people who, 

in a great many cases, literally spoke a different language than most businesspeople 

in America. A history of exclusion from genuine business opportunity. And a history 

of no business history with ‘‘mainstream’’ large economies in America. This is clearly 

a case study of an economically disadvantaged minority business. That is why 

ANCSA and the Small Business Act were amended to provide for economic opportunity for our corporations. These amendments are the basis of the 8(a) program 

as it applies to Alaska Native Corporations. 

SBA 8(a) contracting has created the benefits that it was intended to create. Our 

corporations have built up a capacity that did not exist before. Methodically, efficiently and responsibly, these corporations have built up a capacity to provide employment to Native shareholders, provide training to young people, and develop and 

offer scholarship opportunities. Our corporations have built up a capacity to provide 

jobs and help young people see what it takes to succeed in modern America. They 

have built, as intended, a managerial and business expertise that can carry forward. 

They have helped create an economic stability where none existed before. Our people take pride in this work, and feel strongly that this is our work, not the work 

of others. It is an accomplishment to behold, one which is worth understanding in 

full for its roots, path and basis in law, including Native American law. 

We believe that the laws governing the 8(a) program provide the correct balance 

of interests and provide for an effective small business program. Native American 

participation in the 8(a) program represents less than 2 percent of the total contracting undertaken by the U.S. government. When the regulations need updating, 

the SBA and federal agencies have shown that they have the authority and ability 

to modify the program where needed. New regulations for the 8(a) program were 

published in a Final Rule in February of this year and took effect last month. These 

regulations provide for changes in the joint venture requirements, require more assistance from mentors in the mentor-prote ́ge ́ relationship, and require greater reporting on the benefits to Native members and communities resulting from 8(a) contracts, including the reporting of dividends, funding of cultural programs, employment and other programs. We should give the changes of this new regulation a 

chance to work and then assess what else needs to be done. 

As I testified last year to the Subcommittee on Contracting chaired by Senator 

McCaskill, what happens with Alaska Natives has an impact everywhere: our homeland, our traditional way of life, our economic future—so much depends upon our 

relationship with the U.S. Government, and the development of our Native people 

and our corporations. If they fail, we could lose everything. 

I look at our Native corporations’ participation in government contracting as a repudiation of federal termination and assimilation policies of previous decades. With 

our participation in the SBA 8(a) program, our Native corporations become integrated in the economy. At the same time, we retain our culture and identity; we create jobs; and control the amount of involvement or non-involvement. I view the 

greatest benefit of our participation in the SBA 8(a) program is the capacity building, which is occurring and continues. We are both contributing to the U.S. economic 

recovery and building our capacity to help more. We are involved in nation-building 

work, which benefits all Americans. We work hard, we do quality work within budget and on time, or we do not receive contracts. We build tight financial and accounting systems because we want to work responsibly and according to the law. We are 

developing our people to be responsible U.S. citizens capable of solving any problems 

or crisis and working to build our country. 

I believe strongly that the success of the program is so good that it could be considered a national model for integrating ethnic minorities into the modern global 

38

economy. Several areas around the world, which I am sure you monitor, could greatly benefit from the experiences we are gaining in building a better base in our economy for our indigenous people. The upheavals in places like Tibet, while very complex and historical in root causes, reveal the long-standing ethnic tensions and 

weakness in China’s social and economic structure. Unlike the Soviets, who dealt 

with potentially problematic ethnic minorities in part by moving them en masse

from their homelands, China left its ethnic minorities largely within their traditional lands. Ethnic tensions arise and are exacerbated by disparities in social status and economic situations in these two provinces, as well as elsewhere in the 

world. The experience of Alaska Natives, our separation of economic and political 

organization, our working relationships with the state and Federal Governments, 

are all models, which could have application in other parts of the world. 

In my view, together we have done many things right in the United States and 

Alaska. The ultimate benefit of the SBA 8(a) government contracts is the capacity 

building and the nation building work. It is the integration into the larger economy 

and the opportunity to contribute which is the genius of the U.S. approach. It hasn’t 

been easy, and it is a lot of continuous work by our people, with continual adjustment, but we are on the right path. 

As we look at 2011 with a slow recovery and serious federal budget issues, we 

know we are looking at a new reality. The federal fiscal environment has changed. 

We are in the midst of a global economic realignment and recovery. There is a critical need for the U.S. Congress and Administration’s recovery act investment and 

further action taken and planned. The SBA 8(a) program is a proven way to move 

resources quickly and to get things done and employ people. With national unemployment figures remaining stubbornly high—we all must be concerned. 

As we look towards a post-crisis recovery and how Native Americans, including 

Alaska Natives are helping and can help in the recovery, we request an opportunity 

for a dialogue with the appropriate Congressional committees on strategic, opportunity expanding ideas. We want to keep developing economic tools, infrastructure, 

expanding education and training for our people, and developing our institutions 

and organizations to be effective in the post-crisis economy and world. It will be a 

changed world, and we want to be ready for it. 

We want to maintain our Native identity, our cultures and homelands. We want 

life opportunities and choices. We want to continue to build capacity within all our 

Native corporations, and tribes and to be known for our good governance and leadership. 

The continuation of the SBA 8(a) program helps us accomplish our aspirations 

and goals, and helps our country. We would be pleased to continue a dialogue on 

this and other matters of concern to this Committee. Mr. Chairman, and Members 

of the Indian Committee, we sincerely request and invite you to see what a difference contracting has made for our people in Alaska. Please come to Alaska and 

witness for yourselves and for the United States Senate what a difference the success of these corporations has made. 

Thank you.

The CHAIRMAN. Welcome, Mr. Mallott. 

Mr. MALLOTT. Thank you, Mr. Chairman. It is so good to see you. 

Members of the Committee, I thought that I would share with 

you a little bit of history. I was involved with the passage of the 

Alaska Natives Claims Settlement Act. I was very young. 

The involvement took me here to the United States Senate as an 

aide to one of our U.S. Senators, specifically focused on land claims. 

I went back and helped found the Alaska Federation of Natives. I 

was on the first board of directors of Sealaska Corporation, the 

Alaska Natives Claims Settlement Act corporation for Southeastern 

Alaska. I was CEO of Sealaska for 10 years. I left the corporation 

for seven years, came back as a member of the board of directors. 

And I give you that background just to say this. The ANCSA 

Corporations are incredibly unique institutions. They have the obligations that any for-profit corporation have. We were created out 

of whole cloth to be for-profit corporations, having all of those tremendous obligations and responsibilities, not the least of which is 

a legal fiduciary obligation to our shareholders who are our tribal 

39

members, who are able to sue us, bring action against us at any 

time if we do not meet strict legal definitions of meeting our obligations. 

And almost all of those obligations tend to be financial and business-oriented. We have tried to make the institutions different in 

the sense that we can accomplish what we must in the competitive 

marketplace, in the free enterprise system. And in that marketplace, we are virtually naked. We have to live by all of the laws, 

all of the precedents, every aspect of all of both the richness and 

the complexity that drives our free enterprise system. 

We cannot rest for a single day for fear that competitive or other 

factors could overwhelm us. We had to learn that very, very quickly. 

At the same time, we have tried to make corporations responsible 

institutions for our shareholders as native people. And we have 

done it, as has been explained to you, in many, many ways. I just 

mentioned, Mr. Chairman, that this struck home to me in 1990 

when I received a call from Herb Kane from Hawaii and he said, 

Byron, I have been asked to call you because I understand that 

your corporation has very large trees. And to make a long story 

short, we are trying to build a replica of a traditional Polynesian 

voyaging canoe and we would like to purchase trees from you. 

And as we chatted, he said the reason we want to do this is to 

strengthen who we are, to build our traditions, to re-inspire our 

own culture so that our children can meet the future in a way that 

allows them to have all of the tools necessary, but build fundamentally on who they are as Native Hawaiian people. 

And I said to Mr. Kane, that is exactly what we are wrestling 

with in these corporations. We are in our own canoe and we are 

trying to sail it in the same direction as Native Hawaiians seem 

to be seeking. 

And so we made a gift of those logs to Native Hawaiians and it 

changed our lives in some very powerful ways. We have had to survive in an incredibly competitive world, while trying to maximize 

the financial benefits to our shareholders, but not just financial 

benefits; again, the other things: scholarships and education and 

culture and trying to maintain our communities on our homeland. 

We are the last American first peoples still living in our own homelands, literally still living on our own homelands. 

And so the passion for our future is carried by these institutions, 

but in some powerful ways the institutions are but a tool, but a tool 

that we take very, very responsibly and we view our obligations 

with great significance. 

When Senator McCain was asking the questions he was asking, 

the thought struck me that, for example, Sealaska, and we have 

had many success stories. We are a multi-$100 million corporation. 

We have done this we have done that. But we have had our share 

of difficulty for sure, as any competitive business does over time. 

But we have survived and we make every attempt to prosper. 

But we were among the first business corporations in the Country to bring with the United States Government a recall action successfully against several of our own employees who were seeking 

to derive private benefit from their role with our corporation. And 

we put them in prison. 

40

We have always been very, very sensitive to others taking advantage of us. In some ways, it is in the DNA because for so many generations, that was a reality. But a program like 8(a), all of the 

other range of opportunity for ANCSA Corporations, most of which 

exist in the private marketplace, not in governmental programs, 

are important ultimately to our existence not as corporations, but 

as native peoples who want the same kinds of opportunity, who 

seek the same life that every other American can seek. 

And I just want to say finally, Mr. Chairman, that it sears my 

soul when I hear about and know of abuse within our own institutions. And I know that it affects every native person involved in 

8(a) in anything we do in the very same way. And for the program, 

for the regulatory structure to work, for the statutory structure to 

work properly, we want to be right there at the table with you. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Mallott follows:]

41

PREPARED STATEMENT OF BYRON I. MALLOTT, DIRECTOR, SEALASKA CORPORATION


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The CHAIRMAN. Thank you so much for your statement. This is 

part of the reason also we are moving quickly on 8(a), and we certainly want to improve the system, and this is one way of beginning to do that. 

Thank you very much. We really appreciate your statements. 

Because of limited time, I will forego my questions and submit 

it in the record. By the way, your full statements will be included 

in the record. 

Senator Murkowski? 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

My questions will be limited here today. 

Jackie, I wanted to ask you to respond to an issue that Senator 

McCain raised. And this was about the economic disadvantage as 

a condition to participating within the 8(a) Program. If you can just 

speak to this issue. Why do you think Alaska Natives are not required to demonstrate an economic disadvantage as a condition? 

And then a subsequent question would be: Should all tribes be included in the designation of economically disadvantaged, rather 

than requiring that each tribes proves it? 

I would like to clear up the air on that a little bit. 

Ms. JOHNSON-PATA. Thank you, and thanks for that question. 

I am going to start by saying yes, I think all the tribes should 

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porations have, being economically disadvantaged. And the reason 

being, first of all, just look at the history of our communities and 

where our communities are placed. The majority of them are in 

rural remote areas. 

Now, if you want to measure economic disadvantage, what is 

that measurement? Is it a measurement about the level of community poverty? Is it the level of income that comes in? How do you 

take into account the access to proper health care? How do you 

deal with the fact that we have the highest number in the Nation 

of high school dropouts; that we still have the infant mortality 

rates and the low life expectancy rates; that we still have the 

health issues and concerns? Our transportation systems are still 

considered the most unsafe transportation system. 

I can go on and on, but you would have to account for all those 

things because they are all components of being economically disadvantaged. It is not a poverty rate. It is not an income level. It 

is a historic problem in our communities and it is going to take 

generations to be able to change that dynamic. 

And that is why I think that trying to do that in Alaska where 

you may have maybe a corporation that might have one community 

that is one of our three more urban centers, but the rest of them 

are in our remote villages. And how can you make that measurement for a region? It is not any different than the challenge you 

have of how you make that measurement for a tribe. 

Senator MURKOWSKI. When you think about how you measure, 

how you account for, we have a system, and the IG, the gentleman, 

I have forgotten his name, I am drawing a blank, but suggested 

this is all about following the money. 

I think we recognize in Alaska just measuring things by dollars 

oftentimes is not a sufficient or an adequate measurement. Certainly, when we think to the benefits that are conferred to Alaska 

Natives through this program, how do you put a benefit on preservation of a culture, preservation of a language, that education opportunity? 

Julie and Byron, I truly appreciate both of you being here. Thank 

you for traveling so far. Thank you for your words and for your 

leadership. You have been a leader within the State, Julie, for decades now, as we try to build out our Alaska Native corporations, 

Byron, your history that you have recounted here, and truly the 

beginning of so much governance within the State of Alaska and 

what you have helped to build out. And I think it is important to 

keep this all in perspective and in context. 

One of the things that I think is often overlooked is when we talk 

about an ANC, an Alaska Native Corporation. Well, we all have an 

understanding of what a corporation is. A corporation is like GE. 

An Alaska Native Corporation and the structure and how it works 

is different. 

And with the Land Claims Settlement Act basically you are told, 

okay, go into business, without any real assistance there to provide 

for those opportunities. And so when I mentioned in my opening 

statement, there were some stumbles. I think we recognized that 

we were pushing a lot of growing into a very short time period 

there. 

55

But how difficult has it been to really find viable business opportunities? Julie, you have mentioned that without the 8(a) Program, 

we would simply not see the level of success that we have within 

our native corporations. But again, how do you build out a successful business opportunity in a small remote village like Scammon 

Bay or Chevak or Quinhagak or down there in Southeast, Yakutat. 

If you can just very briefly speak to that, and I know my time 

is limited here. 

Mr. MALLOTT. Well, number one, all shareholders are disadvantaged in using the kind of definition that Jackie used for sure. We 

without question utilized 8(a) as another tool to help deal with that 

disadvantaged circumstance. It is among a number, and to create 

our corporations and give them the kind of ability to be successful 

in the marketplace, such diversity is important. 

We began in Alaska. We will never leave Alaska. The first efforts 

of ANCSA Corporations for more than a generation was to create 

opportunity in our own communities and within our own State. We 

felt a tremendous obligation. 

We found it necessary both for competitive and business survival 

reasons to move out into the corporate world and to seek enterprise 

wherever it might take us, but always for the purpose of creating 

opportunity for our shareholders. 

And I don’t know how else to answer it other than to say we I 

believe always feel like we are on the razor’s edge. We have to be 

extremely competitive in all aspects of our business. At the same 

time, we have this tremendous obligation to our shareholders as 

native peoples, as people. 

And I think it is important to note in looking at ANCSA that we 

took that obligation upon ourselves. ANCSA is very clear in saying 

that this is a legal essentially settlement of land claims; that the 

Federal Government and other institutions in their roles and their 

obligations to native peoples both as Indian peoples and as citizens 

of the United States is not diminished one iota by the passage of 

the Alaska Native Claims Settlement Act. 

But being who we are and knowing what our circumstance was 

and what our potential is, the ANCSA Corporations live that obligation. I don’t know how else to articulate it. 

Senator MURKOWSKI. I thank you. 

Mr. Chairman, I know that we have a third panel and I want 

to give deference to them, but Julie, if you have something you 

want to wrap up with? 

Ms. KITKA. Yes, I just have a couple of things. One, on the disadvantaged, recently we had done a tracking study by decades of 

the socioeconomic well being of Alaska Natives. And you can see 

clearly from the data the whole thread of disparity on every major 

indicator. And I would suggest that it doesn’t even make any sense 

to carry on with whether or not you are included as disadvantaged 

or not disadvantaged until you see that disparity gap closed on all 

those major indicators. 

Clearly, there has been substantial improvement in the living 

conditions and socioeconomics of Alaska Native people. You can see 

the poverty rate going from in the 60 percentile down to 20 percentile. You see infant mortality dropping down. You see our elders 

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ments in the last 30 years, and we are so grateful for the Federal 

presence and the role that it had helped us do. It has totally made 

a difference. 

But to say you are not disadvantaged, I would wait until you see 

that disparity gap by statistics, by numbers, disappear, and then 

revisit that. 

As far as the results of 8(a) government contracts, I will use one 

regional corporation as an example. A small regional corporation, 

small population, when they got started right on our land claims, 

one of their first businesses was fishing because most of the board 

members were fishermen and they knew how to fish. 

Well, they didn’t know how to market fish. They didn’t know how 

to deal with international pricing. And so they bought a cannery 

and all the stuff, and then they lost money. They hired the wrong 

people. Then they got into timber and they did every major area 

that they were familiar with as people. And they would hire people 

and it would be the wrong people. They would rip them off. 

If it hadn’t been for 8(a) for this regional corporation and for 

them getting into it and having to have the tight financial systems, 

the accounting systems, the top security clearances their managers 

need to have, everything in that, this corporation, in my judgment, 

would have had to sell its land back to the Federal Government 

and would have been buried under debt where the shareholders 

would have nothing of value. 

But instead, the 8(a) Program was available for them to build the 

capacity with a dedicated managerial team that put their resumes 

on the line, that built partnerships, and began to build a track 

record. And they are a stunning success now. 

And like I said, that is one that I am familiar with, and they 

clearly know they need to diversify beyond just government contracting on that, but clearly the program is outstanding and there 

needs to be more support of the program. And we need to make 

sure in this round of budget cuts in the Congress that you don’t 

diminish the money going to SBA to continue their role of oversight 

because we don’t want to go backwards on that. 

But there is no doubt in my mind that this is one of the most 

successful programs we have ever seen. 

Senator MURKOWSKI. I thank you all. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator Murkowski. 

Senator Begich? 

Senator BEGICH. Thank you, Mr. Chairman. In light of the time, 

I just first want to say to Jackie, Julie and Byron, thank you for 

being here. I think the questions and the back and forth that you 

had with Senator Murkowski really put out on the table a lot of 

the reasons why 8(a)’s exist. 

To be very frank with you, I wish Senator McCain would have 

stayed because it is nice to talk to the regulators, but it is more 

important to talk to the people who actually do the business and 

how these resources are expended, and what you do with an 8(a) 

corporation. 

Maybe we will able to take some of this testimony you have 

given and deliver it to his office because I think it would be very 

important because I think there is a misunderstanding between 

57

tribes and ANCs and how it all operates and the work and where 

the resources go. 

So I will have some questions that I will send to you folks for 

the record, but I just wish that he was here to hear this because 

I think this is the piece of the equation that never gets the full 

story, and you have done a good job today. 

So thank you all very much. 

Ms. JOHNSON-PATA. Thank you. And we will follow back up with 

his office. 

Senator BEGICH. I knew you would, Jackie. 

The CHAIRMAN. Thank you. 

Senator Crapo? 

STATEMENT OF HON. MIKE CRAPO,

U.S. SENATOR FROM IDAHO 

Senator CRAPO. Thank you, Senator Akaka. 

I will forego asking any questions of this panel, but I would ask 

the indulgence of the Chairman if I might use a few minutes of my 

questioning time to introduce one of the witnesses on the next 

panel who is from Idaho. 

The CHAIRMAN. Thank you so much for being here. 

I want to thank this witness panel very much for your responses 

and your testimonies. Thank you so much for being with us. 

Now, I would like to invite the third panel to the witness table. 

Let me call on Senator Crapo for his introduction of the Chief. 

Senator CRAPO. Thank you, Mr. Chairman. 

As I just indicated, one of our witnesses today on the third panel 

is the Honorable Chief James Allan. Chief Allan is a very good personal friend of mine. I have worked with him on many issues over 

the years, and it is an honor for me to introduce him here to you. 

Before delving into the specifics of this hearing on the 8(a) Program, I want to commend Chief Allan for his strong leadership on 

issues of importance to both Idahoans and the American people. 

With a name like Chief, he has had a lot to live up to and has 

literally been Chairman of the Coeur d’Alene Tribal Council and 

heavily involved in leadership in Idaho and in tribal matters for a 

long time, and I expect will be for a long time to come. 

I will just submit for the record the rest of my introductory statement. I was going to go through something which I think Chief will 

do during his testimony, the experience of the tribe in Idaho with 

the 8(a) Program and how critical the 8(a) Program is to them. But 

I will wait again for my opportunity during questions and answers 

to get into that in a little further detail, but welcome, Chief. 

[The prepared statement of Senator Crapo follows:]

PREPARED STATEMENT OF HON. MIKE CRAPO, U.S. SENATOR FROM IDAHO

Thank you, Mr. Chairman and Vice Chairman Barrasso for holding this important 

hearing on the role of the SBA 8(a) program in enhancing economic development 

in Indian Country. I appreciate the opportunity to introduce Coeur d’Alene Tribal 

Chairman, Chief James Allan, who is appearing for this committee today as a witness. It’s good to see you, Chairman Allan, and I am glad that the Committee will 

have the opportunity to hear your testimony. 

Before delving into the specifics of this hearing and the 8(a) program, I want to 

commend Chairman Allan for his strong leadership on issues of importance to both 

Idahoans and all Native people. With a first name like ‘‘Chief’’, he has dedicated 

his professional career to the high expectations bestowed upon him at birth. 

58

In his tenure as Chairman of the Coeur d’Alene Tribal Council, Chief’s responsibilities include leadership decisions that guide the direction the Tribe takes regarding cultural, historical and natural resources, among other things. 

Today, Chairman Allan will be testifying to the tremendous success that the 

Coeur d’Alene Tribe in Idaho has had under the SBA Native 8(a) program. 

Specifically, the Committee will hear the story of how in just the first year with 

the 8(a) designation, Coeur d’Alene’s tribally-owned company, Echelon LLC, received 

a contract worth almost 40 million dollars and put over one hundred people to work 

in an area with the highest unemployment and poverty levels in the state. I had 

the tremendous opportunity to tour the plant last year and saw firsthand the benefits the program has had on the Tribe’s economy and throughout north Idaho. 

However, you will also hear the story of how in this past year, Echelon LLC was 

forced to lay off 70 of those Native American employees after recent disparagement 

caused government contractors to pull out of the program, forcing the Tribe to lose 

out on a multi-million dollar contract. The basis for these attacks is the premise 

that Native 8(a) is abusing sole source contracting, despite the fact that only one 

percent of all federal contracting dollars are awarded to Native 8(a) businesses. 

As you will hear, the intent of Native 8(a) is to allow minority-owned businesses 

a chance to compete against the large corporations in the federal contracting market, effectively helping them develop into robust and successful businesses. This has 

been the case in my state, and I would urge you to listen closely to Chairman Allan 

and the Coeur d’Alene Tribe’s personal successes with this program. Thank you, Mr. 

Chairman.

The CHAIRMAN. Thank you, Senator Crapo. Your opening remarks will be included in the record. 

I would like to welcome Chief Allan, who is the Tribal Chairman 

of the Coeur d’Alene Tribe; also Lance Morgan, Chairman of the 

Native American Contractors Association and President and CEO 

of Ho-Chunk, Incorporated; and finally, Larry Hall, President of 

S&K Electronics. 

Welcome to all of you. 

Mr. Allan would you please proceed with your statement? 

STATEMENT OF HON. CHIEF JAMES ALLAN, CHAIRMAN, 

COEUR D’ALENE TRIBE 

Mr. ALLAN. Mr. Chairman, thank you so much for inviting me to 

this important Committee, thank you Members of the Committee. 

And thank you, Senator Crapo, for that kind introduction. 

I wanted to start off just by saying why we are here. Why we 

are here is again perceptions, miscommunication, the bogeyman, a 

lot of the same issues I have faced my whole life growing up as a 

native man, with Main Street America always looking to paint a 

big target on Native America’s back saying we are the problem, 

why everything exists. 

Being the tribal leader for the last six years of the Coeur d’Alene 

Tribe, I have seen it all: the arguments against gaming, 8(a), whatever it may be. There is always something or somebody out there, 

some bogeyman in the corner waiting to spread the misconceptions 

of welfare, hand-outs, everything under the sun. 

And quite frankly, it is disheartening because native peoples, the 

Coeur d’Alene Tribes, my job is to look out for not only my people, 

but also the people of the community. I come from North Idaho, a 

heavy logging industry area. A lot of the logging jobs have been 

wiped out. We have been hit hard. 

And so the tribe took it upon itself to look out for everybody, Indian and non-Indian alike. Why? Because if we succeed as a whole, 

everybody succeeds. And that is what we have always done. 

59

Five years ago, we had high hopes. We opened up Echelon. We 

started building the big fuel bladders for the Army, a big contract. 

In one year’s time, we went from four employees to over 100. But 

sadly, about two years ago, we started hearing all the bogeyman 

stories again that 8(a) was somehow bad, somehow needed to be 

fixed. So it really had a devastating effect on some of the contracts 

we went after. 

We spent two years on research and development; spent a lot of 

money to get a pump contract. We thought we had it. At the last 

minute, the Army pulled out. We got a memorandum saying to 

overlook 8(a) companies, and quite frankly it ticked us off. We 

spent all that money. We spent two years doing that. We invited 

them to come down and take a look at what we are doing. But they 

just said they bypassed it. 

I wanted to really point out the facts. There are a lot of comments here today. I know some of your colleagues brought up some 

numbers, but let’s put that in perspective. The numbers really are, 

while 37 percent of Federal contracting is sole-sourced, only 1 percent of all Federal contracting goes to 8(a). And I ask you to do the 

math, and those are the facts. I mean, we didn’t make that number 

up. Those numbers are real. And 25 percent of all contracts still 

go to five of the biggest companies in the United States, and not 

8(a), not native companies. 

So with that, I just wanted to again thank you so much for having me here today. I don’t want to take up too much of your time. 

I know your time is really busy. My comments have been submitted for the record. I stand for any questions that you may have 

and I thank you so much for having me here again. 

[The prepared statement of Mr. Allan follows:]

PREPARED STATEMENT OF HON. CHIEF JAMES ALLAN, CHAIRMAN, COEUR D’ALENE

TRIBE

Dear Chairman Akaka, 

On behalf of the Coeur d’Alene Tribe, I would like to thank you for the opportunity to present testimony today regarding the role that the Small Business Administration’s 8(a) Business Development Program plays in enhancing economic opportunities in Indian Country through tribal government-owned and Alaska Native 

Corporation-owned firms participating in this crucial SBA program (hereinafter referred to collectively as ‘‘Native 8(a)’’). 

I would also like to commend you and this Committee for the efforts you have 

undertaken to improve the lives of Native people in this great nation. We appreciate 

your dedication to fighting the good fight for all of Indian Country. 

The title of today’s hearing is ‘‘Promises Fulfilled.’’ Sometimes it is easy for people 

to forget about the ‘‘promises’’ US Presidents and members of this body have made 

to Indian people. It is also easy to lose sight of the calculated public policy goals 

of programs like Native 8(a) that were carefully created in furtherance of fulfilling 

those promises. My testimony today will hopefully provide a useful perspective for 

this Committee about such promises and how recent unwarranted attacks on Native 

8(a) have ignored and broken those promises, with detrimental economic effects. 

As Chairman of the Coeur d’Alene Tribe, one of my goals has been to educate 

members of the community, the media and elected officials regarding the facts about 

Indian Country. All my life I have had to deal with these misperceptions and misinformation. One of the biggest challenges we face as Indian people today is overcoming the misconceptions of mainstream America, often perpetuated by the national media. It is these misconceptions and the ignorance of facts that provide the 

impetus behind the recent attacks on Native 8(a). 

The Coeur d’Alene Tribe started a manufacturing company about 5 years ago 

called Echelon LLC. The company was certified as a Tribally-owned firm in the SBA 

8(a) program in 2007. In just over a year, our 8(a) company grew from 4 employees 

60

to over 100 employees primarily due to the award of a multi-million dollar 8(a) manufacturing contract. The company expanded into three facilities on the reservation 

with over 40 percent of our employees being Native American. The Coeur d’Alene 

reservation also happens to be an area historically with the highest unemployment 

and poverty levels in the state. The 8(a) program helped our company to breathe 

a new life and hope into a struggling reservation community. 

In 2008–2009, we started hearing about scrutiny this program was receiving from 

members of Congress, primarily Senator Claire McCaskill. Multiple hearings and investigations of the Native 8(a) program ordered by Sen. McCaskill have been conducted in an attempt to expose some ‘‘loophole’’ being abused by Native 8(a) in federal contracting. Press releases vowing to bring accountability to government contracting by doing away with the benefits of Native 8(a) have consistently been 

issued by her office, even taking credit for the quiet inclusion of Section 811 to the 

National Defense Authorization Act of 2010. It is my understanding that another 

piece of legislation sponsored by Sen. McCaskill aimed at gutting Native 8(a) has 

been introduced. 

The basis for these attacks is the erroneous premise that Native 8(a) is abusing 

sole source contracting. Interestingly, the facts show that roughly 32 percent of all 

federal contracting dollars are awarded non-competitively (sole source). Yet, only 

about 1 percent of all federal contracting dollars, competitive and non-competitive 

combined, are awarded to Native 8(a) businesses. This means that Native 8(a) is 

being unfairly and wrongly singled out. 

While some of these ill-conceived and misguided attacks on Native 8(a) have been 

unsuccessful, others have had devastating effects on tribal economies. Government 

contracting officials are shying away from using Native 8(a) because of the scrutiny 

and negative attention surrounding around it. 

The Department of Defense has unfortunately bought into this rhetoric, issuing 

memorandums effectively urging their government contracting officials to use the 

Native 8(a) sparingly. These contracting officers have several procurement options 

available when they put federal contracts out for bid. They do not have to use Native 8(a) businesses or any small businesses for that matter and a resultant chilling 

effect has caused Native 8(a) businesses to lose millions of dollars in government 

contracts. Select members of this Committee sent a letter after Section 811 was 

passed warning that its new requirements could make contracting officials reluctant 

to award contracts to Native 8(a) firms. Sadly, this has come to fruition. 

While I do not expect that many contracting officers would go on the record to 

confirm this reluctance or admit to receiving a directive against using Native 8(a) 

firms, the evidence already exists. Our company has seen multiple sizeable contracting opportunities pulled out of the 8(a) program to be awarded through other 

contracting vehicles, some of which cancelled after years of R&D and thousands of 

dollars invested in receiving the award. In the last year, we have been forced to lay 

off almost 70 percent of our workforce. 

The ability of our tribally-owned 8(a) company and other similarly situated firms 

to secure federal contract and compete in the federal marketplace is being diminished. Native 8(a) has been under a systematic attack that has reduced the amount 

of jobs and revenue for native economies, most of which located in the most povertystricken areas of the nation. 

I ask members of this Committee to implore your fellow members of Congress to 

preserve and expand the SBA 8(a) program. This program is one of the few government programs providing the results for which it was intended. We ask the Committee to join us in our fight to protect Native 8(a). 

The Coeur d’Alene Tribe is honored to provide our testimony today. If you have 

any questions, please contact our Legislative Director, Helo Hancock. Thank you 

and we look forward to working with you and the Committee on these important 

matters in the future.

The CHAIRMAN. Thank you very much, Chief, for being here. We 

welcome your testimony. 

All of your full statements will be included in the record. 

Mr. Morgan, please proceed with your testimony. 

61

STATEMENT OF LANCE MORGAN, CHAIRMAN, NATIVE

AMERICAN CONTRACTORS ASSOCIATION; PRESIDENT/CEO, 

HO–CHUNK, INC. 

Mr. MORGAN. Thank you for the opportunity, Chairman and Senators. 

I am the Chairman of the Native American Contractors Association. I also represent 4,800 Winnebago tribal members as the CEO 

of Ho-Chunk, Inc. I am thinking about this regulatory reform and 

I don’t fear it at all. I am much more afraid of embarrassing the 

Winnebago people and the people I have to answer to back home 

are much scarier to me. 

And I think in terms of the rules and that sort of stuff, it doesn’t 

bother me at all. We are not going to have any problem with it. 

It is nothing compared to the problems I have to deal with. I live 

in a world where the entire economic and legal system seems to be 

stacked against us at every level. The legal system seems slanted 

against us. No Indian tribe in their right mind wants to go to the 

U.S. Supreme Court. 

Our government systems were imposed upon us. In the 1930s, 

someone could sign on the dotted line to extract our resources during the Depression. All of our assets, or most of our assets anyway, 

are held in trust and they are not in our name. We don’t control 

them. We can’t collateralize. We can’t get a home loan. We can’t 

borrow against it. It has killed farming. It has done all these bad 

things for us. 

Our governments can’t have taxes. We can’t issue bonds. It 

makes us dependent upon the Bureau of Indian Affairs for things 

like schools, roads. We have no local control over anything. The 

only entity with any sort of capital are the tribal governments 

themselves because of these restrictions, which really impacts 

entrepreneurism. 

So we have this sort of socialism going. I mean, you could not 

have designed a worse economic system for us: bad legal, bad government, no control of your assets, and socialism. That is the world 

that we have to somehow provide for our people for and it makes 

it very, very difficult. 

Now, I run this corporation that started with one employee. I 

was the only one. I believe in starting at the top so I made myself 

CEO. 

[Laughter.] 

Mr. MORGAN. We have 1,400 employees now in five different 

countries. You would have to come to rural Nebraska to even believe how strange that is. And we have been able to do it largely 

because of things like the 8(a) Program. In the first year, we had 

revenues of $400,000, and I remember thinking we had $12,000 

this week and that is pretty good. Well, we did $193 million last 

year, and it changes the whole world for us and our environment. 

But what is interesting, when I brought up the idea of starting 

a corporation, everybody basically was against the idea because we 

had failed at every business we had ever tried before in the past; 

not one out of two, for our modern history in economics. But the 

tribe went forward because we have to go forward. We don’t have 

any choice. We have to try. 

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When we started as a corporation, we were doing things that are 

very typical. The tribe did gaming and it’s mildly successful there, 

but we also really focused in on things where we could create an 

advantage: gasoline cigarettes, the kind of stereotype stuff, but 

that’s nothing to build an economy on, not for the long term in the 

future. 

And we were looking for alternatives. And the Federal Government came to us and said you should get into 8(a) contracting. And 

because the cigarettes and the gas are so controversial on taxation 

issues, we jumped at it, ironically because it was less controversial. 

We had no idea that this could possibly end up, our success would 

be held against us on some level. 

To be honest, we were terrible at government contracting. Our 

attitude was sort of anti-government as a young company and we 

came around largely with the help of the Salish and Kootenai Tribe 

who partnered with us on a contract and taught us how to do that, 

and we have been able to take off from there. 

In 2004, after losing $700,000 in the first four years of our attempt to be a government contractor, we partnered with them and 

our revenues have grown to $70-some million as of 2010 on the 

government contracting side, changing everything for us. It has 

done a couple of things. It has made us smarter and it has given 

us pride. The pride is hard to measure because it is a very intangible thing. But the smart is there. It is hard to take it away. Once 

you learn something, you can’t reverse that. 

And government contracting is something that I really stayed 

away from in the beginning because in the 1970s, government contracting was a back room sort of thing. You would do some sort of 

low-end subcontract. It was minimum wage. It was a dark room. 

And I didn’t think that that was what I wanted for our future. 

But something happened. The 8(a) Program isn’t a subcontracting program. It is a prime contracting program and it allowed 

us to get smarter. It allowed us to move up the economic food chain 

in these contracts. And the people who used to treat us as subs to 

kind of deal with, to check the box so that they can get the contract, so to speak, have to deal with us on equal terms. And to be 

honest, I think all Indians are mild conspiracy theorists, I think 

that our competitors are now having trouble dealing with us as 

equals. And that is just the reality of what we face. 

Now, I know there is a lot of controversy going on related to 8(a), 

and I think a lot of people have repeated over and over again that 

there are regulations in place that are going to deal with that. And 

we think those regulations need to play out. I think some of the 

stuff is misguided to go further than that. 

The reason I took the time to talk about the economic environment we live in, because that economic environment still exists. 

Government contracting and gaming have kind of overlaid on top 

of this shaky foundation. But if you were to take these sort of 

things away, we would fall right back into poverty. We would revert almost immediately back into very desperate situations and 

we would become the subcontractor again, and we would move 

back down the train to the low-cost labor. And that is really not 

what we have in mind for ourselves and our future. 

63

The other thing that I think is important to mention, and this 

is my last major point, is that if we were to go backwards, it 

wouldn’t save the government a penny. They are going to spend 

that money anyway. What would happen is we would go back on 

welfare. We would go back on food stamps. We would cost the government a fortune. Taking thousands of people, maybe tens of 

thousands of people off government assistance and giving them 

hope is the way to go. There is no doubt about it in my mind. And 

I think that anything else would be cruel after us getting a little 

taste of what it is like to be successful and self-determined. 

In conclusion, I want to tell a mini-story. When I was a kid, I 

spent my summers on the reservation at my grandparents’ house. 

At my grandparents’ house, we raised hogs to eat, not to sell. We 

had to eat them. We raised food. We grew our food on a three-acre 

plot behind the house. That is how we survived. When we wanted 

water, we had a hose that came from a pump in through the kitchen window. That was a big deal because you didn’t have to go outside. 

That was the nature of it. My grandmother now lives in a new 

modern house. We are building a town on our reservation that Senator Johanns referred to. We have our own homes. The homes are 

built by our construction company. They are built in our housing 

factory. Our employees move into them with loans from our bank. 

The Winnebago Tribe recently just committed $1 million of the 

dividends from Ho-Chunk, Inc. The next 20 people who buy a home 

get $50,000 in down payment assistance. We had people who had 

jobs, but because of our economic environment we had zero savings. 

And so nobody would loan us money on our reservation because we 

didn’t have down payments and the rural valuations weren’t there. 

So the Winnebago Tribe took the money from the corporation and 

are helping our tribal members achieve the American dream. And 

that is a major step in a positive direction. 

Senator Johanns from Nebraska, who was kind enough to give 

us introductions, paid a visit to us when he was Governor at the 

groundbreaking of this town. And he said, what can I do for you 

to help? And I said, frankly, Mr. Governor, you can do more harm 

than good. We are on to something here. We are providing for ourselves. We are learning to do it ourselves. Just leave us alone and 

we will be okay. 

This was before I knew he was going to become a Senator. 

[Laughter.] 

Mr. MORGAN. I now have a list of demands I will be submitting 

in writing. 

But I think that is the point. Let us control our destiny. Give us 

a chance. In the end, all we are asking for is to work for you. 

Thank you very much. 

[The prepared statement of Mr. Morgan follows:]

64

PREPARED STATEMENT OF LANCE MORGAN, CHAIRMAN, NATIVE AMERICAN

CONTRACTORS ASSOCIATION; PRESIDENT/CEO, HO-CHUNK, INC.


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The CHAIRMAN. Thank you very much, Mr. Morgan, for your testimony. 

Mr. Hall, will you please proceed with your testimony? 


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STATEMENT OF LARRY HALL, PRESIDENT/GENERAL 

MANAGER, S&K ELECTRONICS, INC. 

Mr. HALL. Thank you, Chairman and other Members of the Committee. 

My name is Larry Hall. I was introduced by our Senator Tester 

from Montana who is a good friend of mine. We have been on various groups there in Montana over the years. 

I am a tribal member of the Confederated Salish and Kootenai 

Tribes of the Flathead Reservation and President and General 

Manager of S&K Electronics, Inc., a successful graduate of the SBA 

8(a) Program. 

I appreciate the opportunity to tell the S&K Electronics story 

and how the SBA program has helped to enhance the economic development of the Flathead Reservation. I can sum it up in three 

words: the program works. 

When my father came home to the reservation after World War 

II, he couldn’t find any work. So he moved our family to Seattle 

where he could find work. He went to work for Boeing. But as children growing up in the Seattle area, we always wanted to come to 

the reservation for our summer vacations and time with our cousins and my aunts and uncles. 

My heart was always on the reservation. I always wanted to live 

there. I was able to come back to the reservation as an intern in 

college. After graduating from college, I got my first job as economic planner for the tribes, focused on creating jobs on the reservation. 

First, I tried to create government jobs using various grant programs that the Federal Government had, HUD, CDBG, you name 

it. And did very well at that, but then those jobs are just transferfund type of jobs. I knew that eventually we needed to have businesses, businesses that could have ways of generating their own 

capital. 

One of those businesses was S&K Electronics. S&K Electronics, 

a tribally-owned company, started in 1984 as a way to diversify our 

reservation economy which was just pretty much related to timber 

and cattle ranching. We became certified in the 8(a) Program in 

1990, after there were significant changes in the 8(a) Program in 

the late 1980s. 

We used the program to grow both our capacity and capability 

to do business. We grew from 35 employees as we started in the 

program to over 100 when we graduated. We graduated from the 

program in 1999. That was the nine-year program. We continue to 

be a highly competitive successful contract manufacturer in electronic and electro-mechanical assemblies for both the U.S. Government, as well as private industry. 

Some of our largest customers currently are BAE, Northrop, 

Raytheon, Lockheed. S&K’s facilities are on the Flathead Reservation. This is our only place of our business, although in early times 

we were able to get into some other contract opportunities off the 

reservation in the I.T. business. 

The jobs are on the Flathead Reservation. It is over 100 jobs for 

our people that did not exist before 8(a). S&K has continued to 

grow and provide dividends to the Confederated Salish & Kootenai 

tribes through their social and economic programs and initiatives. 

84

That amounts to $1.75 million date. It does not include the millions 

that were invested to grow our business and to maintain our competitiveness in our industry, and the wages of our workers that are 

then spent in our local communities. 

One of the economic initiatives that we invested in was to start 

up another 8(a) company, and that was S&K Technologies. S&K 

Technologies, which is the company that Lance was mentioning 

that helped them. It graduated from the 8(a) Program also and continues to return dividends back to the tribes for their social and 

economic programs and initiatives, as well as grow additional companies. To date, S&K Technologies has returned over $10.6 million 

to the tribes in dividends. 

What is different about tribally owned 8(a) companies and other 

8(a) businesses? The profits go to the tribe as a whole, not to individuals. What does the money do? Well, it is reinvested in other 

companies, internships, native language programs, various social 

programs, job training, economic development initiatives, and even 

fractionated heirship land consolidation. 

My father would be proud to know that his children and grandchildren and the children and grandchildren of his peers now have 

a choice of job opportunities that did not exist when he was young. 

As I said before, the program works. 

Thank you for the opportunity to speak and tell the S&K story. 

[The prepared statement of Mr. Hall follows:]

85

PREPARED STATEMENT OF LARRY HALL, PRESIDENT/GENERAL MANAGER, S&K 

ELECTRONICS, INC.


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The CHAIRMAN. Thank you very much, Mr. Hall, for your testimony. I am going to submit my questions for the record and call 

on Senator Murkowski for any questions she may have. 

Senator MURKOWSKI. Thank you, Mr. Chairman. 

And I want to thank each of you for your testimony here today, 

for coming to Washington, for speaking up on this. What I heard 

from the three of you coming from different tribes, different experiences, was that not only does this program work, as you have stated, Mr. Hall, but what it has delivered are a series of intangibles 

that are perhaps difficult for an IG, difficult for Mr. McClintock as 

he tries to itemize what the benefits of this 8(a) Program, this Indian 8(a) Program are. 

He says he has to follow the money and that was why it was important to ask the question about whether or not he has any experience in Federal Indian law; any experience in dealing with reservation communities or Alaska Native villages; whether or not he 

has been a participant in this. I didn’t really hear that. 


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But what I heard you articulate very clearly, Mr. Morgan, was 

that with success comes a level of smartness, and okay, we might 

be able to identify gains in education. But what is very difficult to 

quantify is the pride that comes with being self-sufficient; that 

comes with being self-sufficient after decades and centuries of a 

system where basically you have described the system quite well 

in terms of how things have been provided on the government’s 

terms, with the opportunity to really try to do anything on your 

own stifled or limited. And the efforts that have been made have 

resulted in failure. 

And when you have subsequent failures, that leads to kind of an 

attitude or a mind set that we can’t do this; that perhaps we are 

not capable of this. What I am seeing coming out of the 8(a) Program is a challenge that, yes, in fact we can compete and we can 

compete well. And we can provide for our people in a way that lifts 

everyone. And that sense of pride and that sense of self-sufficiency 

unfortunately doesn’t kind of fall into this matrix when we measure government accountability. 

So I think we need to all be working with people like Mr. 

McClintock and the I.G.’s, the auditors, those that are looking this; 

people like Senator McCain who clearly have some questions. 

But I will ask a question, and it may be a bit of a rhetorical 

question, but I will leave it at this. Do you think that it is perhaps 

blowing things out of proportion or sensationalizing things for the 

media to focus just on the revenue numbers? Just on the revenue 

numbers? 

You have mentioned, Mr. Morgan, that you have done well; that 

the tribe is receiving considerable return in terms of revenues. And 

I don’t believe you told me how many tribal members you have, but 

when you do the math, it probably looks pretty impressive, pretty 

good. 

Do you think this is the wrong way to be measuring things? And 

if so, how can we change this dynamic? Because I think it is critical 

to the success of the Indian 8(a) Program. 

Mr. MORGAN. I appreciate the question. A couple of things. I 

have a rule that I never put my accountant in charge of the business. They are good at what they do, but they are not the people 

you want making the decisions for the future of our people. And I 

am sure the IG, Mr. McClintock, is great at his job, but he didn’t 

seem to have any clue about the kind of challenges that are out 

there in Indian Country. And to make it a numbers game only is 

a mistake, especially when you keep out all the other numbers that 

might in some way impact us. So I think that is unfair. 

As far as some of the revenue numbers, we faced this problem in our own community. We will get a contract for $20 million. That 

might be over five years. The government is pretty careful about 

what your profit percentage is, so you are not making a lot of 

money off of that. 

Senator MURKOWSKI. It sure sounds good, though. 

Mr. MORGAN. Yes, it sounds wonderful. I have gotten to the 

point, though, where I won’t even say the number in our own community because they are thinking, all right, how much do we get. 

And so you really have to work hard to perform to get those contracts. 

89

First, to be in the stage to get them, then to keep them, and to 

keep them going. But the profit margins aren’t that good, but we 

are not saying no. It is still the best things we have in terms of 

diversifying our business. Ho-Chunk, Inc. would not be an international entity were it not for those kind of opportunities. 

No one is going to come out of their way and come to the Winnebago Reservation in rural Nebraska to give us some sort of sophisticated contract. Without these programs, it just simply would not 

happen. We would never have gotten to the point where we were 

able to evolve; where we could make a meaningful impact in our 

communities. 

Senator MURKOWSKI. But on the other hand, you have to perform 

and you have clearly performed or they wouldn’t be coming back 

to you. 

Mr. MORGAN. We were the State Department’s small business of 

the year a few years ago, so obviously we have been doing our part, 

but it is an incredibly difficult environment, as other people have 

said. 

And we don’t just answer to the government. We answer to our 

own people and our own tribal government. And so there are a lot 

of people looking over our shoulders in our world. And there are 

a lot of people who are depending on us to make the right decisions 

and do the right things so that we can impact people’s lives in our 

community. 

It is an incredible responsibility, but it is not something you are 

just going to put down on a piece of paper and put it on a flow 

chart or spread sheet. 

Senator MURKOWSKI. I appreciate that. 

Chief Allan, did you want to make a comment? 

Mr. ALLAN. Yes, I just wanted to put that in perspective. I think 

what people do forget to look at, or they look at the numbers, is 

what impact it has as a whole. For example, we are the largest employer in Benewah County. We are the second-largest in Bonner 

and Kootenai County. And we have every tribal member that 

wants to work put to work. And so we have to get the workforce 

from the community and we employ almost 2,000 people, people as 

a whole, for the good of Idaho, for the good of everybody. So when 

you hear a number out there, it is misleading and it is almost damaging because it is not the whole picture. The whole picture is how 

many people you put in a job; how much taxes are going back to 

the State of Idaho for the betterment. 

We did a study in the State of Idaho for the five tribes in Idaho, 

and we were one of the top 10 employers because of all of our separate businesses and everything that we are doing. 

So I think when a government agency fills a number out there, 

it is wrong and it is harmful. Thank you. 

Senator MURKOWSKI. Again, gentlemen, thank you so much for 

your testimony. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Senator Murkowski. 

Senator Crapo? 

Senator CRAPO. Thank you, Mr. Chairman. 

I know that the time is getting late and we are kind of getting 

jammed up up here. So I am going to focus my questions on you, 

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Chief, and frankly you just did make most of the points I was going 

to ask you about. But I wanted to get a little bit specifically into 

the experience that you had with Echelon plant. 

As you know, I was there to tour this plant with you, and I know 

of the big success that it was. But could you explain just in a little 

more detail just what happened? My understanding is that because 

of the criticisms and the attack on the 8(a) Program and the allegations about the program that have been made that basically you 

have had to lay off about 70 percent of your employees at that 

plant. Is that not correct? 

Mr. ALLAN. That is true, Senator. We did have to lay off 70 percent of our employees so we can sit back and now we have to reevaluate our game plan and figure out which direction we are going 

to move our 8(a) Program. 

We were with the Army and with our fuel bladders, and we 

thought we had the pump contract, but everybody kind of got 

spooked at the last minute. And so we are kind of backtracking a 

little bit and we will live to fight another day, though. 

Senator CRAPO. Well, I am very confident of that because I have 

seen how efficient and how effective you are able to be in the operations of these businesses. But I just wanted to add my support 

and concern to that which has already been expressed here at the 

hearing about not only the importance of maintaining the 8(a) Program, but also about the importance of making it clear that the allegations that have been made about the 8(a) Program are themselves having negative impacts on our Native Americans. And that 

simply has to be addressed and addressed quickly. 

And so Mr. Chairman, I again appreciate you holding this hearing and look forward to working with you as we seek to address 

and resolve the issue. 

The CHAIRMAN. Thank you very much, Senator Crapo. It has 

been a great hearing. I would tell you that I personally look at the 

8(a) Program as a great opportunity, big or small, as was mentioned by Mr. Morgan. You can do something with it and it is 

something that can grow into bigger things. 

I hope that native people of our Country will look upon that as 

something that is workable. And the reason I use workable is that 

it is not perfect. You can get into trouble with it, too, if you make 

wrong decisions. But it can help you come about to grow so that 

you can get into bigger things. 

And this is what I am hoping will come about with the 8(a) Program as we proceed here. Our intent is to try to look at the challenges that we are facing with this program and to try to turn it 

around so that it will be able to help us better than it did in the 

past. 

There are problems, no question about that, and the thing is, we 

just have to be aware of that and continue to proceed. I like to 

think of this program that would be supported by education, meaning to get all the facts about these things so you can use it to your 

advantage. And also to be able to protect you and the tribes in case 

that is needed. Then of course, the resources to help to empower 

you to build and to help your communities as has happened in 

many cases that you mentioned. 

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There are challenges, but we must work together to try to limit 

those and take advantage of the opportunities. I thank you so 

much. It was good to hear from you and what you have been 

through already. We will look forward to continuing to work with 

you. 

I want to thank our witnesses for coming all these miles to 

Washington to testify. And to remind you that the record is open 

for written testimony for two weeks. We will permit the members, 

of course, to add anything they want, whether it is questions or 

other things. 

So I want to thank you again, mahalo nui loa, for making this 

a success. Thank you very much. This hearing is adjourned. 

[Whereupon, at 4:30 p.m., the Committee was adjourned.] 

(93)

APPENDIX

PREPARED STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII

Mr. Chairman, thank you for holding this oversight hearing on the Small Business Administration’s Native 8(a) program. Senator Begich and I originally requested this hearing to provide an opportunity for the Tribes, Native Hawaiian Organizations, and Alaska Native Corporations to tell their stories, the real stories 

and not those sensationalized in the media. We wanted those stories to be placed 

into the record which actually helped Native people and provided opportunities for 

future generations all across Native America. 

When the Native 8(a) program was first started, the goal was to provide an economic development tool to provide economic self-sufficiency for Native communities. 

The intent was a ‘‘helping hand’’ and not a ‘‘handout’’ via social welfare programs. 

This program has demonstrated success, and as a result, it has become a target. 

I look forward to hearing from the witnesses in hopes of establishing a balanced 

record. 

In Hawaii, we have established Native Hawaiian Organizations (NHO). Native 

Hawaiian Organizations are non-profit organizations, managed by Native Hawaiian 

individuals and principally serving Native Hawaiians, which have majority ownership by an 8(a) designated for-profit firm. What makes NHO’s most unique is their 

ultimate mission to serve their communities. Profits generated by the 8(a) firms are 

dispersed for the benefit of the Native Hawaiian community. 

Each NHO has a different priority. They provide different services and programs 

into the Native Hawaiian community. For example, these services include educational scholarships, mentorship and job training, culturally-based leadership development for at-risk youth, extra-curricular science technology engineering and 

mathematics (STEM) education programs, and financial literacy educational programs. 

NHO’s are the youngest among the Native 8(a) businesses. However, they are 

making their mark in the Native Hawaiian community in a positive way. They are 

becoming more competitive in government contracting. As they become profitable, 

social programs and Native Hawaiians benefit. I truly hope it continues. 

I commend the Small Business Administration for proposing reasonable regulations which will help to strengthen this program. These regulations will bring more 

oversight, as well as transparency to the Native 8(a) program. This will help dispel 

the misinformation, and allow the successes to be highlighted. 

I look forward to continuing this discussion and working with my colleagues to 

strengthen the Native 8(a) program such that more Native Americans can move toward economic self-sufficiency. A rising tide raises all ships. 

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PREPARED STATEMENT OF HON. CHAD ‘‘CORNTASSEL’’ SMITH, PRINCIPAL CHIEF, 

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PREPARED STATEMENT OF HON. SEAN PARNELL, GOVERNOR, STATE OF ALASKA


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PREPARED STATEMENT OF VIRGINIA WARD, CHAIRWOMAN, BOARD OF DIRECTORS, 

AFOGNAK NATIVE CORPORATION

Chairman Akaka, Vice Chairman Barrasso and honorable members of the Senate 

Committee on Indian Affairs, cama’i (hello). My name is Virginia Ward and I am 

the Chairwoman for the Board of Directors of Afognak Native Corporation. Thank 

you for the opportunity to provide written testimony for the hearing record about 

Afognak Native Corporation and the benefits we provide to our Alaska Native 

shareholders. 

I am a shareholder of Afognak Native Corporation and I am originally from the 

Old Afognak Village, which is located on Afognak Island in the Kodiak Archipelago 

in Alaska. The Old Afognak Village was heavily damaged as a result of the great 

1964 earthquake and tsunami that struck much of south-central Alaska. Following 

the destruction of my home, I, along with most people of Old Afognak Village, relocated to the Village of Port Lions on Kodiak Island. Even though we no longer live 

in the Old Afognak Village, we, as a people, still identify ourselves as Afognak People. We are Aq’wanermuit (People of Afognak). This is our identity and our community spans cities, oceans, and countries. But no matter where we go, our foundation 

is set by the Alutiiq core values of harmony, appreciation, respect, efficiency, communication, and trust. These values guided the Alutiiq people for generations before 

us, and they have provided the framework around which we structure our Corporation, as they are embedded in our Code of Conduct. 

History of Afognak Native Corporation 

Afognak Native Corporation (Afognak) is a village corporation organized under 

the Alaska Native Claims Settlement Act of 1971. Afognak was formed in 1977 

through the merger of two Native Corporations, Port Lions Native Corporation and 

Natives of Afognak Inc. Afognak is governed by a nine-member Native Board of Directors, all of whom are shareholders of the Corporation. Board members are elected 

by their fellow Native shareholders and serve three-year staggered terms. As an 

Alaska Native Corporation, Afognak is responsible for meeting the economic, social 

and cultural obligations of our 812 shareholders. This is a congressional mandate 

we take very seriously. We are fulfilling this mandate by providing benefits to individual shareholders and by strengthening Aq’wanermuit (our community). By providing benefits to our shareholders and by strengthening our community, we develop 

a collective strength; we empower every shareholder as well as their families and 

their descendants. 

Afognak owns 160,000 acres of land in the Kodiak Archipelago, primarily on Afognak Island. In addition we are the managing partner of the Afognak Joint Venture 

(AJV) which owns 130,000 acres of land also primarily on Afognak Island. The AJV 

is a partnership between Afognak and Koniag Inc., which is an Alaska Native Regional Corporation. As managing partner, we are responsible for the use and care 

of these additional acres. Our lands represent our most valuable asset. Our corporation and our shareholders use our lands for cultural, subsistence, and recreational 

activities as well as some limited opportunities for economic development. Prior to 

our involvement with the SBA 8(a) program, Afognak relied heavily on natural resource development, mainly the harvesting of timber on Afognak land. Over time, 

our Board of Directors recognized that the volatility of the international timber market, as well as the finite timber resources owned by Afognak, made timber harvesting an unsuitable long-term economic development strategy for the Corporation. 

As we attempted to fulfill the mandate of the Alaska Native Claims Settlement Act 

(ANCSA); we repeatedly struggled with geographical isolation, the steep learning 

curve required to master the Western corporate model, and the intense needs of our 

shareholder population. Despite being tasked under ANCSA to operate as a business, we found that a profitable entry into the marketplace was easier said than 

done. 

History of ANCSA and the Link to the 8(a) Program 

The legislative history of ANCSA clearly shows that the goal of the act was to 

provide a mechanism with which Alaska Natives could participate in the capitalist 

economy. Under ANCSA, the federal government has a statutory duty to encourage 

participation by Alaska Natives through Native corporations in America’s capitalistic economy. 

As the ANCSA evolved and the Alaska Native Corporation structure was established, it became increasingly evident that Alaska Natives were not receiving all the 

benefits intended by Congress and to which Alaska Natives were entitled under the 

Act. Alaska Native Corporations (ANCs) were inefficient as the geographic and economic barriers of our rural settlements proved difficult to overcome. It became apVerDate 0ct 09 2002 12:43 Dec 12, 2011 Jkt 065771 PO 00000 Frm 00109 Fmt 6601 Sfmt 6621 S:\DOCS\65771.TXT JACK
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parent that ANCs would not be able to fulfill social responsibilities to their shareholders and achieve economic potential without some adjustments. 

Congress amended ANCSA in 1988 and again in 1992 establishing ANCs as minority and economically disadvantaged businesses for purposes of government procurement programs. By these amendments, Congress made clear that favoring 

ANCs for government contracts was an integral and intentional part of ANCSA’s 

economic settlement. These 1988 and 1992 ANSCA amendments provide ANCs’ eligibility for government contracting preferences as bargained for consideration in exchange for the extinguishment and settlement of Alaska Native aboriginal claims 

in Alaska. The Board of Afognak decided to enter the government contracting marketplace based on the well-established legislative history of the ANCSA. 

The Development of the Alutiiq Family of Companies 

In 1998 and 1999 we began the due diligence process on government contracting 

and the opportunities for business development through the SBA 8(a) program. The 

Board was aware of a few other ANCs that were using the program to grow their 

businesses, and we believed we could emulate that success over time with the development of the Alutiiq family of companies. 

As with many new business ventures, the creation of the Alutiiq companies has 

had many challenges. Not all of our contracts have been profitable, and some of the 

lines of businesses we explored were not a good fit. Now, eleven years after the first 

Alutiiq company was formed, we are both grateful and accountable for the blessings 

and responsibilities our success has bestowed on Afognak. We believe our unwavering commitment and a laser-like focus on measurable results and accountability has 

allowed our participation in the 8(a) program to provide a myriad of benefits to our 

shareholders, their descendants, and the Native community at-large. 

The Benefits Provided by Afognak to its Shareholders 

We understand that the Committee’s focus is on the successes of the Native 8(a) 

program and the benefits it has provided to Native Communities. Afognak has been 

blessed in that we have enjoyed business success in the program, which has allowed 

for a wide range of benefits to be distributed to our shareholders in a variety of 

forms. Benefits we provide include a Shareholder Hunting & Subsistence Program; 

Lands Management Programs; donations, community contributions, and sponsorships; a Shareholder Death Benefit; Elder Benefit; Small Business Growth Program 

and Shareholder Development Programs. However, the most notable and tangible 

benefit provided to our shareholders during this time period came in the form of 

substantial semi-annual dividends. 

In the last 10 years Afognak has paid out almost $95 million in dividends to our 

shareholders. The decision to benefit our shareholders in the form of dividends, 

rather than other services or programs, came after much research and deliberation 

by our Board of Directors. A 2005 survey of Afognak Shareholders, which was commissioned by our Board, revealed that the average household income of our shareholders was approximately $45,000 per year. This is only $17,430 above the 2010 

U.S. poverty guideline of $27,570 for a family of four in Alaska. This data strongly 

suggests that the dividends paid to Afognak shareholders over the last several years 

have had a significant, measurable effect on moving our shareholders out of poverty. 

Clearly Afognak’s success in building our businesses has allowed us to make a dramatic effect on our shareholders’ lives and particularly the lives of those living in 

our rural communities. Many of our shareholders live in a village with no grocery 

store; and where an airplane ticket to travel to Kodiak or Anchorage costs $100 and 

$700, respectively. The cash dividends Afognak provides meet critical needs of our 

shareholders on basic human necessities—housing, food, childcare, education, and 

energy costs. 

Also noteworthy is the increase in Afognak Shareholder equity as a result of our 

participation in 8(a). Afognak’s Shareholders’ equity, which is the total assets of the 

corporation less the total liabilities of the corporation, has grown $87,350,000 over 

the last eleven years. However, our shareholders’ equity, like that of all other ANCs, 

is substantially different from that of other business owners, particularly other individual 8(a) participants. As mandated by ANCSA, shares in Afognak Native Corporation cannot be bought or sold. Shares are not a liquid asset for our shareholders, and they cannot be used as capital for private investment. Nevertheless, 

this growth in shareholder equity strengthens the foundation of our corporation and 

sustains the benefits we currently provide, while also supplying resources to support 

and enhance our culture and traditions that may have otherwise been lost for future 

generations. 

One final benefit I would like to touch upon is Afognak’s scholarship programs. 

Our corporation is committed to developing future generations of Alaska Native 

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leaders. As such, Afognak offers two scholarship programs for shareholders and 

their descendants who want to attend traditional universities, vocational education, 

or other training programs: the Higher Education Program (HEP) and the Career 

Enhancement Opportunities (CEO) Program. 

The Higher Education Program provides financial support to shareholders and 

their descendants who are pursuing higher education through traditional university 

or vocational education. From 2000 to 2010, Afognak awarded $1,368,144 in 334 

scholarships to our shareholders and their descendants under the HEP. 

The Career Enhancement Opportunities Program provides financial support to 

shareholders and their descendants who are seeking additional education to enhance career opportunities through means other than full-time traditional college or 

university attendance. From 2000 to 2010, Afognak awarded $210,771 in 171 scholarships to our shareholders and their descendants under the CEO Program. 

These programs provide the means and opportunities to further our shareholders’ 

educations in a manner which otherwise might not have been available. We are beginning to see the fruits of our efforts. Many recipients are graduating or completing 

their chosen program and putting their new skills to work for Afognak, their communities, and/or their families. We are slowly working towards the generational 

shift that will allow our shareholders to hold the senior management positions in 

our Corporation—but we are not there yet. 

Afognak is proud of the collective benefits we are able to provide our shareholders, 

their families, their descendants and the Native community at large as a result of 

participating in the 8(a) program. We believe it is exclusively the role and responsibility of our Board of Directors to evaluate the needs of our shareholders and to implement the appropriate methods to best meet those needs. This practice is consistent with the overarching federal Indian policy of economic self-determination. 

Conclusion 

In closing, I would like to reiterate my overall message—the 8(a) program is working as intended and working quite well. This program has enabled Afognak to provide the financial support and economic opportunities to many who previously had 

little hope of gaining an education, starting a business, or joining the professional 

workforce. The 8(a) program enables ANCs like Afognak to deliver critical support 

in the form of shareholder dividends and community services to revitalize economically-challenged Alaska Native communities as well as provide great value and service to the Federal Government. 

In 1971, the U.S. Government made a commitment to honor and support the Alaska Native people. This promise came through the Alaska Native Claims Settlement 

Act when the U.S. Government seized millions of acres of oil-rich Native land worth 

hundreds of billions of dollars in exchange for the formation of ANCs and subsequent participation in the SBA 8(a) program. Today, we expect the U.S. Government 

to keep its promise by sustaining ANC participation in this program. 

Quyanaasinaq—(thank you very much) for the opportunity to tell the Afognak 

story. 

PREPARED STATEMENT OF KEN JOHNS, PRESIDENT/CEO, AHTNA, INC. 

Chairman Akaka, Vice-Chairman Barrasso, and honorable members of the Senate 

Committee on Indian Affairs, Nts’e dit’ae (a formal Athabascan greeting). My name 

is Ken Johns and I currently serve as the President & CEO of Ahtna, Inc., one of 

the 13 regional corporations established under the Alaska Native Claims Settlement 

Act (ANCSA) of 1971. By way of introduction, I am a shareholder of Ahtna, Inc., 

and am originally from Copper Center, which is located in the Copper River Valley. 

Thank you for the opportunity to provide written testimony for the record pertaining 

to the hearing held on April 7, 2011, titled, ‘‘Promise Fulfilled: The Role of the SBA 

8(a) Program in Enhancing Economic Development in Indian Country.’’ The title of 

the hearing could not be more appropriate. As this testimony will demonstrate by 

providing background on Ahtna, Inc., its business operations, and its participation 

in the Small Business Administration’s 8(a) program, the SBA 8(a) program has 

provided Ahtna with knowledge, tools and skill sets to bring our Corporation from 

near bankruptcy to a solid foundation and the ability to provide many needed benefits to our shareholders. This is one program that is working for Native peoples. 

Background of the Ahtna People 

Historically, the Ahtna People are Athabascan Indians, who settled the Copper 

River Basin region over 7000 years ago. The Athabascan people traditionally lived 

in Interior Alaska, an expansive region that begins south of the Brooks Mountain 

Range and continues down to the Kenai Peninsula. We lived in small groups of 20 

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1Legacy of the Chief, Ronald Simpson 2001. 2 Id. 

3http://en.wikipeida.org/wiki/Kennecott,Alaska

4 Id. 

5 Id. 

to 40 people that moved systematically through the resource territories. Annual 

summer fish camps for the entire family and winter villages served as base camps. 

Depending on the season and regional resources, several traditional types of houses 

were used. 

Our aboriginal lands included the area of Alaska which houses the Kennecott 

Copper Mine, the richest concentration of copper in the world. When the area was 

‘‘discovered’’ by explorers, it was Chief Nicolai, an Athabascan Tyone who other 

chiefs recognized as their leader that greeted the famous first explorer of the whole 

of Interior Alaska. In 1885, US Army Lt. Henry Allen was given the mission to explore and chart all of the rivers in the Alaskan interior, record the indigenous 

tribes, and assess their numbers. 1

Allen’s small group began at the mouth of the Copper River and headed up the 

rugged valley. As he struggled up the rapids and cliffs about the river he was observed by the Ahtna people. Chief Nicolai, whose village of Taral was far up river 

near the present town of Chitina, was kept informed of Allen’s progress. Eventually 

Chief Nicolai came face to face with the Allen party. Convinced that the Americans 

were no threat, he let them proceed; however, Chief Nicolai had great perception. 

When Allen revealed his keen interest in the copper found along the valley, Chief 

Nicolai knew it was only a matter of time before others would come. A few years 

later, Chief Nicolai’s foresight became a reality when surveyors and engineers began 

to arrive. Soon after, the railroad was built and the Ahtna people’s way of life was 

changed forever. 2

The Kennecott Mine was the largest Alaskan operation of its type from that time 

until long after World War II ended. With the exception of the Juneau gold district, 

Kennecott’s gross revenues in copper exceeded that of every gold mining operation 

in Alaska and the Yukon. On April 8, 1911, the first ore train hauled $250,000 of 

70 percent copper ore. In 1916, the peak year for production, the mines produced 

copper ore valued at $32.4 million. 3 The Ahtna people never realized any profits or 

other forms of payment for the resources of their lands being taken. 

In the 27 years of operation, except for 21⁄2 years of shutdown, Kennecott produced 4.625 million tons of ore averaging 13 per cent copper valued at roughly 

$207,000,000 with an estimated profit of $100,000,000. In addition, the silver byproduct from this operation brought in another 41⁄2 to 9 million dollars in revenues. 

The mine closed up shop in 1938. 4

In the 1980s, Kennecott became a popular tourist destination, as people came to 

see the old mines and buildings; however, the town of Kennecott was never repopulated. Residents involved in the tourism industry often lived in nearby McCarthy 

or on private land in the surrounding area. The area was designated a National Historic Landmark in 1986 and the National Park Service acquired much of the land 

within the Kennecott Mill Town in 1998. 5 The land of the Ahtna people had been 

formally taken from them forever. 

When Alaska became part of the United States in 1867, there was no provision 

in the law for private ownership in the new territory, except for the private individual property holders who had obtained written title to the land when it was 

under Russian rule. ‘‘Uncivilized’’ tribes (which included all but the acculturated 

Natives who had accepted the Russian Orthodox religion) were to be treated like 

Indians in the continental United States, which meant they had claim to their ancestral lands but no citizenship rights. ‘‘Civilized’’ tribes were to be given the rights 

and citizenship of other Americans; in practice, however, the United States government and new residents to the newly acquired territory treated all Alaska Natives 

as ‘‘uncivilized’’ tribes. 

In 1906, John Billum, Sr., (Nasghilniie) an Ahtna Athabascan from Chitina drafted a document that claimed aboriginal rights to traditional lands. He was able to 

develop a map that included all headwaters and indicated what lands to which the 

Ahtna people had aboriginal claim. The document was delivered to Washington, 

D.C. by Mr. Charles O’Brien, a Bureau of Indian Affairs (BIA) teacher. This vital 

document would later become the foundation for the Ahtna region within the Alaska 

Native Claims Settlement Act. 

By the time of statehood in 1959, most of the land in Alaska was already claimed 

by the federal government, with small amounts centered around the cities being 

owned by individuals, almost all of whom were non-Natives. Yet, the rights of Alaska Natives to their ancestral lands had been acknowledged in a number of legal docVerDate 0ct 09 2002 12:43 Dec 12, 2011 Jkt 065771 PO 00000 Frm 00112 Fmt 6601 Sfmt 6621 S:\DOCS\65771.TXT JACK
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6 As of April 15, 2011, there are 1630 active shareholders for 207,318 shares. There are an 

additional 21 inactive shareholders for shares totaling 2932 for a total of 210,250 shares. This 

includes Class L stock who are shareholders; the Ahtna Board and shareholders approved to 

opening enrollment to individuals born after December 18, 1971. As a result, the number of 

shareholders continues to increase. 

uments from the time of the purchase by the United States. The message in all the 

documents was that Alaska Natives own their own land, but that it was up to future generations to decide how they would get title to it. The issue of exactly which 

lands were ancestral did not begin to be addressed until the 1900’s when, bit by 

bit, Natives began to lay claim to portions of the land in the state. 

The discovery of oil in Prudhoe Bay by Atlantic Richfield Company (ARCO) on 

March 12, 1968, created a sense of urgency as the need to pave the way for construction of an oil pipeline became evident. The first formal discussions by the 

Ahtna people on the proposed oil pipeline began in March, 1969. Our Ahtna leadership worked with members of Congress to help settle our land claims and clear the 

title on the land where the pipeline would be built. 

On December 18, 1971, Congress passed landmark legislation known as the Alaska Native Claims Settlement Act (ANCSA). This Act completely changed the traditional role historically played by the federal government and its relationship to Native people. Rather than perpetuate the reservation system, the Act established corporate ownership of assets to ensure long-term profitability and financial independence for Alaska Natives. ANCSA provided the foundation of Alaska Native peoples’ 

economic and legal relationships with the federal government. For these relationships and the approval of agreements by Congress, the Ahtna People and all other 

Alaska Native groups relinquished valid legal claims to lands and resources in Alaska. 

History of Ahtna, Inc. 

ANCSA established thirteen Alaska Native Corporations (ANCs) including Ahtna, 

Inc. and over 200 individual village corporations. Eventually the US Government 

ceded 44 million acres of land and paid $962.5 million to ANC corporations. To date 

a total of 1,528,000 acres of land has been conveyed to Ahtna, Inc. from an entitlement of 1,770,000 under the Act. 

Seven of the eight village corporations within the Ahtna region created as a result 

of ANCSA, merged with Ahtna, Inc. in 1980 and their lands are now the responsibility of Ahtna, Inc. With this merger came a strong unity and vision of the future 

for Ahtna’s original 1179 shareholders. Chitina Native Corporation is the only village corporation that did not merge with Ahtna and the only other ANC in the 

Ahtna Region. 

Ahtna is governed by a 13-member Native Board of Directors, all of whom are 

shareholders of the Corporation. Board members are elected by their fellow native 

shareholders and serve three-year staggering terms. As an Alaska Native Corporation, Ahtna is responsible for meeting the economic, social and cultural obligations 

of our now 1,651 6 shareholders. This is a Congressional mandate taken very seriously by the Corporation and is reflected by our vision statement and expressed values. 

Ahtna’s vision reads:

Ahtna, Inc., with a strong sense of cultural pride and identity, will enhance the 

overall well-being of our shareholders through the wise stewardship of our natural 

resources, and sustained growth and economic development for future generations.

In addition, Ahtna’s values are comprised of the following:

• Cultural and Traditional Principles 

• Integrity 

• Professionalism 

• Dedication 

• Respect 

• Sharing 

• Ethics 

• Perseverance 

• Courtesy

Ahtna is committed to providing a broad range of opportunities for our shareholders and preserving our Native culture; the Small Business Administration’s 8(a) 

Program has provided a means to help achieve that end. 

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7See AFGE v. United States, 95 F. Supp.2d4, 36 (D.D.C. 2002), aff’d 330 F.3d 513 (D.C.Cir. 

2003). Federal Government argued in court that Native participation in the 8(a) program ‘‘furthers the federal policy of Indian self-determination, the United States’ trust responsibility, and 

the promotion of economic self-sufficiency among Native American communities.’’ See also, Morton v. Mancari, 417 U.S. 535, 555 (U.S 1974). U.S. Supreme Court upheld legislation that provides for unique application of laws to Native Americans due to the unique history and role of 

dealings with Indians and has stated that as long as the special treatment can be tied rationally 

to the fulfillment of Congress’ unique obligation toward Indians, legislation regulating commerce 

with Indian tribes will not be disturbed. 

Link Between ANCSA and Government Contracting 

ANCSA established ANCs in part to resolve long-standing issues around aboriginal land claims and to facilitate economic growth in Alaska by introducing Native 

companies into the Western economic system. ANCSA was and continues to be an 

extraordinary national experiment in federal relations with Native Americans. The 

formation of corporations to deliver benefits to the Alaska Native people differs substantially from most government programs. ANCSA’s main goal was to have a fair 

and just settlement of all claims by Alaskan Natives through self-determination, but 

it was also a development tool for one of America’s poorest minority groups to escape from poverty through direct participation in a U.S. market economy. 

As Ahtna, Inc. and other ANC’s emerged from ANCSA, there was substantial evidence that Ahtna, Inc. and its shareholders were not receiving all of the benefits 

from the Act, including lands promised under ANCSA. As referenced earlier, Ahtna, 

Inc. still has 242,000 acres to be conveyed as part of the settlement. Due to the vast 

area and rural nature of Alaska, the lack of economic development opportunities in 

Native villages and the lack of basic infrastructure in rural Alaska, it was virtually 

impossible for ANCs to generate economic progress without significant assistance. 

Alaska’s vast size and isolation created insurmountable obstacles to sustain economic development. In addition, the conventional corporate structure conflicted with 

our traditional Native values, hindering our ability to enter into a free enterprise 

society. 

By the mid 1980s, many of the regional and village corporations were experiencing financial hardships and unable to break out of the geographic constraints in 

rural Alaska. Congress recognized the need for ANCs to be able to diversify in their 

economic opportunities and as a result, legislation was passed in 1986, amending 

ANCSA and allowing ANCs to participate in SBA’s 8(a) program: ‘‘Congress confirms that Federal procurement programs for tribes and Alaska Native Corporations 

are enacted pursuant to its authority under Article I, section 8 of the United States 

Constitution.’’ 43 U.S.C.1626 (e)(4)(A). Recognizing the unique structure and purpose of ANCs, Congress stated that for all purposes ANCs and subsidiaries controlled by ANCs would be considered owned and controlled by Natives as a minority 

business enterprise. 43 U.S.C. 1626(e)(1)&(2). 

In 1992, Congress further amended ANCSA clarifying that ANCs and the businesses controlled by them are deemed ‘‘economically disadvantaged.’’ 43 U.S.C. 

1626(e)(1)&(2). This amendment eliminated the need for ANCs or our subsidiaries 

to prove ‘‘economically disadvantaged’’ status as part of the 8(a) application process, 

therefore, streamlining the acceptance process into the 8(a) program. However, even 

with this issue being resolved, it was still a two year process before Ahtna was successful in having a subsidiary enter into the program in 1994. 

While Congress has enacted many laws to nurture self-determination and economic development in Alaskan Native communities, our ability to participate in 

SBA’s 8(a) program has been the most successful program enacted to meet the federal government’s Trust Responsibility towards the Native people of this land. 7 A 

primary goal of federal policy toward Native people in Alaska is that ANCs will help 

alleviate poverty and economic and social disadvantages among Alaskan Natives. 

Not surprisingly, as Alaskan Natives, we continue to experience many of the social 

ills associated with high rates of poverty: low per capita incomes, lower levels of 

educations, high rates of alcohol and drug abuse, higher than normal rates of diabetes, heart disease and obesity, and many social problems such as shockingly high 

rates of suicides (three times the rate of other Alaskans), high rates of crime, and 

incarceration. 

ANCs and the SBA’s 8(A) Program 

In 1968, the SBA 8(a) Business Development Program was established to assist 

firms owned and controlled by economically and socially disadvantaged individuals 

to enter the economic mainstream. Assistance is rendered to eligible firms in a 

structured developmental process over a nine year program participation term. 

Services include provision of: developmental analysis, counseling, and progress monitoring; management and technical assistance authorized under 7(j) of the Small 

111

Business Act; and access to business development opportunities under section 8(a) 

of the Act. Alaska Native Corporations, lower 48 Tribal Governments, and Native 

Hawaiian Organizations (NHOs) have been granted unique rights under this program to help foster economic development. 

The establishment of the unique aspect of the SBA 8(a) specifically for what has 

been termed as ‘‘Tribal 8(a)s,’’ ‘‘ANC 8(a)s,’’ or ‘‘Native 8(a)s’’ (collectively ‘‘Native 

8(a)s’’) is a recognition by Congress and our federal government that these Native 

organizations have a larger obligation and responsibility in doing business as government contractors—Native 8(a)s must utilize business approaches and models to 

perpetuate the indigenous cultures whose only home lands are within the United 

States while at the same time fostering economic independence through participation in the mainstream economy. Unlike investor owned 8(a) firms that benefit one 

or two people, Native 8(a)s are owned by Native enterprises that have a direct responsibility to the Native communities they serve, communities which are comprised 

of hundreds and often times, thousands of native individuals. 

As a matter of law, ANCs’ deservedly qualify as ‘‘economically disadvantaged,’’ 

which is a fundamental part of governmental efforts to encourage Native American 

participation in federal contracting. Tribes and ANCs are exempt from a federal cap 

on no-bid service and construction contracts that applies to 8(a)’s owned by individuals. Congress created this distinction because as explained above, tribes and ANCs 

serve large communities and groups of shareholders, while other minority small 

businesses generally provide benefits to sole proprietors or small groups of owners. 

Like all 8(a)’s, an ANC 8(a) company must perform at least 50 percent of the work 

on 8(a) contracts with their own employees for federal service and manufacturing 

contracts and 15 to 25 percent of the work for federal construction contracts. Those 

requirements set the minimum amount of work 8(a)’s must perform. In reality, the 

vast majority of ANCs, including Ahtna, surpass those amounts and provide employment for thousands of Alaskans, along with people residing in the Lower 48. 

The primary goals of ANCs are economic self-sufficiency, community and cultural 

development and continuity of Alaska Native tribes and villages. In recent years, 

there has been substantial interest regarding monitoring and oversight of Native 

8(a) contracting. As a result, the National Defense Authorization Act (NDAA) for FY 

2010 included a provision now known as Section 811. This section requires any solesource contract to Native Enterprises valued at $20 million or more to go through 

a formal written Justification and Approval (J&A) process. Tribal consultations were 

held on Section 811, in accordance with Executive Order 13175, prior to drafting the 

implementing regulations. These consultations were finalized in October, 2010 and 

the FAR Council published an interim final rule on March 15, 2011. 

In addition, on February 11, 2011, the SBA issued final regulations that provide 

significant reform to the 8(a) program, addressing concerns that have been raised 

by some members of Congress and certain factions of the media, about the program. 

These regulations were the result of years of work including numerous Tribal consultations held over the course of three years. The regulations went into effect on 

March 14, 2011, and will increase oversight of Native 8(a) firms, significantly 

change how ANCs, Tribes and Native Hawaiian Organizations participate in the 

program, and increase reporting and transparency. 

ANC companies and leaders have embraced more oversight by SBA in order to 

verify that ANC enterprise in the 8(a) program are good stewards of taxpayer funds, 

consistent with the intent of Congress. The fostering of competitive and self-sufficient ANCs is in the interests of the United States, and Alaska Native communities. 

Competitive and self-sufficient ANCs will help alleviate economic and social disadvantages of Alaska Native communities, increase tax revenues, and reduce the 

costs of government support programs to Alaska Natives. Continued support and 

guidance from SBA programs will incubate market competitiveness among ANCs 

and allow Alaska Native and Congressional goals of economic self-sufficiency and 

greater local self-government and cultural recovery more quickly and efficiently. 

Ahtna, Inc. and SBA’s 8(a) Program 

Prior to entering into government contracting, Ahtna’s primary source of revenue 

was contracting with oil companies to perform work on the Trans Alaskan Pipeline. 

Construction on the pipeline began in 1973 and Ahtna, Inc. formed its first subsidiary, Ahtna Construction & Primary Products Corporation, to pursue this line of 

work. Ahtna has a unique relationship with the oil companies as the Trans Alaska 

Pipeline travels through 55 miles of Ahtna land and bisects the region along the 

Copper River. By the mid 1980’s the contracts on the pipeline began to decline and 

by the end of the 1980’s our operational profits from pipeline ventures were at a 

breakeven point. Like many other ANCs, Ahtna learned the hard way that the lack 

of diversity of economic opportunity in our region left us chronically at risk. As we 

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had no other sources of regional economic development, we knew that we had to 

venture into new markets to secure additional revenue streams and ensure a more 

stable economic platform. The 8(a) program offered the ability to diversify and secure additional revenue streams. 

In November 1994, Ahtna Development Corporation (ADC) became the first of 

Ahtna, Inc.’s subsidiaries to receive certification as a Tribal 8(a) company from the 

Small Business Administration. ADC’s lead core business has been Operations and 

Maintenance (O&M) with specialization in Department of Defense sites worldwide. 

The Information Technology and Records Management core businesses were added 

in 1997 forming the new growth aspect of the company. ADC graduated from the 

8(a) program on October 31, 2002 and continues to perform numerous contracts and 

business operations to provide opportunities and benefits to our shareholders. 

By the late 1990s, Ahtna, Inc. made a business decision to increase our capabilities, expertise and ability to go after larger sources of contract revenue. In this process, Ahtna decided to purchase ownership in 3 separate companies to pursue government contracts. The Clearwater Group, Wire Communications Inc. and Ahtna 

Government Services Corporation were all companies in which Ahtna acquired 51 

percent ownership. We were new to a complex organizational structure and were 

growing quickly, and did not yet have the business expertise to manage these 

changes. As a result, the Corporation experienced management challenges and difficulties in dealing with business partners. It was at this point that the board and 

shareholders embraced a change in management and direction. 

After learning some hard lessons from business losses, Ahtna decided to take 

greater control of its subsidiaries and acted on retaining companies with 100 percent ownership or selling our ownership interest if 100 percent ownership could not 

be attained. We took 100 percent ownership and control of Ahtna Government Services Corporation and The Clearwater Group and in 2004 sold our ownership in Wire 

Communications Inc. Since making those changes, all of our subsidiaries are now 

100 percent owned by Ahtna, Inc. and their boards are all comprised of Ahtna 

shareholders. This structure provides transparency throughout the family of companies, which is the key to our future success. 

This transformation was vital because at the beginning of 2004, Ahtna was reeling from a string of unprofitable years and facing a growing amount of debt. Our 

financial institution was squeezing the corporation with restrictions and made no 

bones about the fact that they did not want our business anymore. On top of that 

there was a growing list of pending litigation that threatened to topple our company. One case in particular involved a previous decision to back a third party construction company bond that had a $14 million liability. Ahtna was in dire straits 

and the light at the end of the tunnel was getting dimmer and dimmer. 

In the fall of 2004, Ahtna Government Services Corporation entered into the Department of Energy’s Mentor/Prote ́ge ́ program with Tetra Tech and won a large 

DOE contract ($80 million—3 year) to provide contract oversight and design build 

of overseas nuclear detection devices at key points of cargo transit. This contract 

was competitively re-bid in 2007 and awarded to Ahtna Government Services Corporation. The growth and experience Ahtna gained through this contract is a testament to the intent of the 8(a) program and ANCSA. It was a huge success and 

helped to breathe life back into Ahtna, Inc, as our banking institutions were now 

willing to provide financial support to our company. 

Throughout the course of this contract, Ahtna Government Services Corporation 

self-performed only the contractual minimum percentage of the work, and by the 

end we had acquired the knowledge and skill set to meet and surpass our SBA required percentage of self-performance. This helped us capture profit which we used 

to pay down other obligations in a timely manner. This contract, the capabilities we 

developed through it, and our unique rights in the SBA 8(a) program saved our corporation from having to declare bankruptcy. Although we were unable to pay shareholder dividends during this time, we maintained a strong financial effort to provide 

benefits to our shareholders in the form of land protection, subsistence advocacy, 

scholarships, employment, burial assistance benefits and self-determination (benefits are more thoroughly address later in this testimony). 

Since 2006, Ahtna has turned the corner on our past problems and we have begun 

to see the light at the end of the tunnel. Our efforts to keep this company focused 

on shareholder leadership and development has not only met the intent of ANCSA 

and the 8(a) program but it also meets the aspirations of our people. Our people 

know that as a corporation we have come a long way, but there are still many struggles in our communities we have yet to overcome. The 8(a) program has played an 

enormous role in our ability to provide benefits to our shareholders. We still need 

continued assistance and support to ensure that all our shareholders have the opVerDate 0ct 09 2002 12:43 Dec 12, 2011 Jkt 065771 PO 00000 Frm 00116 Fmt 6601 Sfmt 6621 S:\DOCS\65771.TXT JACK
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8 As of March 31, 2011. 

portunity to fulfill the promises of both our land settlement and as citizens of the 

United States the ability to have self determination. 

Ahtna now has twelve 8 operating subsidiaries involved in a wide variety of business, including government contracting, civil and vertical construction, pipeline 

maintenance, environmental remediation, surveying, facilities maintenance, administrative and janitorial services, food service contractors, tourism, forestry and gravel sales. Of our twelve operating subsidiaries, five have successfully graduated from 

the SBA’s 8(a) Program, and four are currently in the Program. Each of these companies are budgeted to show profits for Ahtna in 2011 and beyond. Each has created 

name recognition within their fields of industry and all are highly competitive in 

going after new contracts. This economic diversity would not have been possible 

without the 8(a) program and the ability to go outside Alaska to find opportunities. 

Ahtna’s Vision Regarding Shareholder Benefits 

Ahtna is a shareholder run company at all levels which is the driving force behind 

Ahtna’s ability to provide meaningful opportunities and culturally significant benefits to our 1,651 shareholders. 

Our thirteen-member board directs operations, and all board members are Ahtna 

shareholders. Ahtna has several active board committees which also provide direction to Ahtna’s management in all aspects of the Corporation, including the Customary and Traditional Committee (subsistence); Land Committee; Shareholder 

Committee; Investment Committee; and Policy Committee. In addition, each subsidiary has a three or five-member board selected from the Ahtna, Inc. Board of Directors, resulting in all subsidiary board members also being Ahtna shareholders. 

Ahtna’s management team consists of nine members, five of which are Ahtna 

shareholders, including the President/Chief Executive Officer, Chief Operating Officer, Vice President of Land and Resources, Vice President of Human Resources and 

Vice President of Corporate Affairs. In addition, the Vice President of Legal Affairs 

& General Council (another management team member) is an Alaskan Native, making a total of six of the nine members being native individuals. Five of the seven 

subsidiaries that have Presidents are shareholders. 

These numbers reflect that Ahtna shareholders are leading our companies into 

the future with a strong desire to enhance the overall well-being and education of 

all shareholders so our future generations can step into their roles and lead our 

companies with a sense of cultural pride. 

Ahtna and its family of subsidiary companies understand that the ultimate purpose of all operations is to benefit our shareholders and future generations. The 

question asked by leadership regarding any endeavor is ‘‘What is the long-term benefit for our shareholders?’’ A majority of Ahtna’s 1,651 shareholders (and their descendents) reside in rural Alaska in isolated and economically disadvantaged areas. 

For example, in 2000, Gulkana (74 percent Alaska Native) was 41 percent below 

poverty and 39 percent unemployed. In comparison, Glennallen (12 percent Alaska 

Native), a town 14 miles south of Gulkana, was only 8 percent below poverty and 

5 percent unemployed. See http://www.commerce.state.ak.us/dca/commdb/

CFlBLOCK.htm. Therefore, providing certain services to shareholders, such as advocacy for subsistence rights and assistance with burial costs for family members, 

is a priority. 

Land is one of the most important shareholder assets. In exchange for giving up 

its aboriginal claims, Ahtna has thus far received 1.5 million acres out of its 1.77 

million entitlement under ANCSA, which was small in comparison to the original 

44 million acres set aside for all ANCSA corporations. Under the Alaska National 

Interest Lands Conservation Act (ANILCA), 603,000 acres of Ahtna’s entitlement 

was locked up in the formation of the Wrangell Saint-Elias National Park and Preserve and the Denali National Park Preserve. Development of this land for shareholders’ benefit has been difficult, if not impossible. Additionally, Ahtna’s land is accessible by road and on the pipeline corridor, causing trespass and unauthorized to 

be a long standing problem. It is easy to understand why protecting and preserving 

our land for resource development, shareholder use and subsistence is a top priority 

to our People. 

Of the $962 million dollars distributed from ANCSA, Ahtna’s share was only 

$13.3 million dollars paid over a number of years in small installments. Balancing 

our shareholders’ interests over the years, Ahtna has needed to carefully spend 

these funds to protect shareholder land and provide basic shareholder services. As 

a result, over the past decade, Ahtna has invested over $15 million in protecting, 

preserving, maintaining and being good stewards of our lands. All resources used 

to protect our most valuable asset will always be money well spent. 

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Although stated earlier in this testimony, it is important to remember Ahtna’s vision when discussing benefits. The company’s vision focuses not only on profitability, but also on providing vital shareholder services and cultural preservation, 

land protection and preservation, and economic opportunities for our People. Ahtna 

strives to promote these priorities for our shareholders. 

Benefits to Ahtna Shareholders 

Ahtna exists to improve the lives of the Athabascan People that have inhabited 

the Ahtna Region for over seventy centuries. Ahtna also exists to protect and preserve the Athabascan culture and values, by providing financially for individual 

shareholders and their communities, by protecting and preserving our lands, by promoting cultural gatherings and supporting the preservation of cultural resources, by 

bringing shareholders together to discuss issues of importance to the Ahtna People 

such as lands and subsistence, and by supporting organizations and endeavors that 

benefit Native people across Alaska. From 2000–2010, Ahtna has spent in excess of 

$20.2 million to provide a great myriad of benefits to our shareholders and their 

families. 

As Ahtna finds its way through financial recovery, the Ahtna Board has been able 

to focus more on investment strategies that will ensure the sustained funding for 

future generations of shareholders, as well as increasing shareholder benefits and 

services for the generation that made ANCSA and Ahtna, Inc. a reality. Ahtna 

maintains shareholder relations staff in each of its offices, to answer questions and 

provide services to shareholders. Ahtna provides quarterly shareholder publications 

to report on business, announce opportunities, provide subsistence and land information, and make announcements about special events in shareholders’ lives. The 

following provides an overview, but not comprehensive explanation, of the benefits 

Ahtna is now able to offer its shareholders, largely in part of the Corporation’s participation in the SBA 8(a) program. 

A. Shareholder Relations and Cultural Preservation 

The Ahtna Heritage Foundation. The Ahtna Heritage Foundation (TAHF) is a regional non-profit that administers Ahtna’s cultural and educational programs. 

TAHF was established in 1986 to perpetuate the Ahtna heritage and enhance the 

socio-economic status of the Ahtna people. To accomplish its mission, TAHF uses the 

traditional culture to enhance the education, the life skills, the pride and self esteem of the Ahtna people. TAHF focuses on remembering and retaining the positive 

aspects of the Ahtna history and culture. 

Ahtna supports TAHF by funding its operating costs ($186,865 in 2010), as well 

as providing in kind support through other professional services and office space. 

TAHF is able to use its funds to run the Ahtna Cultural Center, document oral traditions, maintain cultural artifacts, assist with the Ahtna Culture Camp, facilitate 

the Ahtna dance group, and support many other projects that focus on Ahtna history and culture. Since 2000, Ahtna has contributed approximately $2 million towards TAHF, either in scholarship monies, operating costs, or other in-kind donations. 

Scholarship Program. In addition, TAHF administers the Walter Charley Memorial Scholarship Program, named after our prominent Athabascan Elder and Chief 

who spoke to youth and elders about heritage and wisdom. The Scholarship Program uses funds set aside by Ahtna, Inc. for this purpose. Scholarships are available 

to full-time and part-time students in good standing. In recent years Ahtna has 

been able to substantially increase the amount budgeted for this Program. For example, in 2001 Ahtna spent $30,000 in scholarship awards, while in 2010 Ahtna 

spent $187,000. The budget for 2011 is $200,000. 

Ahtna also encourages our shareholder students by providing them graduation financial awards at every stage of their process. Ahtna provides these gifts for students receiving a GED, a certificate, or an undergraduate or a graduate degree. 

Cultural Preservation. Apart from TAHF, Ahtna supports other projects and activities that perpetuate the Ahtna culture and history. Ahtna purchases traditional 

artwork and jewelry, including the beadwork that is so much a part of Ahtna’s history and ceremonial dress. Ahtna has supported the Ahtna Culture Camp, where 

elders share precious time and knowledge with youth and others in the Copper 

River Region. These are opportunities to share historical stories, traditional ways 

of subsistence and the Athabascan language. Learning these traditional skills helps 

youth develop a closer connection to their culture. In recent years, Ahtna has also 

hosted an annual Youth and Elders Conference, providing another opportunity for 

Elders to share their wisdom and traditions with the younger generation. Ahtna has 

commissioned consultants to digitalize tape recordings, and recently commissioned 

an anthropologist to identify historic trails within the Ahtna Region and document 

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their names in the Ahtna language. Investing in our culture is an intangible asset 

that is priceless but since 2007, Ahtna has contributed approximately $700,000 into 

our cultural preservation activities. 

Burial Assistance Fund and Memorial Support. For many years, Ahtna has maintained a Burial Assistance Fund, providing shareholders with much needed funds 

following the death of a close family member. This Program has seen significant increases in funding in recent years, currently providing $3000 to help a family suffering a loss to cover the funeral expenses and over the last decade, Ahtna has offered approximately $465,000 in burial assistance to our shareholders. In addition, 

Ahtna often provides shareholders other support during the traditional potlatch to 

celebrate a loss. 

Elders Benefits Program. Ahtna considers one of its most valuable and honored 

resources to be its Elders, and the health and welfare of its Elders to be of utmost 

importance. Ahtna’s Elders provided the guidance to establish Ahtna, Inc. and to 

lead it to becoming a very successful company for all shareholders. We have long 

provided our Elders resources they may need, such as salmon, game and chopped 

wood, as well as food gift baskets during the holidays. In recent years, the Ahtna 

Board of Directors established an Elders Benefit Program to further foster our Elders’ health and welfare. The Board declared the first Elders’ benefit in the amount 

of $300 per Elder in December, 2009 and declared the same Elders’ benefit in December, 2010. Although the dividend may seem small, it was a huge step for Ahtna 

and helping to provide for our Elders. 

Dividends. Recognizing that the majority of our shareholders do not have much 

financial wealth or the ability to find employment in the Region, Ahtna strives to 

responsibly issue dividends to shareholders. As discussed above, Ahtna has been 

through some tough times in the early 2000s and was unable to issue a dividend 

in those years. With the economic successes in recent years, Ahtna provided dividends in 2007, 2008 and 2009 of $2.79 per share and $4.00 per share in 2010. This 

is a total of $2,377,923 being paid out in dividends to our shareholders over the past 

four years! 

Regional Community Support. We understand the importance of community and 

the role that other entities have in supporting our shareholders. Every year the 

Board provides an annual contribution of $10,000 to each Village in the Region, and 

often helps fund their annual meetings. Our donation helps with administrative 

costs associated with running tribal programs that are chronically underfunded by 

the BIA and other agencies. Ahtna also supports the Copper River Native Association (CRNA), the Regional non-profit entity providing health and social services to 

the Native people living in the Ahtna Region. CRNA is also significantly underfunded by the Indian Health Service (IHS), which routinely does not pay tribal entities the indirect costs associated with running IHS programs. We support other 

community activities in the Region, such as an annual basketball tournament, community carnivals and parades, dances, shareholder open houses and holiday receptions. 

Other Organizations. Ahtna also recognizes that collectively many ANCs and 

Alaska Native organizations face the same opportunities and challenges as we do, 

as well as the drive to provide for our People in culturally appropriate avenues. 

Therefore, Ahtna donates to some of these organizations, such as the Alaska Federation of Natives (AFN), the Native American Rights Fund (NARF), and the ANCSA 

Regional Association. The existence of these other organizations, their pursuit of 

like causes, and the ability to tackle issues as a collective benefit to our shareholders. 

B. Shareholder Development—Training, Education and Employment 

Ahtna’s shareholder development vision is to ‘‘encourage shareholders to reach 

their highest employment potential and to provide them employment opportunities 

within Ahtna for all future generations.’’ As such, Ahtna focuses on helping shareholders obtain employment, training and education, and by getting shareholder employees into management training tracks within our company to ensure Ahtna is 

shareholder run and managed. 

In recent years, with additional funding from profitable subsidiaries and with additional job opportunities, Ahtna has been able to institute a more aggressive program to recruit, hire, train and retain shareholders. In 2008, Ahtna hired a Shareholder Development Coordinator to run the Shareholder Development Program. 

Over the course of 2008, Ahtna and each subsidiary company prepared a 2009 

Shareholder Development Plan, outlining their Board and Management Team’s 

shareholder development initiatives. Over the past two years, Shareholder Development has made tremendous strides in reaching our shareholders and assisting them 

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9For the purposes of these numbers, ‘‘shareholders’’ includes shareholder descendants and 

spouses of shareholders. 

with their employment goals. For 2011, the focus areas of the Shareholder Development Department are:

• Strengthening subsidiaries relations and reporting mechanisms

• Strengthening shareholder employee relations and use of shareholder development plans

• Expanding shareholder outreach efforts and communications

• Redesigning Talent Bank to be a more comprehensive recruitment/employment 

assistance tool

• Establish P&Ps for On-call and Workforce Development programs

• Further development of Internship Program

• Release a Shareholder Demographics Survey

• Expand employment support services and educational assistance resource library

To provide a better understanding, we highlight a few specific Shareholder Development programs below. 

Shareholder Hire. First and foremost, Ahtna has always promoted shareholder 

hire through a ‘‘shareholder hiring preference,’’ which also includes a preference for 

hiring shareholder descendants and spouses. This preference has translated into 

hundreds of employment positions within Alaska and particularly through Ahtna’s 

construction and pipeline projects. In our 2005 report to the U.S. Government Accountability Office, we reported 760 employees across the Ahtna family, of which 86 

were shareholders. As of December 31, 2010, Ahtna has 2,188 employees, of which 

96 are shareholders. 9 Although we recognize that our shareholder hire percentage 

would appear small due to increased work outside Alaska, we have been able to 

maintain about a 1 in 4 shareholder hire ratio for our Alaska positions. (Ahtna generally maintains the existing workforce when taking on new work in the lower 48.) 

Ahtna had approximately 401 Alaska-based employees in December 2010, of which 

96 were shareholders, shareholder descendants or shareholder spouses. 

Ahtna also partners with companies outside the Ahtna family to provide employment and training opportunities in the Region. For instance, Ahtna has an agreement with Princess Lodge, which is has a resort in the Ahtna Region, whereby Princess will train qualified shareholders in management positions at the resort. Additionally, Alyeska Pipeline Service Company provides Ahtna funding to support individual shareholder interns in fields that are relevant to the pipeline work. 

Internship Program. Ahtna began its internship program informally and started 

the Shareholder Internship Pilot Program in Fall 2006. This Program is now permanent and has three internship opportunities within the Ahtna Family of Companies 

in 2011. This Internship Program assists Ahtna shareholders and descendants in 

pursuing higher education by funding school costs, providing work experience, and 

helping them achieve successful employment within the Ahtna family of companies. 

Along similar lines, in 2008 Ahtna also started the Youth Summer Intern Program, 

providing recent high school graduates the opportunity to work at Ahtna for the 

summer. Ahtna has many success stories over the short course of this Program. Specifically, five of the six interns that participated between Fall 2006 and Spring 2008 

have been hired within the Ahtna family. For example, Eva Olhausen participated 

in the Pilot Program between 2006 and 2007. After she received her B.A. in Business Administration in 2007, Eva was hired on full time as a Human Resources 

Specialist at Ahtna Technical Services, Inc. Eva has since transferred over to Ahtna, 

Inc., as the Benefits Specialist and has received her Benefits certification. 

Temporary Employee Program. Ahtna maintains a list of on-call shareholders interested in working within the Ahtna family of companies. Ahtna fills all temporary 

clerical and laborer-type positions through this on-call list. These ‘‘temp’’ placements 

give shareholders an inside view of working for an Ahtna company and also give 

them an opportunity to display their skills and qualifications. 

Individual Shareholder Development Plans. Ahtna helps employee shareholders 

identify their career goals through Individual Shareholder Development Plans 

(ISDP). An ISDP outlines the shareholder’s strengths and goals, and identifies professional/education development opportunities that help the shareholder reach their 

career goals. 

Management Trainee Program. Shareholder management is not new to Ahtna, as 

is demonstrated by the current Ahtna leadership. Ahtna shareholders are leading 

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the companies and ensuring future generations can step into their roles and lead 

our companies with a sense of cultural pride. Ahtna recognizes the need to identify 

and promote ‘‘emerging executives’’ and the need for ‘‘executive management training’’ to ensure Ahtna stays a shareholder managed company. In past years, Ahtna 

has funded significant continuing education and training expenses for our shareholder executives and managers. 

Through this program, we identify shareholders with the potential and interest 

to manage within the Ahtna family and develop an ISDP to get them there over 

an appropriate timeframe. Many other Ahtna, Inc. manager positions are currently 

held by shareholders, including:

Shareholder Records Manager (maintains all shareholder records and stock 

transfers)

Land and Administrative Supervisor (oversees 8 employees in the Glennallen 

office)

Information Technology Technician (manages Alaska-based IT needs)

Management Trainees and other managers can receive assistance with a college 

degree or other training, and may work across several different departments and 

companies within the Ahtna family. The ultimate goal to maintain a manager or 

executive leadership position with the Ahtna family of companies. 

Workforce Development Fund. In past years, Ahtna has funded training opportunities that promote employability in the trades. For instance, in 2006 Ahtna sent 13 

shareholders to training in Texas for ‘‘rough neck’’ training. In recent years, Ahtna 

has budgeted $30,000 in a Workforce Development Fund to (1) provide individual 

shareholders funding for training opportunities, including enrollment and travel 

costs; and (2) to sponsor trainings in the Region impacting the employability of a 

large number of shareholders. With regard to the latter, Ahtna Contractors, LLC 

has been sponsoring skills trainings in the Region where there is an identified skill 

set needed to perform current construction projects. 

Outreach. Ahtna is committed to providing shareholders access to information, 

support services, training and employment through effective outreach and marketing of Ahtna occupations and careers. We continuously update our job openings 

and advertise career opportunities to shareholders, through the Shareholder Development News (e-newsletter), the Kanas (quarterly shareholder publication), the 

Ahtnajobs.com website, and other shareholder contact tools (such as advertising at 

local high schools and other job fairs). 

C. Land and Resource Management 

Ahtna, Inc. owns in fee title, approximately 1,528,000 acres conveyed in December 

1998 from an entitlement of 1,770,000 acres. This includes 714,240 acres of land 

surrounding the eight villages, and close to 45,000 acres in bonus selections to be 

distributed to the villages based on historic use and subsistence needs. Ahtna’s 

Land Department is guided by the strategic direction of the Ahtna, Inc. Board of 

Directors and the Board’s Land Committee and the Customary and Traditional 

Committee. Unlike ‘‘traditional’’ for-profit corporations managing buildings or property, the priority of Ahtna’s shareholders is to manage these lands and resources 

for future generations of the Ahtna People in accordance with cultural and traditional uses and values, conservative development strategies, and principles of culturally appropriate stewardship. 

The Land Department has four primary functions: (1) identify and preserve 

Ahtna’s land interests and allocate appropriate interests to others; (2) protect 

Ahtna’s customary and traditional uses; (3) protect the land from unauthorized uses; 

and (4) manage and develop commercial land uses. Crossing over these broad categories, Ahtna maintains strong communications with shareholders and villages on 

land-related issues; works closely with State and Federal agencies on land and natural resource matters; and provides for geographic information system (GIS) mapping to provide support and research land status and development issues. Our land 

programs are a direct benefit to our shareholders, and several specific programs are 

discussed below. 

Merged Village Programs. In 1980, seven of the eight Village Corporations merged 

with Ahtna, Inc. Under the terms of the Merger Agreement, Ahtna assumed management of all former Village Corporation lands. Ahtna is required to coordinate use 

of these lands with village-based shareholder committees known as Successor Village Organizations (SVO). The SVO reserves the right to withhold consent to any 

type of new development within the former village lands. The Land Department also 

obtains permission from an SVO before issuing any commercial use permit within 

those lands. Ahtna respects these rights and expends considerable funds ensuring 

Land Committee and SVO participation in land decisions. 

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The Merger Agreement also provides for the transfer of former Village Corporation lands to individual shareholders from the merged Village Corporations. This 

Merger Land Use Program provides shareholders to a long-term lease of 5 acres per 

100 former Village Corporation shares. Ahtna manages this program as well. 

Homesite Program. Under ANILCA, individuals are entitled to 1.5 acres of land 

in fee title if they can prove traditional use of the land. Ahtna administers a Homesite Program that assists shareholders with identifying their property interests, 

completing the appropriate paperwork, and documenting their traditional uses for 

submission to the BLM. 

Resource Development. Ahtna’s lands include areas that are either known resources or have high probability for resources for gravel, timber, minerals, oil and 

gas. The Land Department manages development of Ahtna’s resources considering 

potential revenue to Ahtna and shareholder dividends and minimizing negative impacts on traditional shareholder activities such as fishing and hunting. For instance, 

in 2010 Ahtna’s gravel sales brought in $81,412 in revenue. 

Commercial Land Use Program (Lease, Permit, Easement). The Land Department 

issues leases, easements and permits for commercial uses. These arrangements generate funding through a $1000 proposal fee, which supports administration of the 

Land Department’s research and review. Additionally, if Ahtna accepts the proposal, 

as part of the agreement, the lessee donates 10 percent of the contract or $1,000 

(whichever is greater) to the Walter Charley Memorial Scholarship Fund. 

Individual Use Permit Program. Ahtna’s lands are open to entry by permit only. 

Ahtna’s Permit Program allows individual use in a variety of manners. A land crossing permit can be purchased to cross Ahtna lands to reach public hunting or fishing 

areas. Permits are issued for small amounts of gravel, for individual use such as 

a driveway. Permits are issued for camping and berry picking. Ahtna does not allow 

hunting on its lands except for a special Bison permit and for Predator Control 

Hunting (i.e., wolves). In 2010, Ahtna issued 451 individual use permits. 

Shareholder Resource Program. Ahtna provides shareholders access to free gravel 

for personal use such as for a driveway, and allows villages access to free gravel 

for village projects. Shareholders are also entitled to 100 free house logs per year 

and 25 cords of fire wood. 

Shareholder Assistance Program. Ahtna assists shareholders with land status research at no cost. Ahtna provides maps, GPS services, property legal descriptions, 

surveys, title research, and assistance with BIA Native Allotments. Ahtna waives 

all the fees associated with shareholders submitting requests under the Commercial 

Land Use Program, as well as the Scholarship donation for accepted proposals. 

Subsistence Preservation. Like most ANCs, Ahtna’s People have a traditional subsistence lifestyle, hunting moose and caribou and fishing in Ahtna’s many rivers like 

the Copper River. We help protect these customary and traditional practices 

through subsistence advocacy. The Land Department and Ahtna management review proposed regulations, attend meetings, and submit proposals and comments regarding both State and Federal laws and regulations. Ahtna representatives sit on 

boards and committees that provide venues to protect Native subsistence rights. 

Ahtna has also been at the forefront of litigation against the State of Alaska to protect subsistence rights. Ahtna supports other entities, like NARF, which also seek 

to protect Native subsistence rights. 

Land Protection. Ahtna land is on the road system in an area accessible to Alaska’s major population hubs (Fairbanks and Anchorage). Trespass is frequent and 

land protection is a major component of Ahtna’s land management program. Land 

Protection Officers are stationed in each village and deal with all complaints of trespass, hunting disputes, trap line disputes, theft, wood cutting disputes, vandalism, 

criminal mischief, littering, hazardous material dumping and clean up issues. Officers educate shareholders and the general public on private land laws, patrol via 

ATVs and boats, post private property signs, and issue permits in the field to individuals on Ahtna property. 

D. Reinvestment in Our Companies 

Ahtna’s ability to provide benefits to our shareholders can only come as a result 

of successful business opportunities and growth of our companies. In order to have 

successful and growing companies, it is imperative that we reinvest back into our 

companies, empowering them to build stronger infrastructure, powerful leadership, 

and the capabilities to bid and win larger and more competitive work. As the companies build, the benefits expand which is the ultimate goal and empowers our shareholders. 

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Conclusion 

We as Alaska Natives ceded large parts of Alaska to the United States and trillions of dollars of natural gas and oil reserves. The Alyeska-Pipeline Service Company reported on its website that as of through 2010, over 16.2 billion barrels of 

oil have run through the Trans Alaska Pipeline System and although only rough 

estimates can be calculated, using the average price range of $80–$100 per barrel 

of oil, the equates very roughly to somewhere between over $1.28 trillion and $1.6 

trillion being generated in revenue. That is an amazing amount in natural resources 

that Alaska Natives ceded to the United States and the number only continues to 

rise! In return, we retained some land and less than a billion dollars as assets to 

develop for-profit and non-profit regional corporations and associations. ANC access 

to the SBA’s 8(a) program helps fulfill Congressional mandates for government contracting aimed at providing training and market opportunities for minority and disadvantaged businesses. Our Native shareholders are in control of our Corporations 

and are the primary beneficiaries of dividends, equity, and philanthropy generated 

by ANCs. 

Our business is shareholder driven in every aspect. Our leaders, whether as 

Ahtna Shareholders in management, Village spokespersons, or directors on the 

board, have all played a meaningful role in shaping Ahtna as it stands today and 

the direction for the future generations of the Ahtna People. Through special contracting opportunities, we have been able to realize economic development opportunities that benefit entire communities of people that have historically and continue 

to this day to be economically depressed. Benefits cannot be measured by dividends 

alone, but rather employment opportunities, preservation of the traditional culture, 

opportunities for higher education and training, protection of our lands and resources, and enhancement of the pride and self esteem of the Ahtna People. Federal 

contracting through the SBA 8(a) Program is one of the vehicles that has given 

Ahtna the means necessary to provide these benefits. 

I would like to close my testimony with one message—the 8(a) program is working 

and it is working well! To date, Alaska Natives still remain among the most impoverished populations in America but through utilizing programs such as these, we 

will continue addressing the needs of our people. 

Thank you very much for the opportunity to provide this testimony. 

PREPARED STATEMENT OF ERIC S. TREVAN, PRESIDENT/CEO, NATIONAL CENTER FOR

AMERICAN INDIAN ENTERPRISE DEVELOPMENT

I. Introduction 

Chairman Akaka and Ranking Member Barasso, the National Center for American Indian Enterprise Development (the ‘‘National Center’’ or ‘‘NCAIED’’) commends the Senate Committee on Indian Affairs for convening this important hearing, appropriately titled ‘‘Promise Fulfilled: The Role of the SBA 8(a) Program in 

Enhancing Economic Development in Indian Country.’’ The National Center is 

pleased to present this testimony on how this program is furthering Native business 

development and fulfilling the overarching Federal Indian Policy goals of Indian 

self-determination and self-sufficiency. 

The Small Business Administration (SBA) operates several small business contracting programs to achieve two important goals: (1) enable the Federal Government to diversify the supplier base for the Federal procurement market, and (2) 

strengthen small, minority and Native contractors seeking to penetrate that enormous market. Of all the SBA’s programs, its Business Development Program authorized by Section 8(a) of the Small Business Act (the ‘‘8(a) Program’’) has been 

the most successful in helping Indian tribes, Alaskan Native regional and village 

corporations (ANCs), and Native Hawaiian Organizations (NHOs) diversify, grow 

their enterprises, and generate revenues and jobs for their Native communities. As 

enterprises of each of these indigenous aboriginal groups are eligible to apply for 

certification as 8(a) Program participants, our testimony refers to them collectively 

as ‘‘Native 8(a) enterprises’’ participating in the ‘‘Native 8(a)’’ program. 

The National Center has long played a pivotal role in spurring Congress and Federal agencies to support Native and minority business development. NCAIED leaders have testified repeatedly before Congress, and worked closely with other national Native organizations to improve the Native 8(a) program and advance other 

Native business and economic development initiatives. We also collaborated in the 

first-ever consultations that the SBA and the Office of Management and Budget 

(OMB) and Federal Acquisition Regulatory Council (FAR Council) conducted with 

Indian tribes to discuss 8(a) regulatory proposals, and submitted comments and recommendations for the SBA and FAR Council consultations record. 

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II. Background on the National Center 

The National Center, organized over 42 years ago, is the longest serving Native 

American business development assistance provider in the United States with the 

mission to develop the American Indian private sector as a means to help Native 

communities become self-sufficient. The National Center operates a national network of non-profit centers across the country that provide procurement technical assistance, business development and management consulting services to Indian 

tribes, ANCs, NHOs, and businesses owned by these entities, as well as individual 

Native Americans, Alaskan Natives and Native Hawaiians. Our business centers assist a broad range of first generation Native entrepreneurs to sophisticated tribal 

enterprises in developing business feasibility studies, business plans, banking relationships and lines of credit, marketing and growth strategies. We are supported by, 

and also help, Federal agencies by: coaching contractors on completing applications 

for certifications and registrations; finding capable Native companies to fulfill Federal requirements; and providing contractors guidance on contracting programs administered by the SBA, various other Federal and state agency requirements, and 

various agencies’ Mentor-Prote ́ge ́ programs and other teaming arrangements. 

The National Center also produces various national and regional events that 

train, promote and market Native enterprises to the public and private sectors. Our 

premier annual national event is the phenomenally successful Reservation Economic 

Summit & American Indian Business Trade Fair (RES). At RES 2011, nearly 3,000 

individuals and 400 exhibiters attended, including tribes, ANCs, Native enterprises, 

Fortune 500 and other major corporate representatives as well as Federal, state, 

local and tribal political and procurement officials. Trade delegations from Canada, 

Turkey and China also attended. 

Over the years, the National Center estimates that its operations have assisted 

approximately 80 percent of the Tribes in the lower 48 states and more than 25,000 

Native enterprises, and have trained over 10,000 tribal members. Furthermore, due 

to its centers’ bid matching, other business assistance and networking opportunities 

produced at its RES and other conferences, the National Center has helped companies generate over $4.5 billion in contract awards. 

The comments below are based on countless hours of assisting Native 8(a) enterprises as they struggle to grow, diversify, thrive and return economic benefits to 

their Native communities and other areas where their companies generate tax revenues and jobs. We have learned that our conferences and training sessions must 

provide opportunities for Native 8(a) enterprises to learn from fellow contractors, 

federal procurement officials, and other contracting experts their valuable guidance 

on best practices to ensure compliance with the spirit and letter of the 8(a) rules. 

We also have found that the Native 8(a) program works best when the Native community’s political and business leaders recognize their fiduciary duties to their tribal 

members to do their due diligence to understand the intricacies and responsibilities 

of operating government contracting enterprises. Key to this process is to vet carefully and hire experienced managers (whether Native or non-Native) who know or 

can quickly learn how to navigate procurement rules and market effectively. Some 

tribes may decide contracting is too difficult and risky for profit margins that they 

consider too low. Other tribes find that contracting presents new and different types 

of job opportunities for their tribal members, offers a chance to diversify the tribe’s 

economy, and expands their horizons to operate both on and off their remote reservations and even in the global marketplace. In short, the Native 8(a) program is 

proving to be an effective procurement tool and economic development program, fulfilling its promise just as Congress intended. 

III. Legal Framework of the Native 8(a) Program 

Very compelling reasons prompted Congress to authorize the Native 8(a) Program’s provisions. Their enactment were grounded on the confluence of Federal Indian Policy, Federal Small Business Policy and Federal procurement policy considerations, and were and still are fully justified by sobering socio-economic indicators 

that have improved very little over time. 

A. Foundations of the Political ‘‘Trust Relationship’’

The governments of indigenous American Indians, Alaskan Native and Native Hawaiians were considered sovereign nations from their first interactions with European settlers. The U.S. Constitution’s grant to Congress of the power to ‘‘regulate 

Commerce... with the Indian tribes’’ in Article I, § 8, ¿ 3, and its interpretation 

in subsequent landmark Supreme Court decisions, gave rise to the Federal Government’s special political ‘‘trust relationship’’ with and responsibility to the Tribes. See 

Cherokee Nation v. Georgia, 30 U.S. 1 (1831); Worcester v. Georgia, 31 U.S. 515 

(1832). These cases arose from violations of constitutional and treaty protections. 

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1See Hearing on ‘‘Indian Finance Act and Buy Indian Act,’’ Senate Select Committee on Indian Affairs, 100th Cong. 1st Sess. 21 (1987); Oversight Hearing on ‘‘Barriers to Indian Participation in Government Procurement Contracting,’’ Senate Select Committee on Indian Affairs, 

100th Cong. 2d Sess. 80 (1988). 

Tribes across the country entered into treaties, giving up lands in exchange for 

promises of Federal protection and support for education and community development, only to suffer more treaty violations. The General Allotment Act of 1887 

forced conversion of more than 90 million acres (two-thirds of reservation lands) 

from tribal ownership—often without compensation—to non-Indian settlers as ‘‘surplus’’ lands. The 1867 Treaty of Cession promised Alaska Natives peaceful possession of their lands and the Alaska Statehood Act confirmed these rights. Then discovery of rich oil fields led to enactment of the Alaska Native Claim Settlement Act 

and relinquishment of 89 percent of Alaska Natives’ lands. That Act created regional and village corporations to administer the settlement funds and generate revenues for the benefit of their many thousands of Alaska Native shareholders. This 

constitutional and statutory foundation underpins subsequent Congressional action 

to assist these Native communities in their struggle for economic business and community development, self determination and self sufficiency. 

B. History of the 8(a) Program and Specific Native 8(a) Provisions 

Beginning in 1942, Congress authorized Federal contracting with small businesses 

and in 1977 created the Small Business Act’s Section 8(a) program for Federal agencies to award contracts through the SBA to small, minority-owned businesses. Congress also set a goal of at least 10 percent of all federal contract awards to minorityowned businesses, including those owned by American Indians, Alaska Natives and 

Native Hawaiians. About 15 years later, the Senate Committee on Indian Affairs 

held its first hearings to determine whether Indian preferences in government contracting were effective, why so few Native-owned enterprises were participating in 

government contracting, and why a ‘‘President’s Commission on Indian Reservation 

Economies’’ report had found that government contracting and procurement policies, 

regulations, and procedures were significant obstacles to Indian reservation economic development. 1 The National Center presented testimony at both hearings. 

In 1987, our then President, Steven Stallings, testified on Indian economic development and government contracting. He recommended expansion of the Buy Indian 

Act’s application to more Federal agencies, and proposed a Buy Indian Act certification that all Federal contracting agencies could accept, including the SBA’s contracting programs. He urged that more contracts be issued as Buy Indian because 

the ‘‘unchecked discretionary authority’’ of the Bureau of Indian Affairs (BIA) to 

award substantial and valuable procurement opportunities to non-Native contractors. Despite Buy Indian Act requirements and implementing policy directives that 

‘‘all purchases or contracts are to be made or entered into with qualified Indian contractors to the maximum extent practicable,’’ Mr. Stallings stated that BIA procurements using Buy Indian Act procedures totaled only $10 million in FY 1971 and 

grew only to $60 million in FY 1983. Unfortunately, lack of Buy Indian Act usage 

and enforcement persist to this day. 

The National Center testimony focused on the difficulties that Indian-owned contractors often encountered in seeking certification for the SBA’s 8(a) program. Of the 

few firms that had achieved certification by 1987, most had received no 8(a) contract 

awards. Stallings noted that the two largest contracts (representing the majority of 

8(a) award dollars to Indian-owned companies) were awarded to tribal-owned companies on the Devil’s Lake Sioux and Fort Peck Reservations under special arrangements. At that time, most of the 8(a) certifications resulted from a Memorandum 

of Understanding signed by SBA and the Department of Defense (DOD) in September 1983. The Memorandum committed SBA to ‘‘receive’’ 150 fully completed applications for 8(a) status and ‘‘target’’ 75 of them for certification. Stallings reported 

that SBA did its part, but DOD had not provided the contract support promised. 

He recommended improvements to the 8(a) program, more business and procurement technical assistance to Indian-owned businesses and tribal governments, and 

more effective training programs. 

At the Senate Committee’s later hearing in 1988 on ‘‘Barriers to Indian Participation in Government Procurement Contracting,’’ Mr. Stallings again testified in support of 8(a) program reforms, especially to assist tribal-owned companies. He reported slow growth of contracting companies owned by Indian tribes and American 

Indian and Alaska Native individuals, lagging far behind other groups: only 14,843 

companies, generating gross receipts of just $646.7 million, representing only 1.8 

percent of the total number of small businesses, and a mere l.4 percent in gross receipts of all minority-owned businesses, combined. Comparative figures showed: 

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2Oversight Hearing on ‘‘Barriers to Indian Participation in Government Procurement Contracting,’’ Senate Select Committee on Indian Affairs, 100th Cong. 2d Sess. 2 (1988). The public 

policy referenced in Chairman Inouye’s 1988 statement derives from the U.S. Constitution’s 

grant to Congress of the power ‘‘to regulate Commerce . . . with the Indian Tribes.’’ Article I, 

§ 8, ¿ 3. This Constitutional provision, and its interpretation in subsequent landmark Supreme 

Court decisions, gave rise to the federal government’s special political relationship with and 

trust responsibilities to the tribes. See Cherokee Nation v. Georgia, 30 U.S. 1 (1831); Worcester 

v. Georgia, 31 U.S. 515 (1832). Thus Congressional enactments bestowing special rights to tribes 

and ANCs are based on this political relationship and trust obligation, not on a racial classification designed to remedy past racial discrimination. 

248,141 Hispanic-owned companies with gross receipts of nearly $15 billion; 339,239 

African American-owned firms with gross receipts of $12.4 billion; and 240,799 firms 

owned by Asian American and other minorities with gross receipts of nearly $17.3 

billion. To reach parity with these other groups on a per capita basis, a 4,000 percent increase in Native business ownership would be needed. 

Also testifying at this hearing was Ronald Solimon, the National Center’s immediate past Board Chairman. He then served as CEO of Laguna Industries, Inc. and 

described how his collaboration with Raytheon Corporation, SBA and DOD had led 

to a joint venture between Laguna Industries with Raytheon that was awarded a 

DOD contract. Mr. Solimon recommended that the Congress amend Section 8(a) to 

authorize 8(a) companies owned by Tribes or ANCs to joint venture with companies 

that could mentor them along the way. 

The low level of Federal (particularly defense) contract awards to Native-owned 

firms greatly concerned then Committee Chairman Daniel K. Inouye. He emphasized that ‘‘directing [the] purchasing power [of the Federal Government] to accomplish social goals such as assisting disadvantaged members of society is well established’’ and acknowledged that ‘‘unfortunately, . this public policy goal has not been 

achieved with respect to the participation of businesses owned by [N]ative Americans.’’ 2 In keeping with Federal Indian policies, he acknowledged that it is Native 

groups’ ‘‘common trust relationship with the United States’’ that ‘‘allow[s] the Congress to legislate unique benefits and treatment for the Native Americans.’’

Responding to these recommendations, the Congress passed the Business Opportunity Development Reform Act in late 1988 (as well as amendments authored by 

Congressman Rhodes in 1990) that added the special 8(a) provisions applicable to 

companies owned by tribes and ANCs. Congress included these special 8(a) provisions recognizing that tribes and ANCs, as representative organizations, are responsible for generating continuing income and jobs for, and improving the livelihood of, 

hundreds or thousands of tribal members and Native shareholders. 

In parallel action in 1988, the Congress also amended the Procurement Technical 

Assistance Center (PTAC) Program to target assistance to Indian Country. It authorized creation of American Indian PTACs, or AIPTACs, designed to serve multiple Bureau of Indian Affairs areas. A number of these AIPTAC offices now operate 

within the National Center’s network of business assistance centers, and help Native-owned companies learn how to navigate the complex Federal procurement marketplace using the 8(a) program and other procurement and business development 

tools available to them. 

C. Native 8(a) Fulfills Federal Small Business and Indian Policies 

Part of the National Center’s function as a procurement technical assistance provider is to assist Native American contractor clients to be capable bidders, awardees, and performers of Federal contracts. In order to meet these objectives, these 

contractors must be prepared to serve the best interests of the Federal agency that 

will award the contract. We believe that a competitive or sole source award to a Native 8(a) enterprise will allow the agency to meet its small business goals and further Federal Small Business Policy objectives, including:

• Congress’ declaration that the development and growth of small businesses is 

a national priority, 15 U.S.C. § 631(a);

• Congress’ articulation of the federal government’s policy to ‘‘aid, counsel, and 

assist small businesses to ensure that a fair proportion’’ of federal contracts for 

goods and services are placed with small business, 15 U.S.C. § 631(a);

• The FAR’s articulation of such policies by requiring executive agencies to provide ‘‘maximum practicable opportunities’’ to small businesses, including small 

disadvantaged businesses, such as 8(a) contractors, in federal acquisitions of 

goods and services, 48 C.F.R. § 19.201(a), see also 15 U.S.C. § 637(d)(1); and

• Congress’ establishment of goals for award of federal contracts to small businesses and small disadvantaged businesses, 15 U.S.C. § 644(d)(1).

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Equally important are the numerous articulations of Federal Indian Policy that 

underpin the Native 8(a) provisions, including:

• Congressional recognition of ‘‘the obligation of the United States to respond to 

the strong expression of the Indian people for self-determination by assuring 

maximum Indian participation in the direction of educational as well as other 

federal services to Indian communities so as to render such services more responsive to the needs and desires of those communities.’’ 25 U.S.C. § 450a(a);

• Congress’ declaration of its ‘‘commitment to the maintenance of the Federal 

Government’s unique and continued relationship, and responsibility to, individual Indian tribes and to the Indian people as a whole through the establishment of a meaningful Indian self-determination policy . . . . In accordance 

with this policy, the United States is committed to supporting and assisting Indian tribes in the development of strong and stable tribal governments, capable 

of administering quality programs and developing economies of their respective 

communities.’’ 25 U.S.C. § 450a(b); and

• Congress’ declaration of its policy ‘‘to help develop and utilize Indian resources, 

both physical and human, to a point where the Indians will fully exercise responsibility for the utilization and management of their own resources and 

where they will enjoy a standard of living from their own productive efforts 

comparable to that enjoyed by non-Indians in neighboring communities.’’ 25 

U.S.C. § 1451.

As each Federal agency is a component of the Federal Government, and therefore 

is obligated to honor the Federal trust relationship with Indian tribes, the determination to award a contract on a sole source basis to a Native 8(a) enterprise is 

in the best interest of the agency as part of its trust obligation to promote Indian 

self-determination. 

IV. Reports Confirm Native 8(a) Enterprise Success 

The results of these Congressional enactments demonstrate real progress. The 

U.S. Census Bureau reported in 1997 that its data (though incomplete) showed 

197,300 Native American-owned businesses in the United States, up 84 percent 

from 1992, employing 298,700 people and generating $34.3 billion in revenues. See

1997 Economic Census: Survey of Minority Owned Business Enterprises: Company 

Statistics Series (2001). By 2002, Census estimates were 206,125 Native-owned 

firms, up 4 percent from the 1997, but total revenues down 23 percent to $26.3 billion. See 2002 Survey of Business Owners, U.S. Census Bureau. 

In 2007, the National Center estimated that, of the roughly 360 tribes in the 

lower 48 states, several dozen had launched government contracting operations and 

applied for 8(a) program certification. Some were very successful, while others struggled to break into the difficult federal market. The SBA’s list of the top 8(a) firms 

included several owned by ANCs and Tribes, and some had appeared on the Top 

25 8(a) list of information technology firms. See Wakeman, 8(a)s Still a hit with 

ANCs, tribally owned companies, 20 Washington Technology (Sept. 26, 2005). 

Numerous other reports, even those that critique elements of the Native 8(a) program, confirm that the above-recited Congressional initiatives to spur Native economic development have been remarkably successful. The first major report issued 

in April 2006 from the Government Accountability Office (GAO) entitled ‘‘Increased 

Use of Alaska Native Corporations’ Special 8(a) Provisions Calls for Tailored Oversight’’ (GAO–06–399). This GAO report provided helpful, balanced information on 

ANC 8(a) contracting as activities undertaken in response to the ANCSA that directed ANCs to pursue economic development to benefit their Alaska Native shareholders. GAO’s report also explained how ANCs’ participation in the 8(a) program 

has helped them generate revenues to return benefits to their Alaska Native shareholders, and how the SBA and federal agencies need to improve their oversight of 

ANC and other 8(a) contracting. The GAO report also made some recommendations 

for improvements, virtually all of which have been accomplished with SBA administrative actions and recent promulgation of revised 8(a) regulations. 

Also very helpful in presenting a clearer picture of economic development progress 

in Indian Country is the September 2007 report, entitled ‘‘Native American Contracting Under Section 8(a) of the Small Business Act—Economic, Social and Cultural Impacts,’’ by Jonathan B. Taylor of Taylor Policy Group, Inc., who is associated with the Harvard Project. His analysis confirms what the National Center’s 

network of offices has learned anecdotally from working with Native-owned businesses across the country: the Native 8(a) provisions have succeeded, as Congress 

intended, in facilitating Native communities’ diversification, self-determination and 

economic self-sufficiency. The Mentor-Prote ́ge ́ programs of the SBA, DOD and other 

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federal agencies also have helped in strengthening tribal- and ANC-owned companies. 

These reports, and many other studies, economic impact analyses, and other documentation submitted for this Committee’s hearing record contain substantial additional information on the success of the Native 8(a) provisions, how they fulfill Congress’ intent in enacting them in the first instance, and why they should continue. 

V. Remedial Actions Should Improve, Not Cripple, the Native 8(a) Program 

It is hard to think of a more worthy contracting program that has been more maligned than the Native 8(a) program. Nonetheless, the current and past Administrations certainly have recognized the program’s worth, especially the SBA which directed its limited staff to take significant administrative, enforcement and rulemaking actions to improve its operation and oversight of the Native 8(a) program. 

The SBA addressed problems it identified, issues raised in GAO and SBA Inspector 

General (IG) reports, Congressional critiques, and concerns voiced by tribes, ANCs 

and their 8(a) program participants about the behavior of a few errant 8(a) companies and their non-Native managers that unfairly placed the whole Native 8(a) program in a bad light. Other SBA actions have focused on enhancements, such as efforts to clarify (and thereby improve) the process for tribal enterprises and other applicants seeking 8(a) certification. We applaud SBA’s willingness to conduct many 

consultations with Indian tribes, businesses, and national organizations, such as the 

National Center, the National Congress of American Indians (NCAI), Native American Contractors Association (NACA), Alaska Federation of Natives, and National 

8(a) Association to hear proposals to address the various issues raised. 

In addition to Federal consultations and other activities, many private sector initiatives have been undertaken to develop proposals, implement trainings to build capabilities and broaden procurement knowledge, adopt best practices and compliance 

manuals, institute compliance reviews and more trainings. The National Center is 

proud of the role it has played in conducting training sessions, advocating best practices and compliance, and fostering mentoring and partnering for Native 8(a) enterprises to enhance their capabilities. We have conducted special 8(a) panel discussions at our business development and procurement assistance conferences focusing 

on the special Native 8(a) provisions, the fiduciary responsibilities of the enterprise 

management and the Native board (e.g., tribal councils, tribal business development 

boards, and other Native boards) to their tribal members and Native shareholders 

to operate their 8(a) enterprises in full compliance with both the letter and spirit 

of the laws. The National Center also has entered into partnering arrangements 

with various other national organizations to encourage greater collaboration among 

Native and other contractors in bid matching, joint venturing, teaming and performing federal contracts. 

The National Center continues to work with NCAI, NACA and the National 8(a) 

Association to develop joint statements and reach out to other organizations representing 8(a) and other small contractors to work jointly toward the day that all 

Federal agencies increase, meet and even exceed their 23 percent small business 

contracting goals. 

VI. Specific Recommendations for Additional Improvements 

The National Center recommends the following additional actions, many of which 

this Committee can and should take, to strengthen Native American entrepreneurial and economic development outreach, program support and oversight: 

A. Enact Native American Business Development Provisions 

After careful deliberations, last year the Senate Committee on Indian Affairs developed several very signification proposals to enhance business and economic development in Indian Country. Chairman Byron Dorgan circulated a comprehensive Discussion Draft, received comments, and proffered many of the legislation’s provisions 

as floor amendments while the full Senate was considering the Small Business Jobs 

bill. Below are the provisions that the National Center urges the Committee to take 

up again and promptly move forward: 

1. Native American Business Development Program: After several years, there is 

now consensus on provisions (most recently contained in last year’s S. 3534) to authorize the SBA’s Office of Native American Affairs (ONAA), headed by an Associate 

Administrator, and grants for Native American Business Centers so that more business management, financial and procurement technical assistance can be made 

available in more locations throughout Indian Country. SBA’s ONAA must have 

more authority to be able to compete for a fair share of the funds already appropriated for SBA’s entrepreneurial development program overall. Without specific authorization to access those entrepreneurial development program funds, the ONAA 

will continue to be substantially disadvantaged in trying to provide adequate outVerDate 0ct 09 2002 12:43 Dec 12, 2011 Jkt 065771 PO 00000 Frm 00128 Fmt 6601 Sfmt 6621 S:\DOCS\65771.TXT JACK
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reach and assistance across the country with its grossly inadequate budget of only 

$1,250,000 (down from $5,000,000 annually during the Clinton Administration).

2. Surety Bonding: Expansion of existing, but unutilized, surety bond guarantee 

authority for the Secretary of the Interior to issue surety bond guarantees either 

independently or supplemental to a surety bond guarantee issued by SBA, up to 100 

percent of amounts covered by a surety bond issued for eligible construction, renovation, or demolition work performed or to be performed by an Indian individual or 

Indian economic enterprise. Often tribal and individual Indian-owned construction 

companies engaging in construction contracting (whether under federal, state, local 

or tribal government contracts, or commercial contracts) face significant barriers to 

securing any surety bonding at all. Many insurance/surety companies choose not to 

work with tribal contractors, because they do not understand tribal sovereignty and 

do not want to work with tribal courts. Technical assistance and training for contractors seeking surety bonding also would help them mitigate risk, build capacity, 

improve performance, grow and create more jobs. The National Center’s business assistance centers provide this type of guidance now, but more targeted assistance related to surety bonding is needed. 

3. Indian Loan Guarantee Program Enhancement: The Indian Finance Act authorized the Secretary of the Interior to provide guaranteed loans to businesses that are 

majority-owned by tribes or Indians. Implementing regulations require tribal businesses to provide collateral worth at least 20 percent of the loan principal. Too frequently, this equity requirement inhibits the launch of on-reservation enterprises or 

development projects that employ reservation residents. The Dorgan proposal would 

amend the loan guarantee provisions to require the Department of the Interior to 

establish a tiered system, based on the number of on-reservation jobs created, that 

would provide more favorable equity terms and authorize an increase in the amount 

guaranteed up to 100 percent for energy and manufacturing businesses. This change 

would make the Indian loan guarantee program far more helpful to the establishment of tribally-owned energy or manufacturing businesses, and potential employment of more local reservation residents. 

4. Buy Indian Act Amendments: Enacted in 1910, the Buy Indian Act obliquely 

states simply that ‘‘so far as may be practicable Indian labor shall be employed, and 

purchases of the products of Indian industry may be made in open market in the 

discretion of the Secretary of the Interior.’’ (25 U.S.C. 47). The Dorgan Discussion 

Draft included provisions to clarify and strengthen Buy Indian procurement procedures to apply when fulfilling agency requirements will make use of funds appropriated for the benefit of Indians. Such procedures would foster increased award of 

contracts to Indian economic enterprises by procurement personnel of the Department of the Interior, Indian Health Service, and other agencies receiving funds appropriated for the benefit of Indians. Also proposed was creation of a Data Center 

for the collection of information on the experience, capabilities and eligibility of Indian economic enterprises, and reporting requirements on agency use of the Buy Indian Act and information collected by the Data Center. 

B. Other Actions the Committee Can Take 

We urge the Committee members to share what they have learned with their colleagues on other committees, and explain why Congress enacted the special Native 

8(a) contracting provisions. Equally important is stressing how the Native 8(a) provisions are fulfilling their promise and purpose by: (1) upholding the Federal trust 

responsibility; and (2) serving the Federal agencies’ best interests by meeting requirements at costs that are fair and reasonable. 

This Committee also can play a major role in urging the various Federal contracting agencies over which it has direct jurisdiction to meet and exceed their individual agency’s small and minority business contracting and subcontracting goals, 

using Buy Indian Act contracting authority to the fullest extent possible. Just as 

witnesses at the Committee’s 1987 and 1988 hearings emphasized, the Federal departments and agencies that disburse funds ‘‘for the benefit of Indians’’ (e.g., Bureau 

of Indian Affairs, other Interior agencies, the Indian Health Service, the Army 

Corps of Engineers, the Departments of Transportation, Housing, Agriculture, etc.) 

should be using the Buy Indian Act authority to contract with Native-owned businesses, small or large. To ensure that more ‘‘teeth’’ are put into Buy Indian Act implementation, the Committee should request briefings by the agencies and conduct 

oversight hearings to receive status reports from these contracting agencies on their 

past performance in contracting with Native contractors of all types, and their plans 

for increasing that contracting support. Witnesses from Indian country also should 

be invited to report on their efforts, successful and unsuccessful, to convince these 

agencies to award contracts and other arrangements (such as park concessions) 

qualified Native contractors. 

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C. Ensure Federal Agencies Meet Small Business Contracting Goals 

Tribes, ANCs, NHOs, their Native 8(a) enterprises, and all the national organizations representing 8(a) and other contractors must rally together to focus much 

more attention on the question of what can be done to improve the record of all Federal agencies in meeting both their prime and subcontracting goals for awards to 

small and minority businesses. With the significant growth in the Federal market, 

there is no excuse for the continual decline in the percentage of contract awards to 

small businesses. The following joint policy positions best summarize actions that 

should be taken:

• Fulfill Congressional intent to further the Indian Self-Determination policy set 

forth in 25 U.S.C. 450a by preserving the provisions that promote the competitive viability of 8(a) companies owned by Indian tribes, Alaska Native regional 

or village corporations, and Native Hawaiian Organizations that help support 

their Native communities by developing more self-sufficient Native economies;

• Support limits on bundling and consolidation of contracts, break up such contracts for award to small businesses, or employ procurement procedures to enable teams of Native-owned and other small businesses to pursue bundled or 

consolidated contracts;

• Spur the SBA on in its efforts to negotiate with individual contracting agencies 

to set and meet small and minority business contracting goals higher than their 

current levels, and to be more accountable for their past performance and future 

plans to make more awards in each subcategory of small business contracting;

• Increase the Government-wide contracting goals for awards to small and minority businesses (previous bills have proposed not less than 30 percent of total 

contract awards to small business, and not less than 8 percent of total contract 

and subcontract awards to small disadvantaged business and 8(a) concerns); 

and

• Encourage small businesses with larger contracts to implement subcontracting 

plans to develop stronger business alliances among all types of small business 

contractors, including 8(a) and other small disadvantaged concerns, HUBZone, 

service disabled veteran-owned, women-owned and other small businesses.

V. Conclusion 

The National Center thanks the Committee in advance for considering our comments and recommendations. 

PREPARED STATEMENT OF CHRISTINE E. KLEIN, A.A.E., EXECUTIVE VICE PRESIDENT/

CHIEF OPERATING OFFICER, CALISTA CORPORATION

Please see the below bullets and attached fact sheet on a few of the benefits that 

the 8a program has helped enable Calista corporation to provide to its Alaska native 

shareholders through some of the contracts received:

• Shareholders: Calista had 13,300 original Shareholders enroll in 1971; their Descendants number over 20,000, making Calista one of the largest Alaska Native 

Corporations (ANCs) based on population. The Calista area of Alaska is larger 

than the state of New York, has little if any infrastructure, and is remote and 

now surrounded by federal lands, wilderness, preserves, and parklands which 

isolates the region and makes it very difficult to access and develop economically.

• Dividends: the Board of Directors established an ‘‘Akilista’’ Fund to generate a 

dividend income stream for Shareholders in perpetuity. Calista has provided 

dividends to Shareholders for the past three years after it recouped its capitalized losses and became profitable through business revenues, and the Akilista 

Fund met its criteria for making distributions. Over $12.3 million in dividends 

and distributions have been made since 2008.

• Elders: Original Shareholders who reach the age of 65 have received special 

Shareholder benefit check distribution for the past three years to help them 

with the high cost of heating fuel and living expenses.

• Education: A Scholarship Fund has been providing assistance for 16 years providing post secondary, graduate, certification, and vocational education opportunities through scholarships. Since 1994 over $2.2 million has been awarded to 

over 1,300 Shareholders and Descendants.

• Internships: Calista provides paid summer internships to college students in 

good standing, helping them acquire hands on critical job skills. Students reVerDate 0ct 09 2002 12:43 Dec 12, 2011 Jkt 065771 PO 00000 Frm 00130 Fmt 6601 Sfmt 6621 S:\DOCS\65771.TXT JACK
127

ceive work experience, pay, and a living stipend, totaling more than $78,000 in 

2010 alone.

• Employment: Calista maintains an active Shareholder and Descendant resume 

and talent bank database for job recruiting and its companies all have and utilize Shareholder hire preference policies for employment opportunities.

• Infrastructure Studies, Assessments, and Plans: Energy assessments of hydroelectric, geothermal, oil/natural gas and diesel, as well as transportation infrastructure have been conducted or led by Calista. These efforts are to try solving 

difficulties associated with the extremely high living costs due to lack of any 

basic infrastructure in the region.

• Apprenticeships and Training: A highly successful certified drillers training program was established by Calista with the State of Alaska through apprenticeships, with their employment hours going towards shareholder journeymen certifications.

• Jobs: Calista has consistently had high Shareholder hire rates for over 10 years. 

More than 30 percent of Calista and subsidiary employees in Alaska are Alaska 

Native. Subsidiary company Chiulista Services has a 92 percent Shareholder 

hire and retention on its Donlin Creek mine exploration contracts within the 

Region and is a model program of success. The Brice Incorporated construction 

company owned by Calista is also known for its highly successful local hire 

numbers and training on remote civil construction projects and long history of 

building airports and roads throughout the Calista Region.

Calista supports the SBA 8a program and ability to do sole source contracting 

with qualified Alaska Native Corporations’ (ANC’s). The ANC’s are unlike other 

companies in that they are owned by whole communities of disadvantaged native 

peoples unlike other companies owned by a few members who benefit from the profits. Limiting the ANC 8a program contract caps to the same limits of individual 

small business cap limits would be devastating to the steady positive progress finally being made in some of the poorest areas of the country. 

If you have any questions at all, please feel free to call us. Thank you for the opportunity to provide this information. 

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RESPONSE TO WRITTEN QUESTIONS SUBMITTED BY HON. DANIEL K. AKAKA TO

JULIE E. KITKA


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