U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

37-848 PDF 2008

DIVERSIFYING NATIVE 

ECONOMIES

OVERSIGHT HEARING

BEFORE THE

COMMITTEE ON NATURAL RESOURCES 

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

Wednesday, September 19, 2007

Serial No. 110-44

Printed for the use of the Committee on Natural Resources

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html 

or 

Committee address: http://resourcescommittee.house.gov 

(II)

COMMITTEE ON NATURAL RESOURCES 

NICK J. RAHALL II, West Virginia, Chairman 

DON YOUNG, Alaska, Ranking Republican Member

Dale E. Kildee, Michigan 

Eni F.H. Faleomavaega, American Samoa 

Neil Abercrombie, Hawaii 

Solomon P. Ortiz, Texas 

Frank Pallone, Jr., New Jersey 

Donna M. Christensen, Virgin Islands 

Grace F. Napolitano, California 

Rush D. Holt, New Jersey 

Rau ́l M. Grijalva, Arizona 

Madeleine Z. Bordallo, Guam 

Jim Costa, California 

Dan Boren, Oklahoma 

John P. Sarbanes, Maryland 

George Miller, California 

Edward J. Markey, Massachusetts 

Peter A. DeFazio, Oregon 

Maurice D. Hinchey, New York 

Patrick J. Kennedy, Rhode Island 

Ron Kind, Wisconsin 

Lois Capps, California 

Jay Inslee, Washington 

Mark Udall, Colorado 

Joe Baca, California 

Hilda L. Solis, California 

Stephanie Herseth, South Dakota 

Heath Shuler, North Carolina 

Jim Saxton, New Jersey 

Elton Gallegly, California 

John J. Duncan, Jr., Tennessee 

Wayne T. Gilchrest, Maryland 

Chris Cannon, Utah 

Thomas G. Tancredo, Colorado 

Jeff Flake, Arizona 

Stevan Pearce, New Mexico 

Henry E. Brown, Jr., South Carolina 

Luis G. Fortun ̃ o, Puerto Rico 

Cathy McMorris Rodgers, Washington 

Bobby Jindal, Louisiana 

Louie Gohmert, Texas 

Tom Cole, Oklahoma 

Rob Bishop, Utah 

Bill Shuster, Pennsylvania 

Dean Heller, Nevada 

Bill Sali, Idaho 

Doug Lamborn, Colorado 

Mary Fallin, Oklahoma 

Kevin McCarthy, California

James H. Zoia, Chief of Staff 

Jeffrey P. Petrich, Chief Counsel 

Lloyd Jones, Republican Staff Director 

Lisa Pittman, Republican Chief Counsel 

(III)

CONTENTS 

Page

Hearing held on Wednesday, September 19, 2007 ................................................ 1

Statement of Members: 

Bishop, Hon. Rob, a Representative in Congress from the State of Utah, 

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

Cole, Hon. Tom, a Representative in Congress from the State of 

Oklahoma ...................................................................................................... 2

Napolitano, Hon. Grace F., a Representative in Congress from the State 

of California ................................................................................................... 5 

Rahall, Hon. Nick J., II, a Representative in Congress from the State 

of West Virginia ............................................................................................ 1

Prepared statement of ............................................................................... 2 

Shuler, Hon. Heath, a Representative in Congress from the State of 

North Carolina ............................................................................................. 5 

Young, Hon. Don, a Representative in Congress from the State of Alaska, 

Prepared statement of .................................................................................. 4

Statement of Witnesses: 

DuMontier, Greg, Chairman, Native American Contractors Association, 

Washington, D.C. .......................................................................................... 56

Prepared statement of ............................................................................... 58

Garcia, Joe, President, National Congress of American Indians, 

Washington, D.C. .......................................................................................... 48

Prepared statement of ............................................................................... 50

Hall, Tex G., Chairman and CEO, Inter-Tribal Economic Alliance, 

Mandaree, North Dakota ............................................................................. 43

Prepared statement of ............................................................................... 45

Kitka, Julie E., President, Alaska Federation of Natives, Anchorage, 

Alaska ............................................................................................................ 71

Prepared statement of ............................................................................... 73

Largent, William H., Assistant Administrator, Office of Native American 

Affairs, U.S. Small Business Administration, Washington, D.C. ............. 12

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

Lukin, Sarah L., Director of External Relations, Afognak Native 

Corporation and Alutiiq, LLC, Anchorage, Alaska .................................... 94

Prepared statement of ............................................................................... 95

McCaleb, Neal, Chairman of the Board of Directors, Chickasaw Nation 

Industries, Inc., Ada, Oklahoma .................................................................. 106

Prepared statement of ............................................................................... 108

Middleton, Dr. Robert W., Director, Office of Indian Energy and Economic 

Development, U.S. Department of the Interior, Washington, D.C. .......... 6

Prepared statement of ............................................................................... 7

Schinasi, Katherine V., Managing Director, Acquisition and Sourcing 

Management, United States Government Accountability Office, 

Washington, D.C. .......................................................................................... 17

Prepared statement of ............................................................................... 20

Taylor, Jonathan B., Research Associate, The Harvard Project on 

American Indian Economic Development, Harvard University, 

Cambridge, Massachusetts, and Senior Policy Associate, Native Nations 

Institute, University of Arizona, Tucson, Arizona, and President, The 

Taylor Policy Group, Inc., Cambridge, Massachusetts .............................. 115

Prepared statement of ............................................................................... 117

Additional materials supplied: 

Denson, Beasley, Tribal Miko (Chief), Mississippi Band of Choctaw 

Indians, Statement submitted for the record ............................................. 126

NACA Joint Legislative Proposal on Small Business Contracting 

submitted for the record ............................................................................... 128

National Center for American Indian Enterprise Development, Statement 

submitted for the record ............................................................................... 129

(1)

OVERSIGHT HEARING ON ‘‘DIVERSIFYING 

NATIVE ECONOMIES’’

Wednesday, September 19, 2007

U.S. House of Representatives 

Committee on Natural Resources 

Washington, D.C. 

The Committee met, pursuant to call, at 10:02 a.m. in Room 

1324, Longworth House Office Building, Hon. Nick J. Rahall, II 

[Chairman of the Committee] presiding. 

Present: Representatives Rahall, Young, Kildee, Faleomavaega, 

Christensen, Napolitano, Grijalva, Boren, Inslee, Baca, Herseth 

Sandlin, Shuler, Fortun ̃ o, Cole and Bishop. 

STATEMENT OF THE HONORABLE NICK J. RAHALL, II, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF WEST 

VIRGINIA 

The CHAIRMAN. Committee on Natural Resources will come to 

order. 

At the beginning of this Congress, I stated that the Committee 

would focus on economic development options and other issues of 

importance to Native America. The Committee is meeting today to 

hold the first in a series of hearings on Diversifying Native 

Economies. 

Today’s hearing will focus on the Small Business Administration’s Native 8[a] program designed to provide business opportunities to Indian tribes and Alaska Native Corporations. 

With a 26 percent poverty rate in Indian Country and unemployment rates as high as 80 percent, the need for economic development in Native communities is pretty self-evident. Some Native 

governments have made great strides in combating this situation 

while others continue to struggle. Likewise, some Federal programs 

have worked better than others. 

The Native 8[a] program demonstrates Congress’ commitment to 

promoting tribal self-determination and self-sufficiency. The program reflects the unique character of Native governments and their 

responsibility to provide governmental services and other benefits 

to their members. Testimony today will discuss the benefits that 

the Native 8[a] program has brought to Native America. 

Data shows that Tribal and Alaska Native Corporations received less than 1 percent—less than 1 percent of the $377.5 billion 

awarded through Federal procurement contracts. Of the $145 

billion awarded through some source contracts, Tribal and Alaska 

2

Native Corporations only received approximately 1.4 percent of 

that amount. 

At the same time, the GAO issued a report last year highlighting 

the need for better oversight and administration of the program. So 

I look forward to today’s testimony on how this program affects 

Native communities and how it can be improved to ensure that it 

is working as intended. 

Congress needs to carefully examine the barriers and the challenges facing Native governments as well as which programs are 

working and why they are working. In doing so, we must ensure 

that the Federal programs designed to assist Native governments 

in addressing their needs are fair and working appropriately. 

I now recognize the Acting Ranking Member, the gentleman from 

Oklahoma, Mr. Cole. 

[The prepared statement of Mr. Rahall follows:]

Statement of The Honorable Nick J. Rahall, II, Chairman,

Committee on Natural Resources 

At the beginning of this Congress, I stated that the Committee would focus on 

economic development options and other issues of importance to Native America. 

The Committee is meeting to hold the first in a series of hearings on Diversifying 

Native Economies. 

Today’s hearing will focus on the Small Business Administration’s Native 8(a) program designed to provide business opportunities to Indian tribes and Alaska Native 

corporations. 

With a 26% poverty rate in Indian country and unemployment rates as high as 

80%, the need for economic development in Native communities is self-evident. 

Some Native governments have made great strides in combating this situation while 

others continue to struggle. Likewise, some Federal programs have worked better 

than others. 

The Native 8(a) program demonstrates Congress’ commitment to promoting tribal 

self-determination and self-sufficiency. The program reflects the unique character of 

Native governments and their responsibility to provide governmental services and 

other benefits to their members. Testimony today will discuss the benefits that the 

Native 8(a) program has brought to Native America. 

Data shows that Tribal and Alaska Native Corporations received less than 1% of 

the $377.5 billion awarded through Federal procurement contracts. Of the $145 billion awarded through sole source contracts, Tribal and Alaska Native Corporations 

only received approximately 1.4% of that amount. 

At the same time, the General Accountability Office issued a report last year 

highlighting the need for better oversight and administration of the program. I look 

forward to hearing testimony on how this program affects Native communities and 

how it can be improved to ensure that it is working as intended. 

Congress needs to carefully examine the barriers and challenges facing Native 

governments as well as which programs are working and why. In doing so, we must 

ensure that Federal programs designed to assist Native governments in addressing 

their needs are fair and working appropriately. 

Thank you. 

STATEMENT OF THE HONORABLE TOM COLE, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF OKLAHOMA 

Mr. COLE. Thank you very much, Mr. Chairman. I want to begin 

by reading Ranking Member Young’s statement in the record, and 

then if I may, I will make a couple of brief comments of my own. 

Mr. Chairman, I commend you for holding this hearing today on 

the subject of diversifying Native economies. My understanding is 

that you plan on holding a series of hearings on this broad theme. 

I hope these hearings are a tool to measure progress in implementing Indian self-determination, a policy set forth in 1970. 

3

For anyone who wants to read the eloquent statement which 

launched the present era of self-determination, he should read 

President Richard Nixon’s Special Message to the Congress on 

Indian Affairs dated July 8, 1970. Let me quote the first lines of 

this message. 

‘‘The first Americans, the Indians, are the most deprived and 

most isolated minority group in our nation on virtually every scale 

of measurement—unemployment, income, education, health—the 

condition of Indian people ranks at the bottom.’’

Today, conditions are greatly improved for the first Americans. 

They are closing the gap. Sadly, they still rank below the total population of the United States in the measurements described by 

President Nixon. There is much more work to be done. Progress 

that has been achieved so far has been achieved through a policy 

of self-determination. We should reenforce it as the primary means 

for Indians to improve their lives and control their destinies. 

These days, Native Americans’ summits and conferences tend to 

involve bankers, lenders, tax experts, natural resource managers 

and investors more than government workers. This is a healthy 

sign that Native Americans have taken the reins of their destinies. 

One area in which Native enterprises has been a success is in 

the 8[a] contracting program. There have been some misconceptions about Native involvement in 8[a], bubbling up in various 

news reports and in other committees in Congress. Today’s hearing 

will air out these issues and give the witnesses an opportunity to 

explain how the program is working for Native American economies. 

That concludes Chairman Young’s statement. Let me add, if I 

may, Mr. Chairman, from my own perspective——

The CHAIRMAN. This is Ranking Member Young. 

Mr. COLE. Did I—you know. We can always hope, you know. 

Don’t have much else right now. 

[Laughter.] 

Mr. COLE. He is present, by the way. In case you didn’t know 

that, those were his words. 

The CHAIRMAN. Oh, OK. 

Mr. YOUNG. It seems like you are doing an outstanding job. 

[Laughter.] 

Mr. COLE. Well, that is because I was reading from your script. 

You usually tell me that, Mr. Young, when I do that. 

But I do want to note that I am very privileged to represent a 

district that has an enormous amount of Tribal activity, Mr. 

Chairman. Obviously, my own tribe, the Chickasaws, but also the 

Choctaw Nation, Comanche Nation, Fort Sill Apaches, Cheyenne, 

you know, Southern Cheyenne, Arapaho, others, and they are in 

various states of economic development. This program has made an 

enormous difference, and I see tribal entities, frankly, investing in 

areas in my district that nobody else would invest in, bringing in 

resources, opportunities and jobs, and I think, as you eloquently 

point out in your statement, and Mr. Young in his statement, there 

is no question that if we looked at it on a per capita basis, there 

is not an undue amount of Federal money or contracts flowing into 

Tribal economies, but they have taken what is there and leveraged 

it and provided enormous opportunity for their people, and frankly, 

4

in the case of my tribe, we have 11,000 employees, and we are a 

tribe of over 40,000 people, so we are very substantial, the majority 

of those jobs are to non-Native Americans, frankly. 

There are other people in depressed areas that are brought into 

the economy other than just Native Americans by Native American 

activity. 

So I want to commend you very personally and very sincerely for 

holding this hearing and giving us an opportunity to educate the 

rest of Congress about how important this is so we don’t inadvertently kill the goose that has laid at least one or two golden eggs 

along the way, and I mean that quite sincerely. So thank you so 

much for holding the hearing, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Cole, for your statement and the 

Chair will recognize the Ranking Member if he has any additional 

comments to make. 

Mr. YOUNG. Thank you again, Mr. Chairman, for having this 

hearing. This issue is something dear to my heart. We have done 

much to try to help, especially the Alaskan Native and American 

Natives, in this committee, and we have succeeded in some areas 

and failed in other areas, but this is one area, this ability to get 

involved economically has been quite successful. It is under attack, 

and I think it is time we have a chance to expose what it has done 

for groups within the nation, especially in the State of Alaska, and 

this is what this is all about. 

I believe there is going to be another hearing in another committee. For some reason, they want to attack this program when 

it has been successful, and we ought to be patting people on the 

back and saying this is the right way to go, and there is nothing 

that has been a better success story than this story. 

So again thank you for these hearings. I want to thank the witnesses that are going to be here from the administration and from 

especially the State of Alaska for flying this long distance to be 

here to give their side of the story as it should be for the record. 

With that, I yield back the balance of my time. 

[The prepared statement of Mr. Young follows:]

Statement of The Honorable Don Young, Ranking Republican,

Committee on Natural Resources 

Mr. Chairman and Members of the Committee, I want to thank you for holding 

this hearing. This is an issue that is very important to Alaska Natives and Indian 

Tribes and I would like to thank the witnesses for being here today. I know that 

many have traveled great distances to testify before this committee. 

I’d like to start out by briefly going over the history of the Alaskan Native Corporations, or ANCs and their participation in the 8(a) program. The Alaskan Native 

Corporations were formed in a deal between Alaska Native leaders and the federal 

government. In exchange for giving up their land claims, 12 Alaska Native regional 

corporations were created, along with over 200 village corporations. These corporations were also given one ninth of the land that they had aboriginal claim to and 

a monetary settlement as part of the deal. A thirteenth regional corporation was 

later created for the Alaskan Natives that had moved from the state. 

Each ANC is owned entirely by Native shareholders, none of whom can sell their 

shares. Any profits the corporations make are returned to the shareholders through 

a dividend, reinvested in the company or used to support the Native community, 

through cultural and social programs and scholarships. 

The 8(a) program has been a success story for the Alaskan Native community. It 

has allowed the ANCs to create economic opportunity for their communities while 

preserving their culture and heritage. Most Alaskan Native villages are unreachable 

except by plane, severely limiting their ability to develop economically. Without this 

5

development, life in the villages would be one of day to day survival. As it is, many 

villages do not have water or sewer systems, offer few opportunities for employment 

and lack some of the modern conveniences that people in the Lower 48 take for 

granted, such as electricity and telephones. 

Of the almost 200 regional and village corporations, only twelve are significant 

participants in government contracting. These twelve receive less than 1% of all federal contracts and less than 17% of all contracts awarded through the 8(a) program. 

They have still had a huge impact on the Alaskan Native community, employing 

over 3100 Natives, awarding $22 million in scholarships and donations to programs 

to preserve their culture and improving the lives of Alaskans in the villages. 

This is a good start. However, more Alaska Native Corporations and Indian 

Tribes from the Lower 48 should be encouraged to participate in the 8(a) program 

so that their communities can also benefit. 

Native participation in the 8(a) program allows the United States to keep its 

promises to Alaskan Natives and Indian tribes while creating the opportunities they 

need to create better lives for themselves. It is important that we continue to honor 

our promises and allow Alaska Natives and Indian Tribes to continue to work to 

better their lives while maintaining their cultural heritage. 

I applaud Chairman Rahall (D-WV) for holding this hearing to discuss diversifying Native economies. I am glad to see that the Natural Resources Committee is 

exercising its jurisdiction over this important part of National Indian Policy. 

The CHAIRMAN. The Chair thanks the gentleman from Alaska as 

well for his comments, and totally agreed with him. 

The Chair will recognize for the record the gentleman from North 

Carolina, Mr. Heath Shuler is also present. If he has any comments, he is certainly welcome. 

STATEMENT OF THE HONORABLE HEATH SHULER, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF 

NORTH CAROLINA 

Mr. SHULER. I would like to thank the Chairman and the Ranking Member and Mr. Cole for their statements. We have seen so 

often, growing up close to the Cherokee Indian Reservation in 

North Carolina, how difficult the struggles have been for quite 

some time. We are seeing how some of these policies that we have 

done that actually have worked, and if we continue to work together within this committee, I do think that we can save it, and 

I commend both the Ranking Member, Mr. Cole, and the Chairman 

for their hard work and their continued dedication, that we can 

work together and we can make a difference in their lives. 

Thank you, sir. 

The CHAIRMAN. Thank you, Mr. Shuler. 

The Chair recognizes the gentlelady from California, Ms. 

Napolitano. 

STATEMENT OF THE HONORABLE GRACE F. NAPOLITANO, A 

REPRESENTATIVE IN CONGRESS FROM THE STATE OF 

CALIFORNIA 

Ms. NAPOLITANO. Thank you, Mr. Chair, and it is a pleasure to 

be here on such an important subject. 

Being a minority, we understand many of the perplexities that 

face minority business and contracting out, and we have been for 

many years trying to get the Federal government to live up to the 

Federal mandate of the MWBE, Minority Owned, Women Owned, 

et cetera, and it has not been easy. In the Small Business Committee, they try to hold them accountable, they try to have them 

6

come in and explain why they can’t meet that government mandate, and it is still not anywhere near where it should be. 

Somewhere along the line the powers that be don’t impress upon 

some of the agencies the importance of being able to allow minority 

business to have a piece of the government contact, which is huge, 

and there is no reason for that other than possibly some of the people are not interested in taking the time to help some of these entities along, and I think it is time that we begin to really scrutinize 

and have them understand the importance of allowing small business growth so that we don’t have to import the groups that come 

in from outside, from other countries to take over our business and 

decimate our own economy. 

So thank you, Mr. Chair, Mr. Ranking Member. This is of great 

importance to some of us. Thank you. 

The CHAIRMAN. Thank you. We will now turn to our panel, the 

first of which consists of Dr. Robert Middleton, the Office of Indian 

Energy and Economic Development, Department of the Interior; 

Mr. William Largent is Assistant Administrator, Office of Native 

American Affairs, Small Business Administration; and Ms. Katherine Schinasi, Managing Director, Acquisition and Sourcing Manager, General Accountability Office. 

Mr. Largent, I understand that you work on Native policy issues, 

not the 8[a] contracting program, so your testimony, as I understand, will focus on Native issues, and you will respond to the 

Committee in writing with any questions that are outside of your 

issue area, am I correct? Thank you. 

Lady and gentlemen, you may proceed. Dr. Middleton, do you 

want to go first since I introduced you first? 

STATEMENT OF ROBERT MIDDLETON, DIRECTOR, OFFICE OF 

INDIAN ENERGY AND ECONOMIC DEVELOPMENT, U.S. 

DEPARTMENT OF THE INTERIOR, WASHINGTON, D.C. 

Mr. MIDDLETON. I would be pleased to do that. 

Good morning, Mr. Chairman and members of the Committee. 

My name is Bob Middleton. I am Director of the Office of Indian 

Energy and Economic Development at the Department of the Interior, and I am pleased to be here to deliver the department’s statement about diversifying Native economies. 

As you are aware, Secretary Kempthorne has implemented two 

initiatives: one, to promote safe Indian communities, and the second to strengthen educational opportunities for Indian youth. However, Secretary Kempthorne and Assistant Secretary Artman also 

realize that building sound and foundational Native economies is 

a key ingredient to achieve the goals of these two initiatives, and 

they both strongly support our Indian economic development 

programs. 

Without viable economies, jobs, physical stability, any initiative 

to fight for safe Indian communities and to increase Indian student 

achievement will have an uphill battle. The efforts to enhance 

Indian educational levels and graduation rates may be compromised if students are not given the hope of a stable job opportunity and a better life after graduation. A sustainable wage and 

the ability to allow individuals to support a family are vital to successful Indian communities. 

7

In addition, many of the troubles plaguing reservations, including increases in drug and alcohol abuse, continuing domestic violence, high unemployment rates, are often derived from the lack of 

meaningful, fulfilling, and life-sustaining work, and work that is located in the local reservation communities. 

A strong and diverse Tribal economy also goes to the heart of 

sovereignty. It is hard to imagine that Tribes could be and feel 

truly sovereign if they primarily rely on Federal programs to sustain their governments. Economic self-sufficiency will improve with 

Tribes’ ability to achieve self-governance and self-determination. 

Now, the Secretary of Interior created my office to develop and 

implement innovative programs that benefit Native American 

economies by increasing Tribal business knowledge, increasing the 

number of successful Indian-owned businesses, increasing capital 

investment in Indian Country and to provide technical assistance 

for economic development of their energy and mineral resources. 

Now, my programs are achieving these goals by partnering with 

other Federal agencies, American Indian organizations and tribes, 

and facilitating economic development opportunities in Indian 

Country. We also collaborate with private organizations and colleges and universities to provide training and financial services to 

Indian Country. Using these partnerships, we leverage our existing 

resources to enhance and strengthen Tribal economies and economic development opportunities. 

The 8[a] program has been one of the tools that has been available to us to work with Tribal governments to, in fact, develop and 

enhance economies out on reservations. 

Thank you for the opportunity to participate in this important 

discussion, and I will be happy to answer any questions you have 

either now or after the panel concludes. 

[The prepared statement of Mr. Middleton follows:]

Statement of Dr. Robert W. Middleton, Director, Office of Indian Energy 

and Economic Development, Office of the Assistant Secretary—Indian 

Affairs, U.S. Department of the Interior 

Good morning, Mr. Chairman and Members of the Committee. My name is Bob 

Middleton, and I am the Director of the Office of Indian Energy and Economic Development (IEED) at the Department of the Interior (Department). I am pleased to 

be here today to deliver the Department’s statement about diversifying Native 

economies. 

Strengthening Indian Economies 

Without viable economies, jobs, and fiscal stability, any initiatives to fight for safe 

Indian communities and to increase Indian student achievement will have an uphill 

battle. The efforts to enhance Indian education levels and graduation rates may be 

compromised if students are not given the hope of a stable job opportunity after 

graduation. A sustainable wage and the ability to allow individuals to support a 

family are vital to successful Indian communities. 

It is also likely that any incentive for students to engage in a new education initiative will not be effective if students do not see the possibility of meaningful employment and a better life as an outcome. In addition, many of the troubles plaguing 

reservations, including the increases in drug and alcohol abuse, continuing domestic 

violence, and high unemployment rates are often derived from a lack of meaningful, 

fulfilling, and life-sustaining work opportunities in the local reservation communities. 

IEED was created to develop and implement innovative programs that benefit 

Native American economies. These efforts focus on: 

• improving Indian economic development, 

• increasing tribal business knowledge, 

8

• increasing jobs and the number of successful small and medium Indian-owned 

businesses, • increasing capital investment, and • providing technical assistance in developing energy and mineral resources. 

National Economic Development Summit 

In May 2007, the National Summit on Economic Development in Indian Country 

was held in Phoenix, Arizona. We worked in partnership with other Federal agencies and organizations including the National Congress of American Indians (NCAI), 

the Affiliated Tribes of Northwest Indians, the Alaska Federation of Natives, the 

United South and Eastern Tribes, and the Inter Tribal Council of Arizona. The participants provided information on what activities would provide the most economic 

stimulation for Indian businesses and identified the impediments in technical capabilities, training, capital investment, and infrastructure that are preventing the development of sustainable reservation economies. 

The Summit was a huge success with over 500 registered attendees ranging from 

tribal leaders and individuals, to tribal governments, tribal organizations, federal 

agencies and private industry. 

The Summit examined Native American economic development issues in three areas: (1) Access to capital and finance; 

(2) Improving physical and legal infrastructure; and 

(3) Fostering domestic and international business enterprises. 

The Summit resulted in a list of economic development impediments identified by 

the participants and a corresponding list of recommended regulatory and legislative 

solutions. The information flowing from the Summit sessions was tremendous in volume and more ideas and perspectives are communicated to us daily that need to 

be incorporated into the list. Accordingly, we are working in conjunction with NCAI 

on a number of new tasks, including: • A follow-on discussion about access to capital and finance was conducted on 

September 4-5, 2007, in Jersey City, New Jersey, sponsored by the Department 

in conjunction with NCAI and the Native American Finance Officers Association’s (NAFOA). This ‘‘Wall Street’’ conference was presented to help tribal leaders and their finance professionals obtain a clarity of vision for the present and 

future, and continue to preserve and promote sovereignty through strong financial management. • A follow-on discussion on tribal community comprehensive planning will be 

jointly hosted by the Department, NCAI, the University of New Mexico (UNM) 

and Arizona State University (ASU) on October 5-6, 2007, at the ASU campus 

in Tempe, Arizona. The conference will bring together tribal planners from Arizona and New Mexico, key policy stakeholders, and university planning faculty 

from the UNM School of Architecture and ASU School of Planning. The conference is considered an important step toward defining comprehensive planning and its role in tribal communities. The conference will be supported by a 

white paper on the topic. • A follow-on discussion about tribal legal infrastructure will be jointly hosted by 

the Department, NCAI and ASU on November 29-30, 2007. Improving the tribal 

legal infrastructure is critical to creating a business friendly environment and 

sustaining tribal development, including reform of tribal constitutions and establishing tribal commercial laws to create a business-friendly environment for 

sustainable tribal development. 

Economic Development 

IEED is continuing to build upon a successful start and expand programs that are 

improving the quality of life and communities for American Indians and Alaska Natives. We have taken the initial action to improve economic development by assisting in: (1) building the Indian Country physical and legal infrastructure vibrant 

economies require; (2) creating new jobs and expanding existing tribal and Indianowned enterprises; (3) training existing tribal and native business executives; (4) increasing access to capital investments; and (5) providing technical assistance to develop Indian Country’s sizeable energy and mineral assets. 

• Build a Strong Legal Infrastructure 

Indian Affairs is working towards a strong legal infrastructure to support economic growth. In 2006, we initiated a tribal commercial law project. We began by 

funding some of the tribes who had helped develop a model tribal secured transactions law in consultation with the Federal Reserve Bank’s Helena, Montana 

Branch and the National Conference of Commissioners on Uniform State Laws 

(NCCUSL). To date, the Chippewa Cree Tribe, Crow Nation, the Umatilla Tribes 

9

and the Warm Springs Tribes have enacted various tribal commercial laws, including secured transactions law, in the belief that such laws will aid their reservation 

economies. To complement the enactment of commercial laws, we funded NCCUSL 

to develop a curriculum on commercial law to train tribal law administrators. We 

expect the curriculum to be used in future classes offered to the tribes. 

• Increase Jobs and Businesses 

A great many of Indian Country’s 56 million acres of land are abundant in commercially and strategically important minerals and other natural resources. In addition, IEED, through small grants, assisted remote villages in Alaska and the 

Pribilof Islands in evaluating wind power to supplement expensive diesel fuel. We 

helped the Laguna Pueblo use local resources to generate power for a tribal electrical utility. In FY 2007, grants were provided to assist: (1) the Cherokee Nation 

of Oklahoma to develop a hydropower generating plant, (2) the St. Regis Mohawk 

Tribe to save money and provide cheaper energy to local businesses by developing 

a hydroelectric power plant, (3) the Passamaquoddy Tribe to take advantage of its 

coastal location by developing tidal energy, (4) the Coquille Indian Tribe to plan and 

build a woody biomass generating facility, and (5) the Jicarilla Apache Tribe and 

San Juan Pueblo to embark upon a joint venture to produce from timber resources 

fuel wood pellets and select lumber. 

We have assisted tribes in formulating long-term, strategic plans to accelerate employment opportunities. In FY 2006-2007, funds were provided for economic planning professionals to work with tribal leaders to identify tribal job creation and enterprise needs based on the unique circumstances of each reservation. Notably, the 

Ysleta Del Sur Pueblo used this funding to retain successful economic planners from 

the Winnebago Tribe of Nebraska and the Harvard Project on American Indian Economic Development to identify ways to diversify and resuscitate its moribund economy. 

Under its Native American Business Development Institute (NABDI) conceived in 

FY 2006, IEED has developed partnerships with the Nation’s elite business schools 

to assist tribal businesses in the preparation of business plans, the assessment of 

financial opportunities, and to enhance their skills in drafting proposals to obtain 

financing and loan guarantees from private lenders, foundations, and government 

entities. IEED and the teaching staff of these business schools coordinate with 

tribes in identifying specific economic development projects. These schools assign a 

high-performing Masters in Business Administration candidate or candidates, as 

part of their academic curriculum, to work directly with a tribe to prepare a business plan. 

The NABDI helps tribes assess how to expand their role in a market or region, 

and increase their profitability. Some examples follow and are broken out by fiscal 

year: 

FY 2006: 

• Performed a wind energy study for the Inter-Tribal Council on Utility Policy in 

the Great Plains, and 

• Developed a meat processing business plan for the Fort Belknap Indian Community. 

FY 2007: 

• Helped the Jamestown S’Klallam Tribe analyze the potential of a business park, 

a security business, and a medical supply business; 

• Assisted the Yakama Tribe in expanding employment opportunities in the 

tribe’s timber production; 

• Helped the Ft. Peck and Crow Tribes review the potential for new jobs in upland bird hunting; 

• Assisted the Ysleta del Sur Pueblo in its desire to create new economic development uses for a dormant tribal wellness/recreation center; and 

• Helped the Mescalero Apache Tribe review the potential for new employment 

opportunities through the installation of a glass-covered greenhouse heated by 

way of woody biomass. 

We are also expanding the Buy-Indian Act efforts, including coordination with 

other federal agencies to encourage Federal Government-wide purchases of American Indian goods and services. This will increase Indian employment opportunities 

and revenues for Indian owned firms. Indian Affairs has used the Secretary’s BuyIndian Act authority to expand Departmental purchases of Indian goods and services. In FY 2007, a new performance measure was established to increase by 5 percent the FY 2006 total dollar value of $13.6 million of Indian Affairs government 

charge card purchases from Buy-Indian vendors of office supplies, followed by a 1 

10

percent increase annually in subsequent Fiscal Years 2008-2011. IEED achieved 

the 5 percent goal for FY 2007 ($675,000). 

Since 1994, Indian Affairs has implemented Pub. L. 102-477 which allows tribes 

to integrate 10 Federal programs from the Department of Health and Human Services, Department of Labor, and Bureau of Indian Affairs (BIA) into one comprehensive resource for education, training, job placement, welfare reform, child care and 

related services. The program has been highly acclaimed by tribal leaders, the Congress and independent evaluations. The ‘‘477’’ program has received the highest 

PART score from the Office of Management and Budget of all American Indian programs in the Department. The ‘‘477’’ program is an effective tool for creating jobs, 

training and educating tribal members and assisting them in becoming self-sufficient, and promoting economic development. Tribes participating in ‘‘477’’ are more 

effective in moving people from welfare-to-work and reducing their dependence on 

public welfare due to the ability of tribes to provide comprehensive consolidated resources. 

• Increase Business Knowledge in Tribal Communities 

To carry out its long-term goal of increasing business knowledge, we have pursued 

programs to train young Native Americans in entrepreneurship and tribal businessmen on how to avoid common competitive pitfalls, take advantage of federal procurement and Buy-Indian Act opportunities, and expand their businesses. Our goal 

is to equip hundreds more tribal entrepreneurs and those who aspire to be entrepreneurs with business knowledge that will enhance their prospects of success. 

During this fiscal year, we have funded a one-year Entrepreneurial Education 

pilot project designed for students at five reservation high schools. The pilot project 

is a collaborative effort with the Bureau of Indian Education (BIE) and the National 

Foundation for Teaching Entrepreneurship (NFTE). NFTE has developed awardwinning text books, teaching plans, and support materials along with a Certified 

Entrepreneurship Teacher Training Program. 

In FY 2006-2007, we also partnered with the top-rated Tuck School of Business 

at Dartmouth College to provide a series of intensive training workshops for executives of Native American businesses that focus on developing and improving business management skills; establishing and running a business; maintaining accounting records; assessing performance; creating high-performing enterprises; and expanding existing operations. In fact, members of my staff are assisting with one of 

these workshops this week in Fort Yates, North Dakota near the Standing Rock 

Sioux reservation. These training sessions receive uniform praise from participants. 

We will also augment the number of business training sessions conducted by distinguished business school academics for American Indian businesses. 

We are also working with tribes to expand business opportunities through the 8(a) 

program within the Small Business Administration (SBA). As part of the process, 

IEED is encouraging tribal leaders, where appropriate, to begin the process of applying for tribal 8(a) status, and offering to connect the tribe with 8(a) experts if 

the tribe is interested in using a consultant to aid them in this process. We offer 

guidance to tribal businesses seeking Federal, Commercial and Tribal opportunities, 

and we help facilitate Mentor/Prote ́ge ́ relationships with the SBA, the Department 

of Defense or other appropriate Federal agencies during the 8(a) application process. 

We are currently working with the BIA Procurement Division and the Division 

of Policy and Planning to explore policies that will increase the use of Tribal 8(a) 

businesses. In addition, IEED is also working with the General Services Administration to develop a tracking system of contracts awarded to Tribal 8(a)s and Alaska 

Native Corporations. 

IEED continues to partner with SBA to present Regional Procurement Workshops 

to provide training on the 8(a) and other Small Business Programs which include 

the following highlights: 

• The background of 8(a), the purpose of 8(a), how tribes can use 8(a) in business 

planning, the difference between individual 8(a) and tribal 8(a), and information 

about how to apply for tribal 8(a) status. 

• One-on-one meetings with SBA staff and tribal economic planners during workshops for more in-depth discussions about individual tribe’s 8(a) potential. 

• Work with SBA and other appropriate Federal agencies to pursue sub-contracting opportunities both during the application process and once 8(a) status 

has been approved. 

• Serve as liaison with the Department’s Office of Small and Disadvantaged Business Utilization and other Federal agency small business programs to identify 

projects that will enhance tribal procurement opportunities including planning, 

policies, training, and development of outreach materials for procurement personnel. 

11

• Increase Access to Capital Investment 

Part of our mission is to help tribal communities develop viable business enterprises and foster sustainable economic growth. Our Division of Capital Investment 

offers assistance predominantly through programs established under the Indian Financing Act of 1974, as amended. We seek parity in accessing capital and sustainable economic growth between Indian and non-Indian communities. 

We operate the Loan Guaranty, Insurance, and Interest Subsidy Program, 25 

U.S.C. § 1481 et seq. and 25 CFR Part 103 (‘‘Program’’). This Program offers private 

lenders Federal guarantees and insurance to cover the risk that a loan made to an 

American Indian-owned business will not be repaid in full or on time. By enhancing 

loan security in this manner, the Program enables lenders to make loans that they 

otherwise would not make and the opportunity to offer loan terms substantially better than what they would offer absent the Program guaranty or insurance. 

This Program leverages appropriated funds in a significant way. For example, in 

FY 2006, from the $6.25 million appropriated for the Loan Guaranty, Insurance and 

Interest Subsidy Program, the Program was able to guarantee about $108 million 

in loans to American Indian owned businesses and administer the program. In addition, we maintained a loss percentage of less than 2 percent. 

We are currently writing regulations to implement changes to the Indian Financing Act from Title IV of the Native American Technical Corrections Act of 2006 

(‘‘Act’’). We are using this opportunity to make other changes to the Loan Guaranty, 

Insurance, and Interest Subsidy Program regulations as well, both to reflect changes 

under the Act and to improve management of the loan guarantee program. 

• Development of Energy and Mineral Assets 

Absent the gaming and timber industries, the development of energy and mineral 

resources provides the best economic development opportunities for many tribes. In 

FY 2006, alone, these resources generated $579 million in royalty revenue paid to 

Indian individuals and tribes. We estimate that about 25 percent of Indian and tribal lands contain undeveloped energy and mineral resources. The Department’s goal 

is to help tribes gain access to these energy and non-energy mineral resources while 

ensuring the responsible use of lands that are developed. 

In consultation with tribes, we provide ongoing assistance in the exploration and 

development of over 2 million acres of actively producing energy and mineral leases. 

This activity includes the collection of resource assessment data, feasibility studies, 

market analyses and other resource development initiatives, as well as overseeing 

leasehold agreements of oil, gas, coal and industrial mineral deposits located on 

Indian lands for the benefit of tribes and individual Indian owners. Through collection and analysis of exploration data we help tribes and individual Indian landowners with the assessment of their energy and mineral resources to determine the 

potential value of their lands for leasing purposes and assist in resource development planning. Information about land status and the activities that impact this 

status is a key component in effective decision-making. 

We also provide timely information, economic analysis, recommendations, and 

support to tribes during the negotiation and approval phases of the Mineral Development Agreements as authorized under the Indian Mineral Development Act of 

1982. We also provide monetary grants through our Energy and Mineral Development Program to allow tribes to evaluate energy and mineral resource potential 

through the acquisition of exploratory data and geotechnical data interpretation. 

Program funds also support the development of computer-based systems to make 

this information readily accessible to the Indian mineral owner. By providing this 

type of information to the Indian energy and mineral owner before negotiations with 

developers begin, we greatly enhance the ability of the tribe to maximize income 

from the development of their resources. As a result, requests for assistance from 

tribes to determine their energy and mineral resources development potential continue to increase. 

We sponsor national and regional conferences on energy and mineral development 

opportunities in Indian Country. This outreach program helps to stimulate industry 

interest in pursuing economic development opportunities for Alaska Natives and on 

Indian reservations. It provides a forum for tribes and Alaska Natives interested in 

considering energy and mineral proposals, publishes geotechnical data on mineral 

resources on American Indian trust lands, and discusses the positive effects of doing 

business on American Indian lands. 

The successful development of energy and non-energy mineral resources creates 

many long-term career level jobs for American Indians and Alaska Natives, provides 

sustainable, supplemental funding streams for tribal government operations and improves the overall quality of life within reservation communities. 

12

Conclusion 

We will continue to partner with the tribes, other Federal agencies, and American 

Indian organizations to facilitate economic development opportunities in Indian 

Country. We will also seek ways to leverage our existing appropriations to maximize 

benefits to enhance and strengthen tribal economies and economic development opportunities. Thank you for holding this hearing on diversifying Native economies. 

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

STATEMENT OF WILLIAM H. LARGENT, ASSISTANT ADMINISTRATOR, OFFICE OF NATIVE AMERICAN AFFAIRS, U.S. 

SMALL BUSINESS ADMINISTRATION, WASHINGTON, D.C. 

Mr. LARGENT. Chairman Rahall, Ranking Member Cole, Distinguished Members of the Committee, thank you for inviting me here 

today to discuss diversifying native economies and the Small Business Administration’s efforts along these lines. 

My name is Bill Largent. I am the Assistant Administrator of the 

Small Business Administration’s Office of Native American Affairs. 

The Office of Native American Affairs’ goal is to promote and support economic activities for Native Americans, Alaska Natives, and 

Native Hawaiian business development. We engage in numerous 

activities, including tribal consultations and development and participating in national economic development conferences. 

Since the Office of Native American Affairs is not the program 

office responsible for administering the 8[a] program, I will limit 

my discussion of the program to a brief overview of 8[a], its history, 

and comment briefly on the April 2006 Government Accountability 

Office report concerning Alaska Native Corporation’s use of the 8[a] 

program. I will also address other issues and projects important to 

enhancing and diversifying Native economies that the Office of 

Native American Affairs is working on. 

Before I talk about what the office is doing with respect to economic development and business ownership, it might be helpful for 

the Committee to know a little about me. I was appointed to the 

position of Assistant Administrator in February of last year. I am 

a member of the Keweenaw Bay Indian Community, Lake Superior 

Band of Chippewa, Martin Clan in Michigan’s Upper Peninsula. 

I started my first business on the reservation in 1976. It was not 

sophisticated or high tech, but a small commercial janitorial service 

that allowed me to support myself and my family. After I started 

the company, members of my Tribe and even family members often 

asked me how it was I knew how to start a business and what 

made me believe I could own and run a business. 

I tell you this to make a simple point. In 1976, the concept of 

owning and running businesses was unfamiliar to my people. Since 

then, Tribes have increased their focus in economic development 

and job creation. However, there is more to do, especially for potential small business owners, and that is where the SBA and the 

agency’s Office of Native American Affairs comes in. 

For the moment, let me shift my attention to the 8[a] program. 

The 8[a] program was enacted during the 1960s, to assist eligible 

small, disadvantaged business concerns to compete in the American 

economy through business development. The Small Business Act 

authorizes SBA to develop business ownership programs for people 

13

whose ability to compete in the free enterprise system have been 

impaired due to diminished credit and capital opportunities. 

Alaska Native Corporations, Native Hawaiian Organizations, 

Community Development Corporations, and Tribally owned 8[a] 

firms are deemed by statute to be socially and economically disadvantaged. The primary difference between ANC-owned 8[a] firms 

and non-ANC-owned firms lies in the intent of their participation 

in the program. The 8[a] program’s design anticipates that organization-owned firms, including ANCs, will utilize the program to 

provide economic development to the respective communities. 

I must emphasize that as the law is currently written the 8[a] 

program is simultaneously providing business development programs to disadvantaged individuals while also providing regional 

or community economic development to organization-owned firms, 

including ANCs. 

In April of 2006, the Government Accountability Office published 

a report entitled ‘‘Increased Use of Alaskan Native Corporation’s 

Special 8[a] Provisions’’ called for tailored oversight to address 

some of the differences I just mentioned. The report notes that Federal contract dollars awarded to firms owned by ANCs grew from 

265 million in Fiscal Year 2001 to 1.1 billion in Fiscal Year 2004. 

The SBA takes it oversight responsibility over Federal procurements very seriously. Even before the release of the GAO report, 

the agency had taken a number of steps to improve the oversight 

of the 8[a] concerns owned and controlled by ANCs, Native Hawaiian Organizations, and Indian Tribes, and the agency has continued to look at ways to strengthen the program and increase SBA’s 

oversight capabilities. 

While the Office of Government Contracting and Business Development is working with the Federal agencies, the President has 

tasked my office, the Office of Native American Affairs, to host tribal consultations to allow Tribes to provide insight into how the 

SBA can better manage the programs and address concerns. 

As I mentioned earlier in my testimony, when I started my first 

business there was a lack of awareness of business principles. I 

saw much of the same situation through my work as a board member of the Native American Business Alliance. When NABA expanded its mission to include businesses located on reservations, 

both tribally owned and individual entrepreneurs, I was asked to 

travel to Indian Country to determine the interested tribes and the 

best method for representing those interests. It was during this period that I came to fully appreciate the unenviable position of Tribal leaders for identifying, creating, and running the economic engines that create jobs and revenue streams without the basic resources available to virtually every other government in the United 

States. 

The key barriers to success are more than just remote locations, 

lack of capital, absence of internet or even basic utilities, these are 

substantial hurtles, but the unawareness of how business is conducted, the speed, competitiveness, demand and measures of quality are little understood or even discussed. 

The unique nature of Native governance and culture makes business creation in Indian Country especially challenging. Because of 

this, I have come to the realization that what Indian Country 

14

needs is a tool that will prove a comprehensive checklist, an assessment of inventory of assets, so the decisionmakers can pursue businesses that are consistent with their unique governance, culture, 

vision, internal capabilities and the resources available to them. 

To assist business development in Indian Country, it envisioned 

a web-based system that will be available to anyone with internet 

access though we also anticipate that hard copy will be utilized in 

some areas. The tool is being developed by the Office of Native 

American Affairs with the help of over 25 well-respected volunteer 

private sector attorneys, economists, Tribal leaders, small and 

large business people of Native descent who are well versed in 

Indian issues. 

It is important to note that the tool will not be a magic box. It 

will not solve problems, nor will it recommend specific solutions. It 

will only reflect the value, culture, and strengths and weakness of 

the communities that utilize it. 

While the Office of Native American Affairs has other responsibilities, the Tribal self-assessment tool is our priority. The goal is 

to provide decisionmaking tools that will enable tribes to create a 

positive business environment where they can compete effectively 

in the private sector. 

After a business environment that fits the Tribe’s culture has 

been developed, other SBA programs, such as our loan programs 

and technical assistance, will be of greater value. 

Again, thank you for inviting me to testify on this important subject. I will be happy to address questions you might have about 

how the Office of Native American Affairs works. 

[The prepared statement of Mr. Largent follows:]

Statement of Bill Largent, Assistant Administrator,

Office of Native American Affairs, Small Business Administration 

Chairman Rahall, Ranking Member Young, distinguished members of the 

Committee, thank you for inviting me here today to discuss ‘‘Diversifying Native 

Economies’’ and the Small Business Administration’s efforts along these lines. 

My name is Bill Largent and I am the Assistant Administrator of the Small Business Administration (SBA) Office of Native American Affairs. The Office of Native 

American Affairs’ goal is to promote and support economic activities for Native 

Americans, Native Alaskans, and Native Hawaiian entrepreneurs. We engage in numerous activities including tribal consultations, developing tools to support economic 

development and participating in national economic development conferences. Other 

offices within SBA oversee loan programs, individual entrepreneurial training opportunities and business development and government contracting programs. 

Since the Office of Native American Affairs (ONAA) is not the program office responsible for administering the 8(a), I will limit my discussion of the program to 

a brief overview of 8(a) and comment briefly on the April 2006 GAO report concerning Alaska Native Corporations’ use of the 8(a) program. I will also address 

other issues and projects important to enhancing and diversifying native economies 

that ONAA is working on. 

Before I talk about what ONAA is doing with respect to economic development 

and business ownership it might be helpful for the Committee to know a little about 

my own experiences. I was appointed to the position of Assistant Administrator of 

the Office of Native American Affairs in February of last year. I am a member of 

the Keweenaw Bay Indian Community, Lake Superior Band of Chippewa, Marten 

clan in Michigan’s Upper Peninsula. I started my first business on the Reservation 

in 1976. My business was not sophisticated or high tech, but a small commercial 

janitorial service that allowed me to support myself and my family. 

When we started it was just me and my partner but it grew to 15 employees doing 

commercial janitorial, carpet cleaning, and fire restoration along with equipment 

and supply sales. I sold it in 1986 and moved to Detroit where I continued my entrepreneurial endeavors in various fields of business. 

15

After I started my first company, members of my Tribe and even family members 

often asked me how I knew how to start a business and what made me believe I 

could own and run a business. I tell you this to make a simple point. In 1976 the 

concept of owning and running businesses was unfamiliar to my people, and 

Keweenaw Bay is not, and was not then, entirely isolated. Since then the Tribes 

are much more aware of the value of sustainable economic development. However, 

there is more to do, especially for potential small business owners, and that is where 

the SBA and the Agency’s Office of Native American Affairs come in. 

The 8(a) Business Development Program 

Since the Committee has specifically expressed an interest in the SBA’s 8(a) Business Development Program or the 8(a) program, as it is commonly known, I will 

begin with a quick overview of that program. The 8(a) program was enacted during 

the 1960s to assist eligible small disadvantaged business concerns to compete in the 

American economy through business development. The Small Business Act authorizes SBA to develop business ownership programs for people whose ability to compete in the free enterprise system has been impaired due to diminished credit and 

capital opportunities. Individual applicants must demonstrate social and economic 

disadvantage. Although some groups are presumed to be socially disadvantaged, 

they, as well as all other applicants, must also demonstrate economic disadvantage. 

Alaskan Native Corporations (ANCs), Native Hawaiian Organizations (NHOs), Community Development Corporations (CDCs) and Tribally-owned 8(a) firms are 

deemed by statute to be socially and economically disadvantaged. In addition, all 

U.S. citizens who can demonstrate social and economic disadvantage as well as compliance with the other eligibility requirements are welcome to apply for participation 

in the 8(a) program. Besides the management and technical assistance provided 

under the program, firms that are certified for 8(a) program participation may be 

eligible to receive contracts that Federal Agencies offer to SBA for the 8(a) program 

through either sole source or restricted competition. 

In 1986, Congress enacted legislation that allowed ANCs, NHOs, CDCs and Tribally-owned firms to participate in the 8(a) program. Congress intended this legislation to foster economic development to these respective communities. 

Under the Alaska Native Claims Settlement Act, Congress extended certain procurement advantages to 8(a) ANC firms, such as the ability to win sole-source contracts for any dollar amount. In comparison, non ANC-owned 8(a) firms can receive 

sole-source contracts for up to $5 million for manufacturing or $3 million for all 

other contracts; contracts above those amounts must be competed. 

Additionally, for non-ANC 8(a) firms, procurements must be competed whenever 

possible before being accepted on a sole-source basis while for ANC-owned 8(a) 

firms, procurements need not be competed before being accepted on a sole-source 

basis. Another way ANC-owned firms differ from non-ANC 8(a) firms: there is no 

limit on the number of firms an ANC 8(a) participant may own as long as each business is in a different primary industry. Moreover, the president or CEO of a nonANC 8(a) must be a disadvantaged individual, whereas the management of an ANCowned 8(a) firm need not be a disadvantaged individual. 

The primary difference between ANC-owned 8(a) firms and non ANC-owned firms 

lies in the intent of their participation in the 8(a) program. The 8(a) program design 

anticipates that organization owned firms, including ANCs, will utilize the program 

to provide economic development to their respective communities. All other 8(a) participant firms utilize the program to receive individual business development, as 

was the initial intent of Congress. Again, I must emphasize that as the law is currently written, the 8(a) program is simultaneously providing a business development 

program to disadvantaged individuals while also providing regional or community 

economic development to organization owned firms including ANCs. 

In April 2006 GAO published a report entitled ‘‘Increased Use of Alaska Native 

Corporations’ Special 8(a) Provisions Call for Tailored Oversight’’ to addresses some 

of the differences I just mentioned. The report notes that Federal contract dollars 

awarded to firms owned by ANCs grew from $265 million in Fiscal Year 2001 to 

$1.1 billion in Fiscal Year 2004. While there is no indication within this report of 

wrongdoing by any participants in this program, the report did find that ANCs are 

increasingly utilizing the special advantages Congress has provided them. The report also found that contracting officers often need guidance on how to effectively 

use the program to ensure taxpayer dollars are spent wisely, and SBA could make 

improvements to its oversight of the program. 

Also, significant increases in Federal contract dollars went to other groups during 

the same period of time. From Fiscal Year 2001 to Fiscal Year 2004, contract 

awards to women-owned small business grew from $5.5 billion to $9.1 billion, 

service-disabled veteran-small businesses grew from $554 million to $1.2 billion, 

16

HUBZone firms grew from $1.6 billion to $4.8 billion, and overall small business 

grew from $50.1 billion to $69.2 billion. The Federal Government achieved its goal 

during Fiscal Year 2003 and Fiscal Year 2004 that 23 percent of its prime contracting dollars were awarded to businesses that qualified as small businesses, including ANCs. Although there is a small disadvantaged business contracting goal 

which includes the 8(a) program; there is no separate goal for 8(a). However, in Fiscal Year 2004, 8(a) firms were awarded $8.4 billion of the SDB achievement of $18.5 

billion. 

SBA takes its oversight responsibility over Federal procurement programs very 

seriously. Even before the release of the GAO Report, the Agency had taken a number of steps to improve the oversight of the 8(a) concerns owned and controlled by 

ANCs, NHOs, and Indian Tribes and the Agency has continued to look at ways to 

strengthen the program and increase SBA’s oversight capabilities. For instance, the 

Agency is exploring possible additions to the Business Development Management 

Information System (BD-MIS) being built to electronically manage all aspects of the 

8(a) operations. SBA’s efforts also include addressing the staffing levels in the Alaska district office. 

Additionally, SBA’s Office of Government Contracting and Business Development 

has been holding meetings with all Agencies to discuss our concerns with Partnership Agreements, which delegate 8(a) contracting authority from SBA to various 

Federal procuring agencies, to clarify their roles and responsibilities for monitoring 

contract compliance of and performance by 8(a) firms. SBA has also increased training to field staff responsible for working on 8(a) issues and created a roundtable 

with the seven largest contracting Agencies to specifically discuss ANC and 8(a) 

issues. 

Office of Native American Affairs and Native American Economic 

Development 

While the Office of Government Contracting and Business Development is working with Federal Agencies, the President has tasked SBA-ONAA (through Executive 

Order 13175) to host tribal consultations to allow tribes to provide insight into how 

SBA can better manage the program and address concerns. 

As I mentioned earlier in my testimony, when I started my first business there 

was a lack of awareness of business principles. I saw much of the same situation 

through my work as a Board Member of the Native American Business Alliance 

(NABA). When NABA expanded its mission to include businesses located on reservations, both tribally owned and individual entrepreneurs, I was asked to travel to 

Indian Country to determine the interest of tribes and the best method for representing their interest. It was during this period that I had come to fully appreciate the unenviable position of Tribal Leaders for identifying, creating and running 

the economic engines that would create jobs and revenue streams, without the basic 

resources available to virtually every other government in the United States. 

Traveling around Indian Country, I came to understand that much if not most 

of Indian Country was not ready to be in business. The key barriers to success are 

more than just remote locations, lack of capital, absence of Internet, or even basic 

utilities, but an unawareness of how business is conducted. The speed, competitiveness, demand and measures of quality are little understood or even discussed. 

The unique nature of the Native governance and culture make business creation 

in Indian Country especially challenging. Because of this I came to the realization 

that what Indian Country needs is a tool that will provide a comprehensive checklist, assessment and inventory of assets so that decision makers can pursue businesses that are consistent with their unique governance, culture, vision, internal capabilities and resources available to them. 

To assist business development in Indian Country I envision a web-based system 

that will be available to anyone with internet access, though we anticipate that hard 

copies will be utilized in some areas. This tool is being developed by ONAA with 

the help of over 25 well respected volunteer private sector attorneys, economists, 

Tribal leaders and small and large businesspersons of Native descent who are well 

versed in Indian issues. 

Topics in the tool range from the highly technical to the practical, including issues 

such as: 

• Constitutional reform, 

• Development of judicial codes, 

• The role of government in business, 

• Inventorying assets and resources such as hard assets, natural resources, workforce education and skill, 

• Assessing relationships with states, local governments, non-tribal members, 

tribal members living off the reservation, 

17

• Assessing how business practices like hiring, bereavement, compensation and 

decision making work within the Tribal way of life, 

• How does expanding a business economy impact traditional culture, 

• Assessing organizational, physical and technical infrastructure. 

It is important to note that the tool will not be a magic box, nor will it recommend 

specific solutions. It will only reflect the value, culture, strengths and weaknesses 

of the communities that utilize it. Whether it is gaming or other tourism and entertainment endeavors, manufacturing, technology, natural resources, energy or alternative energy, retail or building entrepreneurial environments, the decision is 

theirs. 

While ONAA has other responsibilities and numerous other initiatives, projects 

and ad hoc tasks the Tribal self assessment tool is our priority. The goal is to provide decision making tools that will enable Tribes to create a positive business environment where they can compete effectively in the private sector. After basic assessments have been made and a business environment that fits the Tribe’s culture has 

been developed, issues such as the SBA loan guarantee programs and entrepreneurial technical assistance will be of greater value. This is why ONAA believes 

that focusing on providing the basics through the self assessment tool is the first, 

and most important, course of action in developing, enhancing and diversifying 

Native economies. 

Again, thank you for inviting me to testify on this important subject. I will be 

happy to address questions you might have about ONAA’s work. 

The CHAIRMAN. Thank you. Ms. Schinasi. I hope I pronounced it 

correctly. 

Ms. SCHINASI. Pardon me? 

The CHAIRMAN. I hope I pronounced your name correctly. 

Ms. SCHINASI. That was perfect. Thank you. And unusual. 

[Laughter.] 

STATEMENT OF KATHERINE V. SCHINASI, MANAGING 

DIRECTOR, ACQUISITION AND SOURCING MANAGEMENT, 

U.S. GOVERNMENT ACCOUNTABILITY OFFICE, WASHINGTON, 

D.C. 

Ms. SCHINASI. Thank you for inviting me today to testify on our 

prior work on Alaska Native participation in the Small Business 

Administration’s 8[a] business development program. 

With your permission, I would like to put my full statement in 

the record and summarize it right now. 

The CHAIRMAN. Without objection. 

Ms. SCHINASI. As you know, the 8[a] program is one of the Federal government’s primary mechanisms for developing small businesses owned by socially and economically disadvantaged individuals, and Congress has extended additional procurement advantages to ANC firms participating in the 8[a] program, the most significant of these is the ability to receive sole source contracts for 

any amount, and the ability of the Alaska Native Corporations to 

create numerous subsidiaries to receive government contracts. 

My statement today focuses on the findings and recommendations we made in an April 2006 report. Because of the scope of our 

work, we offer observations neither in support of nor challenge to 

the program itself. Rather, we evaluated the trends in 8[a] ANC 

contracting, how ANCs are using the 8[a] program, and the facts 

and circumstances behind the award of a sample of large sole 

source contracts. 

We made a number of recommendations and my statement today 

also includes information on actions that SBA and the procuring 

18

agencies are taking or plan to take to address our recommendations for improved oversight. 

It is important to point out that management of this program is 

a shared responsibility among government agencies as SBA has 

delegated the contract execution function to Federal procuring 

agencies through its partnership agreements. SBA, however, remains primarily responsible for implementing the 8[a] program. 

Let me start with some trends. By one measure, Mr. Chairman, 

as you said, 8[a] ANC contracting continues to represent a very 

small amount of total Federal procurement spending. However, as 

Mr. Largent pointed out, the contracts awarded to the 8[a] ANCs 

increased four-fold over the five-year period that was in the scope 

of our review—That is 2000 to 2004—growing from $265 million to 

$1.1 billion. 

Dollars obligated under sole source contracts to the 8[a] ANC 

firms during that period from the six agencies in our sample also 

increased from about $180 million in 2000 to about $876 million in 

2004, which represented about 77 percent of the 8[a] contracts 

awarded to ANCs over that period by the agencies in our sample. 

Another trend that we noted was the increasing complexity of 

the corporations’ business arrangements, including use of subsidiaries. In 1998, one ANC owned one subsidiary. By 2005, 49 ANCs 

owned 154 subsidiaries. 

We found that the Alaska Native Corporations were using the 

8[a] program in a variety of ways. Our GAO team traveled to Alaska and met with representatives of 30 village and regional corporations of various sizes who were engaged in a wide variety of business activities, and used various business models, including some 

that did not participate in the 8[a] program at all. 

We found for the ANCs that do participate in the 8[a] program 

some are heavily reliant on the program to generate revenues for 

the benefit of their shareholders, while others approach it as one 

of many revenue-generating opportunities that also include investments in stocks or real estate. 

We also looked at the facts and circumstances behind the award 

of 16 large sole source contracts awarded to 8[a] ANC firms by 

seven Federal agencies. These covered a wide range of services, 

such as facility support services in the U.S. and overseas, training 

and equipping security guards in Iraq, detention facility operation 

support, and information technology services. The contracts that 

we reviewed ranged in value from $11 million to almost $600 million. 

As you know, Alaska Native Corporations in the 8[a] may be 

awarded sole source contracts without regard to dollar thresholds, 

which contrasts with the thresholds that have been established for 

sole source awards to other 8[a] firms, and the preference for competition in structuring most other government contract awards. 

Our review found that agency officials view contracting with 8[a] 

ANC firms as a quick, easy and legal way to award contracts while 

at the same time helping their agencies meet the small business 

goals. In several cases agency official stated that they turn to 8[a] 

ANC firms because they do not have the time nor the people needed to structure competitive awards. 

19

Let me say now a few words about the oversight of the program. 

When we looked, we found shortcomings in both the procuring 

agencies and in SBA regarding their management of the program. 

Some of these shortfalls stem from the very nature of the complex 

business arrangements that the ANC 8[a] firms are involved in. 

For example, SBA was not tracking subsidiary participation in 

secondary industry codes to ensure that only one subsidiary of an 

ANC generate most of its revenue as is required. In other cases, 

agency contracting officers believed that SBA had responsibility for 

actions that SBA relied on the agencies to undertake. This was 

true, for example, in monitoring compliance with the Federal Acquisition Regulation limitation on subcontracting clause which requires 50 percent of personnel costs to be maintained by the prime 

contractor. 

With respect to SBA itself, we found that the agency had not tailored its policies and practices to account for the ANCs unique status and rapid growth in the 8[a] program. SBA officials told us 

they face a challenge in this regard. They noted that the goal of 

ANCs, which is economic development for Alaska Natives from a 

community standpoint, is not always consistent with the primary 

purpose of the larger 8[a] program, which is business development 

for individual small disadvantaged businesses. 

We made a number of recommendations to SBA on actions that 

can be taken to revise regulation and policy as well as to improve 

their oversight practices. At the time of our review, SBA officials 

stated that they were planning to revise their regulations and policies to address the ANCs unique status in the 8[a] program. They 

have not yet done so. 

However, the agency has taken actions to implement one of the 

recommendations, which is to revise its partnership agreements 

with the procuring agencies to emphasize that it is the procuring 

agency’s responsibility to monitor compliance with such things as 

the limitations on subcontracting. SBA has also instituted training 

for its own personnel and for those in the procuring agencies. 

Also during the time of our review, SBA indicated that a new 

automated data collection tool would help them more readily collect 

information on 8[a] firms, and thereby help their monitoring efforts. The system was expected to be operational during this fiscal 

year. Although that could be helpful to SBA, I would also note that 

GAO’s work has shown that upgrading the technology and management information systems is useful only when the underlying management policies and practices work well. 

We also recommended that the procuring agencies in our review 

work with SBA to develop guidance for contracting officers on how 

to comply with requirements of the 8[a] program, in particular, 

when contracting with ANC firms. Most of the agencies have begun 

to address this recommendation. 

We will continue to follow up on agency actions to implement our 

recommendations. Until strong oversight is in place, there is a potential for abuse and unintended consequences. 

Mr. Chairman, that concludes my summary, and I would be 

happy to answer any questions you or the members have. 

[The prepared statement of Ms. Schinasi follows:]

20

1GAO, Contract Management: Increased Use of Alaska Native Corporations’ Special 8(a) Provisions Calls for Tailored Oversight, GAO-06-399, (Washington, D.C.: Apr. 27, 2006). 2 Each 8(a) ANC firm must be in a different primary industry. 

Statement of Katherine V. Schinasi, Managing Director, Acquisition and 

Sourcing Management, United States Government Accountability Office 

Mr. Chairman and Members of the Committee: 

I am pleased to be here today to discuss our April 2006 report on Alaska Native 

Corporation (ANC) 8(a) firms. 1 In December 1971, Congress enacted the Alaska 

Native Claims Settlement Act to resolve long-standing aboriginal land claims and 

to foster economic development for Alaska Natives. This legislation created ANCs, 

which would become the vehicle for distributing land and monetary benefits to Alaska Natives in lieu of a reservation system. As of December 2005, there were 13 regional ANCs and 182 village, urban, and group corporations. 

In 1986, legislation was enacted that allowed ANC-owned firms to participate in 

the Small Business Administration’s (SBA) 8(a) program—one of the federal government’s primary means for developing small businesses owned by socially and economically disadvantaged individuals. Since then, Congress has extended special procurement advantages to ANC firms. For example, ANC firms are permitted to receive noncompetitive contracts for any amount, whereas other 8(a) companies are 

subject to competitive thresholds of $5 million for manufacturing contracts or $3 

million for all other contracts. ANCs can also own multiple subsidiaries participating in the 8(a) program, 2 unlike other 8(a) firms that may own only one in a 

lifetime and no more than 20 percent of another 8(a) firm. 

Our 2006 report on 8(a) ANC contracting identified (1) trends in contracting with 

ANC firms, (2) the reasons agencies have awarded 8(a) sole-source contracts to ANC 

firms and the facts and circumstances behind some of these contracts, and (3) how 

ANCs are using the 8(a) program. We also evaluated SBA’s oversight of 8(a) ANC 

firms. We made a number of recommendations to SBA and also recommended that 

the agencies in our review work with SBA to develop training for their contracting 

personnel. 

Today I will discuss the highlights of our report and provide an update on actions 

SBA and the other agencies have taken to address our recommendations. 

To address the objectives of our 2006 report, we obtained data on federal 8(a) contracting with ANCs. It is important to note that there is no readily available central 

source of information on ANC 8(a) contracting activity. We obtained each ANC 

firm’s Data Universal Numbering System (DUNS) number and used this information to obtain data from the Federal Procurement Data System (FPDS) and agencies. To assess the reliability of the procurement data, we (1) compared FPDS and 

agency data to verify its accuracy, (2) reviewed related documentation, including 

contract files, and (3) worked closely with agency officials to identify and resolve any 

data problems. When we found discrepancies, we brought them to the agency’s attention and worked with them to correct the discrepancies before conducting our 

analyses. We also analyzed 16 large, sole-source 8(a) contracts awarded to ANC 

firms from the departments of Defense, Energy, the Interior, State, Transportation, 

and Homeland Security and the National Aeronautics and Space Administration 

(NASA). We selected the contracts based on high ultimate award values and high 

dollar obligations that represented a variety of contractors and services. We traveled 

to Alaska and met with executives of 13 regional ANCs and 17 village or urban corporations. The report on which this testimony is based was prepared in accordance 

with generally accepted government auditing standards. 

Our work did not include within its scope an objective or analyses that either support or challenge special ANC advantages within the 8(a) program. The program 

has been established in law and any changes are up to the Congress. 

ANC Trends in and Use of 8(a) Contracting 

8(a) ANC contracting represents a small amount of total federal procurement 

spending. However, dollars obligated to ANC firms through the 8(a) program grew 

from $265 million in Fiscal Year 2000 to $1.1 billion in 2004. Overall, during the 

5-year period, the government obligated $4.6 billion to ANC firms, of which $2.9 billion, or 63 percent, went through the 8(a) program. 

During this period, six federal agencies—the departments of Defense, Energy, the 

Interior, State, and Transportation and NASA—accounted for almost 85 percent of 

total 8(a) ANC obligations. Obligations for 8(a) sole- source contracts by these agencies to ANC firms increased from about $180 million in Fiscal Year 2000 to about 

$876 million in Fiscal Year 2004. 

21

3 In this testimony, ‘‘ANC’’ refers to the parent corporation. The term ‘‘ANC firm’’ denotes a 

business owned by an ANC. We use the term ‘‘ANC firm’’ and ‘‘subsidiary’’ interchangeably. 4There is a 9-year limit to participation in the 8(a) program; firms could graduate earlier if 

they outgrow their primary industry size standards. 5 ANC firms in the 8(a) program are deemed by law as socially and economically disadvantaged. Awards to these firms are credited to agencies’ small business goals. 6For general construction, the 8(a) firm is required to incur at least 15 percent of the personnel costs. 

ANCs use the 8(a) program as one of many tools to generate revenue with the 

goal of benefiting their shareholders. Some ANCs are heavily reliant on the 8(a) program for revenues, while others approach the program as one of many revenue-generating opportunities, such as investments in stocks or real estate. ANCs are using 

the congressionally authorized advantages afforded to them, such as ownership of 

multiple 8(a) subsidiaries, 3 sometimes in diversified lines of business. From Fiscal 

Year 1988 to 2005, numbers increased from one 8(a) subsidiary owned by one ANC 

to 154 subsidiaries owned by 49 ANCs. Figure 1 shows the recent growth in ANCs’ 

8(a) subsidiaries. 

ANCs use their ability to own multiple businesses in the 8(a) program, as allowed 

by law, in different ways. For example, some ANCs 

• create a second subsidiary in anticipation of winning follow-on work from one 

of their graduating subsidiaries; 4

• wholly own their 8(a) subsidiaries, while others invest in partially-owned subsidiaries; and 

• diversify their subsidiaries’ capabilities to increase opportunities to win government contracts in various industries. 

Contract Execution Shortfalls 

Our review of 16 large sole-source contracts awarded by 7 agencies found that 

agency officials view contracting with 8(a) ANC firms as a quick, easy, and legal 

way to award contracts while at the same time helping their agencies meet small 

business goals. 5

Memoranda of Understanding (partnership agreements) between SBA and agencies delegate the contract execution function to federal agencies, although SBA remains responsible for implementing the 8(a) program. We found that contracting officials had not always complied with requirements to notify SBA when modifying 

contracts, such as increasing the scope of work or the dollar value, and to monitor 

the percentage of the work performed by the 8(a) firms versus their subcontractors. 

For example: 

• Federal regulation requires that when 8(a) firms subcontract under an 8(a) 

service contract, they incur at least 50 percent of the personnel costs with their 

own employees. 6 The purpose of this provision, which limits the amount of work 

that can be performed by the subcontractor, is to ensure that small businesses 

do not pass along the benefits of their contracts to their subcontractors. For the 

16 files we reviewed, we found almost no evidence that the agencies are effectively monitoring compliance with this requirement. In general, the contracting 

officers we spoke with were confused about whose responsibility it is. 


37848.001.eps
22

7This requirement is set forth in the Small Business Act (15 U.S.C. § 636(j)(10)(J)(ii)(II)). 

• Agencies are also required to notify SBA of all 8(a) contract awards, modifications, and exercised options where the contract execution function has been delegated to the agencies in the partnership agreements. We found that not all 

contracting officers were doing so. In one case, the Department of Energy contracting officer had broadened the scope of a contract a year after award, adding 

10 additional lines of business that almost tripled the value of the contract. 

These changes were not coordinated with SBA. 

SBA Lacks Oversight of 8(a) ANC Activity 

We reported in 2006 that SBA had not tailored its policies and practices to account for ANCs’ unique status and growth in the 8(a) program, even though officials 

recognize that ANC firms enter into more complex business relationships than other 

8(a) participants. SBA officials told us that they have faced a challenge in overseeing the activity of the 8(a) ANC firms because ANCs’ charter under the Alaska 

Native Claims Settlement Act is not always consistent with the business development intent of the 8(a) program. The officials noted that the goal of ANCs—economic development for Alaska Natives from a community standpoint—can be in conflict with the primary purpose of the 8(a) program, which is business development 

for individual small, disadvantaged businesses. 

SBA’s oversight fell short in that it did not: 

• track the primary business industries in which ANC subsidiaries had 8(a) contracts to ensure that more than one subsidiary of the same ANC was not generating the majority of its revenue under the same primary industry code; 

• consistently determine whether other small businesses were losing contracting 

opportunities when large sole-source contracts were awarded to 8(a) ANC firms; 

• adhere to a statutory and regulatory requirement to ascertain whether 8(a) 

ANC firms, when entering the 8(a) program or for each contract award, had, 

or were likely to obtain, a substantial unfair competitive advantage within an 

industry; 7 ensure that partnerships between 8(a) ANC firms and large firms 

were functioning in the way they were intended under the 8(a) program; and 

• maintain information on ANC 8(a) activity. 

SBA officials from the Alaska district office had reported to headquarters that the 

makeup of their 8(a) portfolio was challenging and required more contracting knowledge and business savvy than usual because the majority of the firms they oversee 

are owned by ANCs and tribal entities. The officials commented that these firms 

tend to pursue complex business relationships and tend to be awarded large and 

often complex contracts. We found that the district office officials were having difficulty managing their large volume and the unique type of work in their 8(a) portfolio. When we began our review, SBA headquarters officials responsible for overseeing the 8(a) program did not seem aware of the growth in the ANC 8(a) portfolio 

and had not taken steps to address the increased volume of work in their Alaska 

office. 

Previous Conclusions, Recommendations, and Agency Responses 

In 2006, we reported that ANCs were increasingly using the contracting advantages Congress has provided them. Our work showed that procuring agencies’ contracting officers are in need of guidance on how to use these contracts while exercising diligence to ensure that taxpayer dollars are spent effectively. Equally important, we stated, significant improvements were needed in SBA’s oversight of the program. Without stronger oversight, we noted the potential for abuse and unintended 

consequences. 

In our April 2006 report, we made 10 recommendations to SBA on actions that 

can be taken to revise its regulations and policies and to improve practices pertaining to its oversight of ANC 8(a) procurements. Our recommendations and SBA’s 

June 2007 response are as follows. 

We recommended that the Administrator of SBA: 

1. Ascertain and then clearly articulate in regulation how SBA will comply with 

existing law to determine whether and when one or more ANC firms are obtaining, or are likely to obtain, a substantial unfair competitive advantage in 

an industry. 

SBA response: SBA is exploring possible regulatory changes that 

would address the issue of better controlling the award of sole-source 8(a) 

contracts over the competitive threshold dollar limitation to joint ventures between tribally and ANC-owned 8(a) firms and other business concerns. 

23

8SBA has designated a small business size standard for every NAICS code. 8(a) applicants 

must qualify as small under their primary NAICS code at the time of application and SBA’s 

certification date. SBA regulation requires that at least 2 years lapse after an ANC firm exits 

the 8(a) program before another firm owned by the same parent ANC can enter the program 

with the prior firm’s primary NAICS code. However, once accepted into the program, 8(a) firms 

may pursue contracts in any line of work, called secondary NAICS codes. 

2. In regulation, specifically address SBA’s role in monitoring ownership of ANC 

holding companies that manage 8(a) operations to ensure that the companies 

are wholly owned by the ANC and that any changes in ownership are reported to SBA. 

SBA response: SBA is building a Business Development Management 

Information System to electronically manage all aspects of the 8(a) program. According to SBA, this system, scheduled to be completed in Fiscal 

Year 2008, will monitor program participants’ continuing eligibility in 

the 8(a) program and could include an ANC element in the electronic annual review that would monitor the ownership of ANC holding companies 

that manage 8(a) operations and ensure that any changes in ownership 

are reported to SBA. 

3. Collect information on ANCs’ 8(a) participation as part of required overall 8(a) 

monitoring, to include tracking the primary revenue generators for 8(a) ANC 

firms to ensure that multiple subsidiaries under one ANC are not generating 

their revenue in the same primary industry. 

SBA response: The planned electronic annual review can collect information on ANCs’ multiple subsidiaries to ensure that they are not generating the majority of their revenues from the same primary industry. 

Further, to ensure that an ANC-owned firm does not enter the 8(a) program with the same North American Industry Classification System 

(NAICS) code 8 as another current or former 8(a) firm owned by that 

ANC, the ANC-owned applicant must certify that it operates in a distinct 

primary industry and must demonstrate that fact through revenues generated. SBA notes that the planned annual electronic reviews can validate this information. 

4. Revisit regulation that requires agencies to notify SBA of all contract modifications and consider establishing thresholds for notification, such as when 

new NAICS codes are added to the contract or there is a certain percentage 

increase in the dollar value of the contract. Once notification criteria are determined, provide guidance to the agencies on when to notify SBA of contract 

modifications and scope changes. 

SBA response: SBA stated that its revisions to its partnership agreements with federal agencies address this recommendation. However, we 

note that the revised agreement does not establish thresholds or include 

new criteria for when agencies should send SBA contract modifications 

or award documentation. The agreement states that agencies ‘‘shall provide a copy of any contract...including basic contracts, orders, modifications, and purchase orders’’ to SBA. 

5. Consistently determine whether other small businesses are losing contracting 

opportunities when awarding contracts through the 8(a) program to ANC 

firms. 

SBA response: SBA stated that it plans to require the contracting 

agencies to include impact statements in their contract offer letters to 

SBA. 

6. Standardize approval letters for each 8(a) procurement to clearly assign accountability for monitoring of subcontracting and for notifying SBA of contract 

modifications. 

SBA response: SBA agreed with the recommendation but did not indicate an action taken or planned. 

7. Tailor wording in approval letters to explain the basis for adverse impact determinations. 

SBA response: SBA agreed with the recommendation but did not indicate an action taken or planned. 

8. Clarify memorandums of understanding (known as partnership agreements) 

with procuring agencies to state that it is the agency contracting officer’s responsibility to monitor compliance with the limitation on subcontracting 

clause. 

SBA response: SBA has implemented this recommendation by revising 

the partnership agreements with the procuring agencies. It added several 

provisions that delineate the agencies’ responsibilities for oversight, monVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00027 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
24

itoring, and compliance with procurement laws and regulations governing 

8(a) contracts, including the limitation on subcontracting clause. 

9. Evaluate staffing levels and training needed to effectively oversee ANC participation in the 8(a) program and take steps to allocate appropriate resources 

to the Alaska district office. 

SBA response: SBA stated that the planned Business Development 

Management Information System should help the Alaska district office 

more effectively oversee ANC participation in the 8(a) program. It stated 

that it is providing training to the Alaska district office. However, no 

plans were in place to evaluate staffing levels at the office. 

10. Provide more training to agencies on the 8(a) program, specifically including 

a component on ANC 8(a) participation. 

SBA response: SBA has provided training to agencies on the revised 

8(a) partnership agreements; however, our review of the slides SBA used 

for the training found no reference to ANC 8(a) firms specifically. According to an SBA official, SBA will include a component on ANC 8(a) participants in future training sessions. 

We also recommended that procuring agencies provide guidance to contracting officers to ensure proper oversight of ANC contracts. The procuring agencies generally 

agreed with the recommendation. Some agencies are waiting for SBA to implement 

our recommendations before they take their own actions, but others have taken 

steps to tighten their oversight of contracts with 8(a) ANC firms. The Department 

of Homeland Security, for example, recently issued an ‘‘acquisition alert’’ requiring 

that its heads of contracting activities provide guidance and training on the use of 

8(a) firms owned by ANCs. The alert provides that use of the authority to award 

sole-source 8(a) contracts to ANCs must be judicious with appropriate safeguards to 

ensure that the cost/price is fair and reasonable, that the ANC has the technical 

ability to perform the work, that the ANC will be performing the required percentage of the work and that the award is in the best interests of the government. The 

Department of Energy revised its acquisition guidance regarding small business programs to remind contracting officers to use care in awarding and administering 

ANC contracts, to include notifying SBA of contract modifications and monitoring 

the limits on subcontracting. The Department also provided training on the 8(a) program, to include contracting with ANC firms. By providing contracting officers with 

appropriate training on these issues, the government is taking steps to ensure that 

the ANC firms are operating in the program as intended, thereby mitigating the 

risk of unintended consequences or abuse of some of the privileges provided to these 

firms. 

This concludes my testimony. I would be happy to answer any questions you may 

have. 

Contacts and Staff Acknowledgements 

For further information regarding this testimony, please contact Katherine V. 

Schinasi at (202) 512-4841 or schinasik@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page of this 

statement. Key contributors were Michele Mackin, Sylvia Schatz, and Tatiana 

Winger. 

This is a work of the U.S. government and is not subject to copyright protection 

in the United States. It may be reproduced and distributed in its entirety without 

further permission from GAO. However, because this work may contain copyrighted 

images or other material, permission from the copyright holder may be necessary 

if you wish to reproduce this material separately. 

GAO’s Mission 

The Government Accountability Office, the audit, evaluation and investigative 

arm of Congress, exists to support Congress in meeting its constitutional responsibilities and to help improve the performance and accountability of the federal government for the American people. GAO examines the use of public funds; evaluates 

federal programs and policies; and provides analyses, recommendations, and other 

assistance to help Congress make informed oversight, policy, and funding decisions. 

GAO’s commitment to good government is reflected in its core values of accountability, integrity, and reliability. 

Obtaining Copies of GAO Reports and Testimony 

The fastest and easiest way to obtain copies of GAO documents at no cost is 

through GAO’s Web site (www.gao.gov). Each weekday, GAO posts newly released 

reports, testimony, and correspondence on its Web site. To have GAO e-mail you a 

list of newly posted products every afternoon, go to www.gao.gov and select ‘‘Subscribe to Updates.’’

25

Order by Mail or Phone 

The first copy of each printed report is free. Additional copies are $2 each. A check 

or money order should be made out to the Superintendent of Documents. GAO also 

accepts VISA and Mastercard. Orders for 100 or more copies mailed to a single address are discounted 25 percent. Orders should be sent to: 

Public Affairs 

Paul Anderson, Managing Director, 

AndersonP1@gao.gov (202) 512-4800

U.S. Government Accountability Office, 441 G Street NW, Room 7149

Washington, D.C. 20548


37848.002.eps
26

The CHAIRMAN. Thank you. The Chair would like to thank each 

of you for your time and testimony today as well as for your public 

service and your commitment to Indian Country, and your help to 

our Native Americans. We all deeply appreciate that service. 

Let me start with Dr. Middleton first. Your testimony indicated 

that your office is encouraging other Federal agencies to increases 

purchases of American Indian goods and services. My question is 

does this include encouraging the use of tribally owned and Alaska 

Native Corporation 8[a] companies? 

Mr. MIDDLETON. Yes, it does. Under the Buy Indian Act, we are 

trying to encourage Federal government to be a procurer of goods 

and services from Indian-owned businesses, whether they are individually Indian-owned or tribally owned, and which would include 

8[a] firms. 

The CHAIRMAN. And are tribally owned and/or Alaska Native 

Corporation 8[a] companies eligible for the training provided by 

your office? 

Mr. MIDDLETON. They are actually. We go out and we provide a 

series of conferences to talk about business development in Indian 

Country, and any firms that may be applying for or in fact have 

applied for 8[a] status would be eligible for this training. One in 

particular would be the training we provide through Dartmouth 

College. That is in fat put in place to be able to allow existing businesses to either enhance their business development or expand 

their business development. It has been very effective and they can 

in fact participate in those programs. 

The CHAIRMAN. Your testimony indicates that your office is working with the GSA to develop a tracking system of contracts awarded to Tribal 8[a] and Alaska Native Corporations. Does the tracking system that is being developed track contracts awarded by all 

Federal agencies to Tribal and Alaska Native 8[a]s or only those 

awarded by the DOI? 

Mr. MIDDLETON. We are looking to do it government wide. The 

existing system in GSA at this time does not allow for designation 

of tribally owned 8[a] businesses, only 8[a] businesses, and so we 

are trying to work with GSA to try and identify those Native American 8[a] businesses that are in fact getting contracts across the 

Federal government. 

The CHAIRMAN. Mr. Largent, in its 2006 report on Alaska Native 

Corporation in the 8[a] programs, the GAO recommended that the 

SBA improve the monitoring and oversight of Alaska Native Corporations in 8[a] program. Does the Small Business Administration 

have a way to track procurement data on Tribal and Alaska Native 

Corporation participation in the program? 

Mr. LARGENT. I don’t know that I could answer that question 

with any reliability. Can we get back to you in writing on that? 

The CHAIRMAN. Sure. Let me ask you one final one. Can the SBA 

develop and make recommendations to other Federal agencies to 

develop mechanisms to accurate track Tribal and Alaska Native 

Corporation procurement data? 

Mr. LARGENT. I am aware that a meeting has been scheduled 

with seven of the largest agencies that do procurement with Indian 

Country and 8[a]s. I think that meeting is scheduled in October, 

and we can give you more detail on that in writing also. 

27

The CHAIRMAN. OK. The Committee would appreciate it. 

Ms. Schinasi, in your written testimony you indicated that from 

Fiscal Year 2000 to 2004 contracts to ANCs increased by 265 million to 1.1 billion. Was there an increase in the total amount of 

contracts obligated by the Federal government from the same time 

period, 2000 to 2004, to all entities? 

Ms. SCHINASI. Yes, sir. We see the same explosion in service contracting generally. 

The CHAIRMAN. In your study, I noticed that you indicated that 

the SBA and the Federal contracting agencies were not conducting 

adequate oversight. Did you find any illegal activity being performed by the ANCs? 

Ms. SCHINASI. No, sir. 

The CHAIRMAN. OK, I appreciate it. That concludes my questions. 

I will turn to the Ranking Member, Mr. Cole, Mr. Young. I am 

sorry. 

Mr. YOUNG. Thank you, Mr. Chairman. 

Katherine, I won’t pronounce your last name, I would rather say 

Katherine, it is a lot easier. 

[Laugher.] 

The CHAIRMAN. I slaughtered the language anyway. 

Mr. YOUNG. You said that the SBA has made some progress or 

significant progress toward implementing your changes that were 

recommended. Do you believe the SBA and procuring agencies will 

be able to make the remaining changes on their own without significant intervention by this body or any other body? 

Ms. SCHINASI. Yes, sir, I do. 

Mr. YOUNG. I am glad the question was asked by the Chairman 

about the growth of this total contracting because I was a little 

concerned when you mentioned that it went from 200 million to 1.5 

billion. If you look at the total number of contracts, it is still, I believe, 0.5 percent of the total contracts that are let. So it is not a 

huge growth. It is a growth, but everybody else grew too, so I think 

it is good. 

I don’t have any other questions, Mr. Chairman. I think you did 

quite a good job on it. I want to thank the witnesses for being here, 

and again, this whole program is a success and I hope we encourage it instead of discourage it. The oversight part is probably needed, and I think it is good for everybody. I have found no one that 

has an interview with your agency that objected to that. I think 

that is good for the SBA. I think it is good for the 8[a]s, and we 

will encourage that. Thank you. 

The CHAIRMAN. The gentleman from North Carolina, Mr. Shuler. 

Mr. SHULER. Thank you, Mr. Chairman. 

Mr. Largent, can you share with us how the process for deciding 

if a Tribe is deemed social or economically disadvantaged, and does 

gaming enter into this decision? 

Mr. LARGENT. Again, that is not my area. I am not with the program office. I do know that it is incredibly thorough assessment. 

It takes a considerable amount of time, and we are looking to 

streamline that process so that Tribes that are applying for 8[a] 

certification can more easily navigate it, but it is a comprehensive 

and thorough process, and I would be happy to get back to you 

from the program office if you would like. 

28

Mr. SHULER. Very good. And this could be for anyone on the witness panel. Can you give me some examples of Tribes who have entered into the process of the 8[a] program and graduated from that 

and actually become more self-sufficient based upon the success 

that they have had in the program? 

Mr. LARGENT. Actually, sitting right behind me, and I believe you 

will hear testimony a little later from former Secretary Neal 

McCaleb, Chickasaw Nation is a wonderful example. At one point 

I believe they had 12 Tribal 8[a]s. I think five have graduated. 

They employ over 2,000 people, have a very diversified economy 

and a far better quality of life than they had 20 years ago because 

of 8[a]. S&K Technologies, Kootenai and Salish Reservation is another example, but there are few. There are few Tribes that have 

been able to enjoy any real benefits from the 8[a] program, and we 

are working feverishly to change that. 

Mr. SHULER. Very good. I commend all of you for your service, 

and Mr. Chairman, I yield back. 

The CHAIRMAN. Mr. Cole. 

Mr. COLE. Thank you very much, Mr. Chairman, and thank each 

of you for your testimony. I only have a few questions. Let me 

begin by picking up where Mr. Shuler left off. 

I would ask you just to elaborate going forward. We have some 

examples of Tribes, Mr. Largent, obviously that have been successful in taking 8[a] contracting and moving out more broadly. What 

are the things you think we can do to make sure that that success 

is shared by more Tribes? 

Mr. LARGENT. Congressman, I would defer to the specifics on 

that to the actual Tribes and Native villages, but I will tell you 

that I travel extensively. I have been to remote Alaskan villages, 

spent the night there, been to a number of reservations, attend regular conferences, host meetings in my office, and with the Administrator with Tribal delegations, and I cannot recall one meeting 

where the issue and the importance of 8[a] has not come up. 

Mr. COLE. So this is a pretty important tool in a lot of different 

Tribal toolboxes in terms of making their people self-sufficient and 

providing opportunities that simply haven’t been there in the past? 

Mr. LARGENT. That is the message that is delivered to me and 

that I deliver to the Administrator. 

Mr. COLE. Mr. Middleton, we have a lot of interesting ideas in 

the broader society about the nature of Native economies, and most 

people I run into be outside that universe quite often think that all 

Tribes are now rich due to gaming. Could you comment on how accurate that is or how much that might reflect the reality? 

Mr. MIDDLETON. Well, actually, I, in talking to non-native citizens of the United States, I have them relay that exact message 

to me also, and it is absolutely not true as evident by the unemployment rates that are currently out there in a number of reservations. It is true that some Tribes in fact have been fortunate, that 

gaming has contributed significantly to their well being, but there 

are many Tribes out there that may in fact that have gaming but 

are not doing as well or just barely breaking even, or in fact not 

have gaming, and they are in remote locations. 

29

So any way that we can enhance the economies of those areas 

absent having gaming opportunities allows the Tribes to in fact 

enjoy a better life. I will give you one example. 

I was traveling to Duck Valley, which is on the Idaho/Nevada 

border, recently, and had a chance to go to a computer center 

where some local Tribal members were there, and a young man 

was there sitting at the computer. And I struck up a conversation 

with him, and they are desperate to have some sort of economic development opportunities in Duck Valley. We are working closely 

with them to try and make that happen. But I talked to him. I 

said, well, what are you doing now? And he said he graduated from 

high school about a year ago. And I said, well, you know, what is 

happening? And he just said, I am just bored, there is nothing to 

do, there is no jobs, no job opportunities, and so he will come to 

the computer center and sit there and get on the computer and 

look at the outside world, and not be able to participate, and those 

are the type of things that we need to change. 

Mr. COLE. Appreciate that. Ms. Schinasi, and I hope I pronounced it right, you did mention, and I want to go back to this 

point about the trend line, the growth. Is there anything that 

would surprise you about that particularly? Given the fact that we 

sort of set this policy out, and people have taken advantage of it, 

and I would expect in the early stages if you start at zero or a 

relatively low number, the numbers look pretty dramatic if you 

talk in terms of percentage increases. But is there anything that 

is alarming or surprising about the speed with which people have 

taken advantage of the opportunity or Tribes have taken advantage 

of the opportunity? 

Ms. SCHINASI. The trends that we see here, interestingly enough, 

parallel the trends that we see in government contracting as a 

whole, and I talk about that not because there is anything in the 

absolute dollar value that has any value in and of itself in that 

number, but what we look at that for is whether or not there are 

risks from a management perspective. And so we have taken a very 

similar positions when we look at service contracting as a whole. 

When you have rapid growth and you have at the same time cuts 

in your workforce, and you have more complicated contract vehicles, then the agencies need to be paying more attention to what 

is going on. 

Mr. COLE. But just for the record, there is no reason to think 

that it is any different than any other phase of government contracting, no reason to particularly single out this particular area of 

Federal contracting? 

Ms. SCHINASI. Not in terms of the dollars spent. No, sir. 

Mr. COLE. Thank you very much. Thank you, Mr. Chairman. 

The CHAIRMAN. Gentlelady from California, Ms. Napolitano. 

Ms. NAPOLITANO. Thank you, Mr. Chair, and this is really an interesting conversation, but I am trying to find out, Mr. Largent, 

whether—because I sat on the Small Business Committee for six 

years, and I learned a lot about what agencies, Federal agencies 

are not doing, because I have known contractors that have been 

8[a] certified, this is minorities, and never got a contract once for 

years. 

30

So are we having SBA work with the Federal agencies to change 

their mindset in terms of being able to assist minority outreach? 

Because it is all well and good that your agency may be focusing 

on that, but if you don’t change the mindset of the procurement officers in the Federal agencies, it is not going to help you increase 

at the way it should be. 

Then the second question would be are you looking at diverse 

areas of the United States where you have your Tribal groups in 

the area? Because I know you have talked about the ones that have 

gaming, some of them are doing very well, and they have done outreach to help other tribes, but you need to start teaching the young 

people at the school level and advising them where they can begin 

to look for getting into the economy, getting into business, being 

able to be—how would I say—successful in business enterprises, 

and I don’t hear any of that. Sir? 

Mr. LARGENT. With respect to your first question, in general 

terms I can tell you that, yes, I know that the Office of Advocacy 

works specifically on this issue. I have had the opportunity to accompany Tribal delegations to other agencies to talk about opportunity. 

With respect to specific methodology, I would prefer to get back 

in writing from the program office that is responsible for that because my focus is very, very narrow. I work with Indians, Native 

Hawaiians, Alaska Natives and the Islands of Guam and American 

Samoa, and probably won’t get there. So if that is OK, I would prefer to get back in greater detail with people that can give you that 

answer. 

With respect to your second question, absolutely, and this is one 

of the reasons that we travel so much. We have put together a 

team of people to help us develop a tool that is both diverse from 

a business and educational background and also diverse from a geographic background. 

I cannot emphasize enough the challenge that Tribal leaders 

have in trying to build economies. It is more than just access to 

capital or better education or access to markets. I recently had an 

opportunity to travel to a reservation and was touring one of their 

facilities, a very nice facility, and they were explaining to me because of the high incidence of diabetes in the community that they 

have to schedule their workforce because every two or three days 

people need to leave for three hours for treatment. Factor that into 

a competitive business analysis and you see the challenge, and that 

is one component. 

So developing this tool that I keep talking about, we have identified 130 separate components at this point that we believe are instrumental or integral to developing sustainable economies, things 

from as broad and powerful and well known as Tribal governance 

structure to things as nuanced as bereavement policy. It is a very 

complicated mix and we are working very, very hard. 

This past Sunday I flew to San Francisco to meet with Wilma 

Mankiller, former Cherokee chief, to get her insights as to how we 

can roll this out. A lot of people are working very hard to address 

that issue. 

Ms. NAPOLITANO. Do you work in California? 

31

Mr. LARGENT. No, I work here. I live in Michigan. I fly in on 

Mondays. I fly home on Fridays. 

Ms. NAPOLITANO. So your outreach is not into the Western——

Mr. LARGENT. I go everywhere. I go everywhere. I was in San 

Francisco. I have been to Alaska. 

Ms. NAPOLITANO. OK. 

Mr. LARGENT. We are in the process right now of trying to finalize an inner-tribal in Oklahoma, Nevada, New Mexico, California, 

and somewhere else where we will sit down with broad delegations 

of Tribal leadership to say here is what we are doing, what do you 

need. 

Ms. NAPOLITANO. I hate to stop you but my time will be very limited, and that is, do you actually have the ability to do other outreach through new technologies such as video conferencing so you 

don’t have to travel? 

Mr. LARGENT. Yes, although it is difficult to effect the trust and 

the nuance, the understanding. But the tool that we are building 

is on a sheer point platform where more and more people can access it from remote locations and provide their insights, yes. 

Ms. NAPOLITANO. OK. The other question would be the Small 

Business Committee under former Chairman Donald Manzullo had 

begun establishing a one-stop shop for small business. Are you 

aware? Do you work with that? Because they were going to be able 

to try to hone in on assisting small business, that is any small 

business. 

Mr. LARGENT. Are you referring specifically to Indian reservations? 

Ms. NAPOLITANO. No. Generally small business that could be useful in being able to use this tool to further some of the contacts of 

some of the Tribes. 

Mr. LARGENT. If we can draw a distinction, Congresswoman, 

there is a unique distinct set of circumstances between individual 

Indians and Tribes. So for individual entrepreneurs such as myself, 

I have been self-employed for 30 years, being able to access the resources of the Small Business Administration or other Federal programs are available to them like they would be anybody. 

But for developing sustainable economies on reservations, that is 

an entirely different matter, and I believe that one-stop shops 

would have limited, if any, value in that particular context. 

Ms. NAPOLITANO. Well, that may be so for some, but others may 

be in a position to be able to have some benefit from that. 

Mr. LARGENT. If you could elaborate. 

Ms. NAPOLITANO. Some may already be in business and may be 

able to expand and being able to access information available on 

that one-stop shop. 

Mr. LARGENT. Agreed, and again those resources are already 

available and we are trying to direct individuals and Tribes to 

those resources where appropriate. But in remote locations, such as 

the villages of Alaska, or the big land mass Tribes out West, we 

have not had a great deal of success because it is just a unique circumstance to work in. Accessing capital is very difficult, for example. Pretty hard to start a business without money. 

Ms. NAPOLITANO. Thank you, Mr. Chair. I would like to go for 

a second round, if available. 

32

The CHAIRMAN. Sure. The gentleman from Puerto Rico, Mr. 

Fortun ̃ o? Next on our side is the gentleman from California, Mr. 

Baca. 

Mr. BACA. Thank you very much, Mr. Chairman, and I want to 

thank the panelists for coming and giving their insight, and I guess 

we have heard a lot of positive things, but I want to continue to 

hear. What can be done to improve the current system that we 

have right now in doing the outreach in reference to the 8[a] programs, and what kind of educational programs are we developing 

in conjunction with our K through 12, our community colleges or 

state colleges to make a lot of the people aware of the programs 

that are available for them? Any one of you can elaborate on that 

in terms of what can be done to improve what we are doing now, 

and if there is any changes or corrections that we need to do to 

make sure that we do the outreach too as well and letting many 

individuals that they have an opportunity to apply to create, not 

only diversify themselves and jobs and opportunities within the 

area. 

Mr. MIDDLETON. I will let Mr. Largent speak toward ongoing improvements of the 8[a] program. I would like to speak to the educational opportunities that Congresswoman Napolitano also raised. 

It is important for us to get out and talk with Indian youth at 

an early period in their educational process. We have gone out and 

found that many Indian youth really need to have an understanding of what entrepreneurship is, what small business development is. I think, as this committee is aware, small businesses create well over 50 percent of the jobs in the United States, and we 

need to promote more small business development in Indian 

Country. 

We have started an initiative in the Department of Interior in 

conjunction with a financial education nonprofit to do a demonstration project with six of our schools to, in fact, start teaching entrepreneurship. We think this is going to be a successful program, and 

one that we can expand to the other schools that we have in place. 

We are also looking to reach out to youth through some of our 

conferences that we are putting on across country to talk about 

business development and providing them the tools and skills and 

financial expertise they need, in fact a step in the small business 

development as tribes start developing their economies. How do 

you fill in with some of those on-location businesses that in fact 

could be supporting services for some of the other businesses that 

are in place. 

In addition, both Mr. Largent and I sit in on a monthly meeting 

at the White House. We have a work group that includes all of the 

agencies across Federal government that have Indian programs 

and are dealing with Indian issues, and through that meeting and 

that committee that we sit on we provide a lot of cross-fertilization 

across information across agencies so that we in fact are trying to 

leverage our programs as best we can so that we are not stovepiped, and we think that has shown some success on a number of 

occasions. 

Mr. BACA. Mr. Largent, can you elaborate a little bit more? 

Mr. LARGENT. In addition, the Office of Native American Affairs 

in partnership with the Small Business Training Network, which 

33

is an office inside the SBA that develops online training materials, 

last year we partnered to link some of those materials to the Tribal 

colleges and universities, which are managed under the White 

House Initiative of Tribal Colleges and Universities, and this year 

we are in the process of developing a Native-specific curriculum for 

entrepreneurial development, basically a first step of what it 

means to be an entrepreneur, and again I can’t overstate the importance and the difference in the way that Indian people look at 

business and economic development. 

I was in a meeting last week and I had a conversation with a 

Tribal leader who said to me, what is economic development? He 

said, to us, our festivals are so important that we take part time 

and seasonal work because it is more important to be at a festival 

with our people, celebrating who we are, than to be working five 

days a week. So these are cultural differences and trying to create 

training programs and making technical resources available that 

will have meaning is a difficult thing to do. 

I had one other thing I wanted to tell you and it slipped my 

mind, so if I can tap dance for a minute and come back to it. 

Mr. MIDDLETON. And I would be glad to fill in a little more on 

this also. For small business development, actually one of the hindrances of small business development is getting capital to be able 

to start small businesses, and Congress last year passed an amendment to the Indian Finance Act, in fact, is going to provide us some 

very useful tools for providing capital investment out to Indian 

Country for small business development. It is going to allow the 

guaranteed loan program of the Department of the Interior to provide guaranteed loans to 501[c][3]s, which includes community 

development financial institutions. 

Currently, our program typically makes loans on the order of 

$250,000 to our largest is about $18 million, and because we work 

with the lenders, lenders typically don’t want to deal with smaller 

business loans because it is the same amount of paperwork for 

them. By allowing us to do guaranteed loans to some of these 

501[c][3]s, it is going to allow us to set up a revolving guaranteed 

loan account there that can meet the needs of let us say a mechanic who wants to start a mechanic business, needs to buy tools, 

needs to buy equipment, needs to set up a shop in the $80,000 to 

$100,000 range, and we think this is going to show some great benefits in future years. 

Mr. BACA. I know that my time has expired but, Mr. Chair, if 

I may ask my final question. Just a quick yes answer would be to 

the question. 

Is it true that because of these programs have come into existence and not only in small business development and creating opportunities and jobs, that these jobs are truly created here in the 

United States and they are given opportunities to individuals to obtain jobs here comparison to every other corporation that is outsourcing Native American Indians and Indian Country are creating 

jobs right here in the United States for the American people, is 

that true? 

Mr. LARGENT. That is absolutely true, and if I can take more 

than a couple of words just to give you an example. I am working 

with a group of Tribes and a private sector company to put toVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00037 Fmt 6633 Sfmt 6602 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
34

gether call center operations off a central node located in the urban 

environment. 

Mr. BACA. Thank you. 

The CHAIRMAN. Gentleman from Utah, Mr. Bishop. 

Mr. BISHOP. Thank you, Mr. Chairman. I apologize for being here 

late, but I realize that no well-run institution would there ever be 

three hearings and a markup scheduled at the same time in the 

morning. 

[Laughter.] 

Mr. BISHOP. But since Mr. Kildee was able to do it, I am appreciative that I was able to join him. And by the way, Mr. Kildee, 

happy birthday on Sunday. 

I am glad I was able to catch Dr. Middleton here, and I appreciate the approach they have taken in realizing the diversity 

amongst our Native American Bands and Tribes so that multiple 

approaches have to take place so that one size just doesn’t fit all. 

We can’t be stereotypical with that. I am especially grateful for the 

8[a] program under Dr. Middleton’s direction. 

The Northwest Shoshone Band is based in my home city of 

Brigham City, and they have used this program very effectively in 

a number of projects and an ever-increasing expansion of projects 

that have added toward their economic benefit and the benefit not 

only of this particular Band but also the area. 

I would ask unanimous consent, Mr. Chairman, to have a statement added to the record. 

The CHAIRMAN. Without objection. 

[The prepared statement of Mr. Bishop follows:]

Statement of The Honorable Rob Bishop, a Representative in Congress 

from the State of Utah 

The Northwestern Band of Shoshone Nation, based in Brigham City, Utah, started their Economic Development Corporation three years ago. With $10,000 borrowed 

from the Tribe and no employees, they were able to start a company that took advantage of the 8(a) program. Now the Company performs contracts for the Intelligence Community (translation services, intelligence analysis and Information 

Technology) and construction (over 60 projects throughout the country). The tribal 

company has over 100 employees, and is still 100% owned and run by the Tribe. 

Half of the Company’s profits go to tribal infrastructure—the Tribe built a new 

housing development (10 house subdivision in Ogden), new tribal offices (in 

Brigham City) and reacquired the site where the Tribe was massacred by federal 

troops (33 acres NW of Preston, Idaho). The Tribe continues to open new offices 

throughout Utah, and has extended employment opportunities not only to Shoshones, but also member of other Tribes (Navajo, Sioux, Cherokee, etc.). 

Taking the Harvard Project for American Indian Economic Development to heart, 

the Tribe follows ‘‘Nation-building’’ principles. Tribal representatives run the businesses without interference from politics. Now other tribes, including gaming tribes, 

are turning to the Northwestern Shoshone to diversify economic development 

through joint ventures with the Tribe to promote 8(a) work. 

The CHAIRMAN. The gentleman from American Samoa, Mr. 

Faleomavaega. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. Not only do I 

want to wish the gentleman from Michigan a very happy birthday, 

but I do want to personally commend him for his authorship of the 

legislation that was recently passed by the House of Representatives concerning giving greater assistance to the housing needs of 

our Native American community, and I do want to personally comVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00038 Fmt 6633 Sfmt 6602 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
35

mend him for that and for you too, Mr. Chairman, coming from 

Alaska, and Mr. Cole, this was a bipartisan effort, and I am just 

so happy that this legislation went through. 

I just want to commend the members of the panel for their 

excellent statements. I do have a couple of questions. I am not a 

very good mathematician. If I read this correctly that here we have 

a pot of $378 billion, and out of this whole thing we are talking 

about—is it five-tenth of 1 percent that has been used for our 

Native American community? Five-tenths of 1 percent of 

$378 billion. 

I was just wondering with this $378 billion pot, how about maybe earmarking $5 billion as—well, maybe I had better not use the 

word. 

[Laughter.] 

Mr. FALEOMAVAEGA. Let us earmark it or set it aside or allocate 

it or appropriate. Yes, I would be the first one to volunteer to earmark $5 billion out of this $378 billion pot that we are talking 

about. 

You know, with 38 percent unemployment, 56 percent of the minimum wages of household goods, the highest rate of diabetes, the 

health conditions that our Native American community are experiencing, and it is just nice to give out the money. I mean, this is 

the way to do it. Encourage them to do business, but I am very concerned that we haven’t really got to the very root of the problems. 

As you had indicated earlier, Mr. Largent, that it is not just say, 

OK, let us start a business. Are the people educated enough to do 

a business? What kind of an educational system or educational facilities even that a Native American community has been given? 

We have some 24 Tribal colleges all over the country, and maybe 

this is another area that we need to focus on, not just to say do 

business, but we haven’t really started from the roots on how we 

can better prepare our Native American community, not only 

through education, through providing better health, infrastructure, 

and I honestly believe that what—what is your response? Do you 

think $5 billion may be a help in that direction if we can find some 

way or some how? 

I am just throwing out a number. If I see five-tenths of 1 percent of the $378 billion pot, and we are only giving 1.7 billion to the 

Native American community, somehow it just doesn’t seem to jive 

with me on that. Can you comment on that? 

Mr. LARGENT. No. 

[Laughter.] 

Mr. LARGENT. But I can say that as Tribes and Alaska Native 

Corporations and Native Hawaiians and individuals wade in——

Mr. FALEOMAVAEGA. By the way, I am a member of the Samoan 

Tribe. Is there any hope for me? 

Mr. LARGENT. We can talk afterwards. 

As they wade into business the capacity and capability gets 

broader and stronger every year. I mentioned an organization earlier in my testimony called ‘‘NABA’’, Native American Business Alliance, and NABA was formed, I had left the reservation after I 

sold my company in 1986, and NABA was formed by urban Indians 

to do business in the private sector. And when I introduced the 

idea that our credibility was at stake without the support of Tribes, 

36

it was a very heated debate that lasted for a year before we finally 

decided to shift our mission. And as I said in my testimony, there 

was very little understanding of how business works, how competitive it is. 

Today, we are seeing improvements and it is my belief that as 

Tribes get a better understanding of what makes sense for them, 

because of their internal capabilities, their culture, the resources 

that are available to them, they will be able to excel in the private 

sector, and I think we are going to see that kind of diversification 

as time goes on, but we need some time because we are dealing 

with a 250-year legacy of not just neutral activity but in many 

cases harmful activity to Native concerns. 

Mr. FALEOMAVAEGA. Just a real quick question to Ms. Schinasi. 

It sounds like you are either Navajo or Pueblo or Comanche. 

Schinasi sounds very much southwestern. 

I was listening to your testimony and other than greater oversight and all of this, but do you have any recommendations on how 

we can even amend the law to make it even better for the needs, 

to provide for the needs of your Native American community? 

Ms. SCHINASI. I think most of what needs to be done can be done 

without legislative change, and I would offer that our recommendations to SBA were at some level generally to protect the taxpayer 

dollars, but also at some level to protect the firms who are participating in these programs, because when you don’t have an idea of 

what joint ventures look like or whether or not contracts are let 

based on pass-through contracts and things like that, it can be the 

firms themselves who can suffer in an arrangement like that. So 

I think better oversight is in fact one way to help the ANC 8[a] corporations. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. My time is up. 

The CHAIRMAN. Gentlelady from the Virgin Islands, Ms. 

Christensen. 

Ms. CHRISTENSEN. Thank you, Mr. Chairman. I wondered, because most of the discussion was around reservations, as I understand it, and I realize I did have to step out, but how are you 

reaching the urban Indian populations, and is the situation there 

any different? Anybody or all could answer. 

Mr. LARGENT. The Small Business Administration has significant 

presence in urban and suburban areas. I recently had the opportunity to address the Wisconsin American Indian Chamber of Commerce in Milwaukee where they recently received a grant to become a lending entity to small businesses in urban areas as well 

as Tribal areas. So we have a plethora of programs on technical assistance, access. One of the businesses I have owned in my career, 

I got an SBA loan. So there is plenty of assistance from my agency 

for urban Indians, and that is why the focus of my office is exclusively on remote locations, Alaskan villages and Tribes that are in 

remote geographic areas, as well as Hawaii. 

Ms. CHRISTENSEN. Anyone else? 

Have any specific areas of economic activity or any specific types 

of businesses been identified? Has there been any kind of study to 

see what kind of businesses might be most profitable or have the 

most opportunity for creating businesses in Indian communities 

and Alaskan Native? 

37

Mr. MIDDLETON. I can speak a little bit to that. Absent having 

gaming opportunities, probably one of the largest opportunities for 

Tribes, particularly in the lower 48, is energy and mineral development. There is a significant amount of energy and mineral development on Tribal lands that has been unexplored. As a matter of fact, 

I think some of the estimates that we have in place are fairly conservative simply because we don’t have enough data, seismic data 

or geological data to be able to determine what the extent of the 

resources are. 

A number of tribes are starting to take advantage of this, the 

Crow Tribe in Montana, for example, which has large land base 

and significant coal, natural gas, and other mineral resources. 

But I have to speak a little bit toward the development of these 

energy and mineral resources because our philosophy on this is 

that we would like to see Tribes get away from this landlord/lessee 

arrangement of just leasing the lands and just leasing the resource 

capacity to outside companies. We would like to see Tribes start 

their own companies. For example, if they have gypsum deposit, as 

many Tribes do, rather than just selling it off at a cents per ton 

manner, we would like to see them think about setting up a wallboard plant, which is what—gypsum is made into wallboard, set up 

a wallboard plant and actually capture that value added, capture 

those jobs rather than moving those jobs off a reservation. 

So that is the approach we are taking, but we think there are 

significant opportunities in energy and mineral development. 

Mr. LARGENT. And Dr. Middleton raises a good point, and my 

agency is working in concert with them. As we travel around and 

find Tribes that think they have a business idea because of a resource, whether it be alternative energy like ethanol or biomass or 

wind, or manufacturing, or niche IT, we look to work with them 

both to help them find the capital and the expertise and the education to make this a reality, and that is really what I was referring to when I said it will be an evolutionary process, much like 

gaming. 

When gaming first came, and my Tribe was one of the first in 

the country to have gaming, we imported non-Native gaming managers to come in and run our operations for us. Now we are pretty 

much self-sufficient in that area. 

So given the opportunity over time, we will find additional value 

add opportunities in the various natural resources or other assets 

that we have to work with 

Ms. CHRISTENSEN. OK. Is that it? 

Is it your birthday today? Oh, we share a birthday. OK. Happy 

birthday. 

Mr. LARGENT. And as a fellow Michigander, Congressman, I 

wanted to say happy birthday too. 

The CHAIRMAN. The gentleman from Michigan is now recognized, 

Mr. Kildee. 

Mr. KILDEE. Thank you very much. It is my privilege to welcome 

a fellow Michigander today. 

I have been involved in Indian matters since my election to the 

state legislature in 1965. One of the first bills I introduced was the 

Indian Tuition Waiver Act in Michigan. Any Michigan Indian can 

go to a public college in Michigan and the state pays the tuition. 

38

I introduced that because I read the Treaty of Detroit, and treaties 

are very, very important, and we have moral and legal obligations 

to those treaties. 

So I met many a Indian from Michigan who went to college because of that Michigan Indian Tuition Waiver Act, and I also introduced the bill back in 1966, I think, to establish the Michigan 

Indian Commission, because many agencies in Michigan had no 

idea what the responsibilities were, so they advise the other agencies of government. 

But on this bill here, very often we find what is supposed to be 

a solution to what is not a problem, and I worked with Mr. Waxman, because he had rather Draconian language in the bill, which 

would have put limits of an $8 million cap on services and $10 million on goods, and I put some place-holder language in there which 

I worked out with the Native American community. They would 

have preferred no language at all, but I put some place-holder language in there just to hold things for awhile. 

With that in mind, I would like to address a question to Ms. 

Schinasi. You indicated, I think, a couple of times now in your testimony that you felt most of this, of not all of this, could be handled 

administratively. Could you elaborate on that, the problem that 

Mr. Waxman was seeking a solution for, and I’m not sure there is 

a problem? 

Ms. SCHINASI. The recommendations that we have in our report 

go to the findings that we developed during our review that said 

there was some confusion in who was responsible for which piece 

of managing the 8[a] ANC firms as well as a limitation on the information that SBA had in order to carry out its responsibilities, 

and the resources that had been devoted, particularly to the part 

of SBA that was responsible for the local monitoring of the ANC 

8[a] firms. 

So those recommendations went more to the management of the 

program and really can be accomplished within the statutes that 

are now set out. 

We did not talk about support or challenge for the program as 

a whole, and my understanding is that that legislation had to do 

with what the appropriate level was for contracting dollars to go 

to the ANC 8[a] firms and corporations, and so that was not within 

the scope of our work, and was not reflected in any of our recommendations. 

Mr. KILDEE. At this point you are not pushing this legislation 

that Mr. Waxman originally had in the bill or even the place-holder 

language that I put in to make it——

Ms. SCHINASI. That is correct. We have no position on that. 

Mr. KILDEE. You have no position on that. I appreciate that. 

I think in all these things we have to recognize that for so many 

years—when I first started visiting Indian reservations in 1965, in 

Michigan, some of them were like Third World countries. The injustice was horrible, and now we are finding some sensitivity in 

government for programs like this, but some people think that 

every Tribal agency has, you know, got huge casinos someplace, but 

the poverty that you still find and the need for economic growth in 

an Indian community and Native American community is still 

great, and I think whenever we see legislation that is offering a soVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00042 Fmt 6633 Sfmt 6602 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
39

lution for a problem that doesn’t exist, we should be very cautious, 

and probably leave it up to you people to try to find how the law 

should be administered if there is some problem there and you feel 

that can be done, I would prefer at this point. 

Of course, I will also keep my options open when the administration maybe does do something that we feel is too tight, we can 

come back and try to soften that too. But at this point I would 

trust you to take care of that, but hope that my place-holder language, which I worked out with the Native American community, 

could be just dropped from this legislation and let you do your job. 

I yield back the balance of my time. 

The CHAIRMAN. The Chair thanks the gentleman from Michigan. 

The gentlelady from California, Ms. Napolitano, is recognized. 

Ms. NAPOLITANO. Thank you, Mr. Chair. 

A lot of the discussion on the oversight of the Native 8[a] program, but Mr. Largent, has there been an increase or a decrease, 

and can you tell us the amount of appropriations since 2000? And 

how has that affected the contracting officers? How many contracting officers are there? What is the level of training provided 

to those officers to be able to deal with the Native Americans and 

to the Alaskan Natives? Then, of course, the volume of work performed by those officers. Those are all questions that come to mind 

as I hear you speak. 

Mr. LARGENT. Again, my office is not part of the program office 

that has oversight for the 8[a] program. That would be Government 

Contracting and Business Development. I am generally aware that 

we have increased staff. We have had staff-specific training around 

this issue. As we alluded to earlier——

Ms. NAPOLITANO. That is very general. Could you put it in writing, sir? 

Mr. LARGENT. I absolutely could. Yes, ma’am. 

Ms. NAPOLITANO. Because that is very general. I could just tell 

you something and not be able to back it up with facts and figures. 

It just begs the question because I can’t remember the year but 

not too long ago SBA’s budget was supposed to be cut by 43 percent. Now that means a lot across the board. Now, of course, that 

came back because there was a hue of an outcry from the small 

business community, and most of it was put back. I think 33 percent. But it begs the question of how much is actually being put 

into the SBA programs to help achieve this. 

Then the other issue that came up, you mentioned the fact that 

small business finds it hard to get loans from the lending institutions, the ANCs. Have you tried credit unions because they have 

an agreement with SBA to be able to do small loans? And I am 

talking micro 2, I am not sure of the amount, but they have done 

a wonderful job in supplanting the banks’ inability to do the small 

loans because they don’t want to spend the time and the money to 

do that, and that is a known fact. Have you? 

Mr. LARGENT. With respect to your first question, I have staff 

right behind me. We will get back to you in detail on that question. 

In regards to your second question, the issue is not so much the 

size of packaging a loan, although banks are sensitive to that, we 

have programs such as Community Express which require very little documentation. The issue is sovereignty. 

40

Ms. NAPOLITANO. OK. 

Mr. LARGENT. Banks have no recourse in the event of default. 

There is no way to go in and recapture any collateral because 

Tribes are sovereign nations. 

Ms. NAPOLITANO. Right. 

Mr. LARGENT. So we are having extensive conversations not only 

in my agency but Indian Country-wide, and most of the people in 

the room behind me can talk to you in detail about this, on how 

we can address that issue. 

Ms. NAPOLITANO. Is there a possibility then that your specific 

area of expertise might be able to help develop the greening of 

some of the Tribes, the focus on being able to learn how to green? 

And you talked about wind turbines and others. What about 

solar panels? That is something that is going to have to be in the 

future for us to save electricity and the energy because we are having global warming, and drought in the Western states, which 

means there is not enough water in the rivers and the dams to be 

able to generate the electricity. 

So if we are then able to start a process of teaching them where 

to begin setting up so they can connect to a grid and sell their electricity, is that something that you might be able to look at and 

begin to foster? 

Mr. LARGENT. All of these are under discussion. There is a new 

assistant secretary or deputy assistant secretary, I believe, at the 

Department of Energy who I am in very close contact with, and we 

have regular conversations about this, as does most of the Indian 

Country. So yes, these are all opportunities that we are looking at. 

There are fundamental and structural issues that need to be 

dealt with ahead of time. We can’t rush head-long into this, throw 

capital at something, and then realize that we missed a component. 

So it is thoughtful and cautious, but there are approaches we are 

looking at. 

And as an aside if I may, I would like to thank Congressman Kildee because I am also one of the recipients of the Michigan Tuition 

Waiver Act. 

Ms. NAPOLITANO. I would love to maybe have some conversation 

with both—actually all three—because I am the Chair of the Subcommittee on Water and Power, and the grids are under the jurisdiction of my subcommittee. 

Mr. MIDDLETON. Congresswoman Napolitano, if I could address 

that. Part of the program that I administer is energy development, 

and we are working closely with a number of tribes on energy development, on renewable energy resources, wind, solar, biomass, 

geo-thermal. A number of tribes would like to reach out and in fact 

develop more extensively their opportunities for renewable energy 

development, and are doing so. 

So we are working in partnership with the Department of Energy, the National Renewable Energy Lab in Golden, Colorado, to 

go out and determine whether in fact they have sufficient wind resources to be able to in fact establish wind turbines. 

One of the problems we are running into though is in fact that 

when Tribes determine that they in fact have wind resources getting access to turbines has become problematic because, as the renewable—I am sorry—the subsidy for renewable energy gets reVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00044 Fmt 6633 Sfmt 6602 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
41

newed every two years, there is a big spike on requests from companies that are actually out there doing it for a for-profit, and 

Tribes need to be able to put money down to be able to even get 

in line to be able to gain access to the turbine industry, turbines 

that are being developed. So we are working through that with 

tribes, but we think there is a large opportunity for wind development, particularly in the northern plains, and getting access to the 

grid through the Western Area Power Administration is a key opportunity for us to develop the resource. 

Ms. NAPOLITANO. Thank you. And certainly wind is one of the 

energies that we should be able to develop and foster the growth 

of, but also solar power. The National Electrical Contractors are 

teaming up with the IBEW to do a lot of greening of businesses 

which could be a new way of being able to address energy consumption by the business, which is their largest portion of expense. 

Thank you, Mr. Chair. 

The CHAIRMAN. The gentleman for Puerto Rico, Mr. Fortun ̃ o. 

Mr. FORTUN ̃ O. Thank you, Mr. Chairman, and I commend you for 

this hearing, and I join my colleagues in congratulating Mr. Kildee 

on his birthday, certainly. I also apologize for being late, and having to leave also—a number of us are having three hearings, including some markups at the same time during this morning. 

But this is a topic of interest to me. I believe there are some parallel comparisons to the territories, and that is why it is of interest 

to me, and I was wondering if anyone may want to comment on I 

wonder if the programs are in place are doing what they are supposed to do. I have read at times the concern that there will be a—

that anything we may do may be or may impact in any way culture 

or way of doing things for many centuries, but by the same token 

certainly, I believe we have a common interest in developing an entrepreneurship amongst different Tribes. 

So I am wondering if what we are doing makes sense and where 

are we failing. It is the educational system? Where are we failing 

here. I don’t know if you want to comment on that, any of the 

three. 

Mr. MIDDLETON. I think from our department’s perspective that, 

although we haven’t done as good a job in the past as we possibly 

could have. I think things are changing for the better, and the 8[a] 

program is one of the tools that has been in place that is allowing 

us to make progress, but there are other things we are doing such 

as trying to teach at a young age entrepreneurship and the meaning of business development, financial education of those types of 

opportunities. 

In addition, many of the Tribes are recognizing that they need 

to make some changes in order to take advantage of the opportunities they have for business development. Many tribes looked at 

changing their constitutions because they realize that the constitutions in fact may have been holding them back. The Crow Tribes 

is one example of this. Other Tribes are looking at the way their 

governments are structured, realizing that if they have a separate 

business arm, that they in fact can grow their own expertise for developing their business opportunities and business resources rather 

than making everything a political decision that is looked at by 

42

new administrations within the Tribe as being past administration’s policy. 

In addition, we have a number of tribes, such as the Southern 

Ute, that have done very well in managing their growth fund and 

managing their energy and mineral resources. They currently have 

a AAA bond rating on Wall Street, which is significant, and they 

own partial interests in a number of let us say offshore oil and gas 

wells. So they in fact have grown the expertise they need to move 

forward, and many other Tribes are seeing this and taking the examples to heart, and trying to decide what they need to do in fact 

to put them on parallel with some of these successful Tribes that 

have developed economically. 

Mr. LARGENT. I would just say that Dr. Middleton’s comments 

are accurate, 100 percent accurate, that economy in the sense of 

the U.S. economy is a new concept to Indian Country. In my opening testimony, I talked about forming a company in 1976. That was 

31 years ago. And people in my community came to me and said, 

what made you think you could do that? They truly were perplexed. Where did the idea come from and where did the confidence 

come from that I could actually run a business? That was 31 years 

ago. 

So it was the advent of gaming for some, and I recently read a 

report, and if I am correct, I think it said that 37 percent of all 

gaming dollars in Indian Country are controlled by 15 Tribes, so 

it certainly has not been an across-the-board distribution. But gaming has given some tribes at least to beginning to start the seed 

capital to go out and now diversify, and the Tribes that have had 

the best leadership, the most consistent leadership, well educated 

workforce, access to markets, and a culture that understood the importance of this have done very, very well. Chickasaw comes to 

mind, doing a remarkable job. Still a long ways to go, but a remarkable job relative to the Tribe’s that Congressman Kildee was 

just talking about where you go in, there is just no activity at all. 

So I think we are heading in the right direction. We are making 

progress. I think we need some time. 

Mr. FORTUN ̃ O. Thank you. 

The CHAIRMAN. Gentleman from Oklahoma, Mr. Boren. 

Mr. BOREN. Thank you, Mr. Chairman. I appreciate—sorry I was 

also late, had several meetings. We have 200 Oklahomans who 

have flown in this week, and so we have a lot of different meetings. 

I am glad to see my good friend Mr. Cole, and also our great Oklahoman Neal McCaleb being here today as well. 

We have 39 federally recognized Tribes in Oklahoma. So many 

of them are doing great things, creating small businesses, employing a lot of people. In my district, Tribes like the Chickasaw 

Nation, the Choctaw Nation, and others, my concern is making 

sure that we have everyone, all of our smaller Tribes in the northeastern part of my state we have Tribes like the Quapaws and the 

Miamis and other tribes who need—we need to make sure that everyone has a chance, and I appreciate the efforts of the Small Business Administration and also of Tribal leaders in making sure that 

we diversify our economies. 

I want to thank the Chairman for holding this hearing, and for 

letting me be a part of it. Thank you. 

43

The CHAIRMAN. Thank you, Mr. Boren. 

No further questions. We will proceed to our second panel. The 

Chair again thanks the panel for their testimony and service. 

Our next panel is composed of The Honorable Tex Hall, Chairman and CEO, Inter-Tribal Economic Alliance, Mandaree, North 

Dakota, and speaking of birthdays, just had a birthday yesterday 

so we wish Tex a birthday as well. This seems to be happy birthday 

day; The Honorable Joe Garcia, President, National Congress of 

American Indians, Washington, D.C.; Mr. Greg DuMontier, Chairman of the Native American Contractors Association, Washington, 

D.C., and Ms. Julie Kitka, President, Alaska Federation of Natives 

from Anchorage, Alaska. 

Lady and gentlemen, we have your prepared testimony. It will be 

made part of the record as actually read, and Tex, we will start 

with you, and just a warning, we are expecting three roll call votes 

shortly on the Floor of the House so we may be having to recess 

during this panel’s testimony. Tex, welcome. 

STATEMENT OF THE HONORABLE TEX HALL, CHAIRMAN AND 

CEO, INTER-TRIBAL ECONOMIC ALLIANCE, MANDAREE, 

NORTH DAKOTA 

Mr. HALL. Thank you, Chairman Rahall, and Ranking Member 

Young, and Members of the Committee, Co-Chair Kildee and CoChair Cole, thank you for your service to Indian Country. It is a 

great honor, Chairman Rahall, to speak to the Committee on this 

topic of diversifying Native American economies. 

I want to make sure the Committee knows that this is one of the 

hot topics in Indian Country today, is diversifying the economies. 

So you are right on target, Chairman Rahall. 

I do want to say that I am grateful to you and your staff for the 

outstanding work that you have done on behalf of Indian Country, 

and the Committee. Twelve hearingss, 12 issues, critical issues, 

you have already marked up 12 Native American bills that include 

the Indian Health Improvement Act, and the Native Hawaiian 

Government Reorganization Act, and today’s hearing on economic 

development is just an extension of the work and the commitment 

that you have shown to Indian Country, so thank you, Chairman 

Rahall, for your work on that. 

Today I am here as the Chairman of the Inter-Tribal Economic 

Alliance, which I helped co-found in 2001. When I first became 

National Congress of American Indians’ president, the topic of economic development, high unemployment, high poverty rates was 

discussed at that time and long before that. So we thought a need 

for an economic development organization like the ITEA was needed to really create jobs, and we put a goal out there of 200,000 jobs 

because of the high unemployment and high poverty on the reservation, on the Native Alaska villages, and the homelands, so we 

thought creating new businesses is critical and key to putting a 

dent on this poverty. 

So experience has taught us that we cannot rely solely on the 

Federal government to win this war on unemployment and poverty, 

and we had to take this challenge in Indian Country up ourselves, 

and so we have. And so ITEA has created new businesses since 

2001 in energy. We have created a private equity fund, a $200 milVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00047 Fmt 6633 Sfmt 6602 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
44

lion private equity fund, multi-tribal construction, a natural beef 

and buffalo that is chemical free, uses all natural grass fed, telecommunications and also we are managing a contract with the Marine Corps, an $80 million contract for digitization and document 

conversion for military manuals. 

Nonetheless, as we heard today, poverty is still widespread. It is 

still over 31 percent, and that is almost a third of our Native families, and today Native American households report a median income of over $33,000. We must simply do better than that. 

As we know, the United States has a treaty-backed trust responsibility to Indian Tribes, and that responsibility must extend to 

economic development because you understand just how important 

diverse Native economies are. We are certain that we use the full 

power and jurisdiction of this committee to protect and defend the 

programs such as the Native 8[a] programs that are working in 

Indian Country, and have created new jobs and economic 

opportunities. 

So the 8[a] is a prime example of the Federal initiative that created these real benefits. It is working. I wish, as Eni was talking 

about, Congressman, that it should do more, and I think we really 

should be talking about those discussions about how to improve. As 

we all heard, it is less than 1 percent of all procurements set aside 

for Native businesses. 

So I think there is many new Native businesses that are just 

starting. Some haven’t got contracts. And there is many that are 

back logged in the application process, waiting to get SBA certified. 

So we somehow have to address those that are not even certified 

that haven’t got the opportunity, Mr. Chairman. 

But I do want to focus on the last few comments, as I know my 

time is short, and that is, the proceeds from the Native businesses, 

the Native Tribal businesses go back into the community, there is 

no question about that, and I think that is a huge misunderstanding when you have individual entrepreneurs and companies 

that are looking at the profit and the bottom line that are benefitting for their company versus a Native Tribal company, and that 

is part of the culture of Native America, I mean, that the benefits 

go back into the Tribal community. 

So I have never heard that discussion talked about from any of 

the discussions, and I have been around for awhile, Mr. Chairman, 

as you know, and I haven’t heard that discussion at the table about 

what is the difference between Native businesses and individually 

owned corporate businesses where those benefit that individual. 

So I think that was the reasons that Congress created the Native 

8[a] program in the early 1980s or late 1970s or thereabouts, and 

so it is troubling to now, 2007, and it appears that some Members 

of Congress still do not have that understanding that that is the 

major differences. 

Health care, we know that it is less than 50 percent funded, so 

we know that new diabetes equipment will be purchased by some 

companies with those profits. We know that eye glasses, dentures 

for the elderly program, a ramp so they can at least get up their 

stairs into their house are many examples of how these profits benefit the elders and then the head starts and the playground equipment. That is a lot different scenario than what is being portrayed 

45

on many of these Native businesses that are supposedly taking advantage and getting billions and billions of dollars. It is simply not 

the case, Mr. Chairman and Members of the Committee. 

And here at ITEA, we created six companies in the last few 

years. Because we are about 400 miles from the closest BIA regional office, we are 400 miles from the SBA office, we are in the 

middle of North Dakota and South Dakota, and so we have to find 

a table somewhere and say let us look at our ideas, and let us try 

to create something here based on what we have in front of us. And 

we had grass, so we said beef and buffalo. We have wind and solar. 

I am glad Congresswoman, you really stressed that. Getting access 

to the grid though is really critical. We can put all of the wind turbines we want, but if we don’t have access to the grid it is just 

going to sit there. 

There is a book called ‘‘You Damned Indians,’’ and that is because they dammed us up. They should at least let us get access 

back to that dam transmission if they are going to dam us up. 

So in closing, Mr. Chairman, we are really—I must say about 

gaming is that in working with the National Indian Gaming Association, they have come a long ways in working with us on a potential agreement with the Inter-Tribal Economic Alliance to assist us 

in developing that private equity fund to create—if we created a 

number of small businesses, that 200,000 job initiative, putting 

that war on poverty would—we could actually accomplish that. So 

the gaming Tribes are looking to invest in the private equity fund 

and assist small business development. 

So thank you, Mr. Chairman, for allowing me to talk a little bit 

about the Inter-Tribal Economic Alliance. 

[The prepared statement of Mr. Hall follows:]

Statement of Tex G. Hall, Chairman and C.E.O.,

The Inter-Tribal Economic Alliance 

Dosha! Good morning Chairman Rahall, Ranking Member Young and distinguished members of the U.S. House Committee on Natural Resources. Thank you 

for your invitation to appear before the Committee on Natural Resources, particularly on the topic of Diversifying Native Economies. This is a powerful subject and 

one that we in Indian Country, our leaders and our communities are talking about 

all across our great country. We are grateful to the Committee for its remarkable 

record of activity which shows just how seriously the Chairman cares about the 

needs of Indian Country. 

My name is Tex Hall and I am Hidatsa and Mandan. I served two terms as the 

President of the National Congress of American Indians and eight years as Chairman of the Mandan, Hidatsa, and Arikara Nation in North Dakota. 

I am here today as Chairman of the Inter-Tribal Economic Alliance (ITEA), a national engine of economic development whose mission is to create communities of 

hope on American Indian reservations, Alaska Native villages and Native Hawaiian 

homelands. The ITEA was formed in 2001 by Native leaders hailing from many 

states across the nation and we are a tribally-driven business. We work day-in and 

day-out to fight poverty by creating new business opportunities and new jobs in diverse industries such as information technology, private equity, energy development, 

natural beef and buffalo, and call center operations. 

Poverty remains widespread across Indian Country. According to the 2000 census, 

the poverty rate on reservations is 31.2 percent while nationally 24.3 percent of 

American Indians and Alaska Natives live in poverty, a rate more than twice that 

of Whites and Asians. Native American households report a median income of only 

$33,132. 

While Native Americans are making progress in pockets around the country, the 

big picture remains that we lag well behind the rest of the nation. We can and must 

do better. The condition and state of Indian country, however, has many fathers. 

Over the last 200 years, our federal and state governments, whether legislative 

46

bodies like Congress or various government agencies, have all played a role in landing us in the condition we find ourselves in today. Nevertheless, those same actors 

can make amends and help us in forging a bright future ahead of us. All we ask 

is that the United States acknowledge its treaty-backed trust responsibility to the 

first peoples of this nation and support, strengthen and protect programs that have 

successfully advanced our economic well-being. 

Chairman Rahall, Committee members, your call for a hearing on the topic of Diversifying Native Economies is a good beginning to work together. We welcome the 

dialogue and being asked to the table to create a new future for our people, for 

Indian Country. 

Native Communal Commerce 

We believe that native communal commerce works. It is what Native governments 

believe in and it has worked for them for thousands of years. Native communal commerce is very different, in fact it is the opposite, of what the United States government has been trying to force on Native peoples through federal policies for the past 

two hundred years. The ITEA itself is a model of communal commerce. 

In native economies, the benefits and profits of work and industry flow back to 

the community. They do not flow back to individual business owners. For instance, 

the ITEA is structured so the profits of all of our ventures flow back to tribes. The 

profits from our businesses, for instance, go back to a tribe and are used to invest 

in health care, housing, and schools. This is a profoundly different model than say, 

IBM or even Univision, where corporate profits are distributed to individual owners 

or investors. 

Indian Country believes that the Native communal model works well and better 

than any of the failed models of commerce—the General Allotment Act program or 

the Indian Reorganization Act—forced upon us by the BIA or the Interior Department and the Congress. And with the Committee’s support of the ITEA’s efforts and 

federal programs that actually do work, together we can start jump-start a period 

of unprecedented economic growth. 

That growth is the point of having Diversified Native Economies. We ought to 

have federal policies and programs that do not measure our tribal enterprises 

against individually-owned businesses or stockholder-owned corporations. Doing so 

entirely misses the tremendous gifts our communities have to offer the marketplace—an untapped and unified resource of labor in some of the most remote and 

rural communities in the country. Our Tribal governments and business enterprises 

are located in 35 of 50 states, with 56 million acres of trust lands and a million 

plus man and woman work force, a large portion of which is either underemployed 

or unemployed. 

While Native peoples and our federal government share a tragic history together, 

we have the power to change the course of that relationship. But it will require the 

federal government to support policies that have worked and embrace economic 

strategies that guarantee the growth of our native communal businesses into the 

larger marketplace. 

Small Business Administration 

The Small Business Administration now runs a solid program to diversify our 

Native economies. The SBA 8(a) program, specifically the provision for Native 8(a) 

firms that consist of Tribal and community owned firms is in its infancy, yet from 

a policy approach and understanding of the communal nature of our enterprises, 

this program got it exactly right. The Native 8(a) program embraces our communal 

approach to commerce, encouraging our Tribal and Native corporations that are 

owned by entire communities to enter the federal government contracting industry. 

The ITEA strongly believes that the Native 8(a) program works. The program recognizes that Native 8(a) firms are not investor-owned like other conventional businesses. Instead, it recognizes that Native firms are community-owned, and that they 

use revenues to address the social, economic and cultural well-being of communities—truly a double bottom line. And the 8(a) program does not require a single 

appropriation of federal funds, but rather the inclusion of the unique enterprises of 

Native communities in providing quality product to our federal government, while 

serving the social good. 

The ITEA is been troubled by the statements of some that would frame the tiny 

0.2% awarding of all federal contracts to Native 8(a) firms, and in particular, Alaska 

Native Corporations, as a threat rather than a success that should be nurtured. 

Some members in this Congress have even gone so far as to criticize Alaska Native 

enterprises for doing government work outside of the state of Alaska. The Committee should make it unacceptable to carry the failed policies of the early part of 

the last century into the present and into our future. Our tribal enterprises must 

47

be encouraged to grow beyond our reservation and village boundaries and be allowed to participate nationally, and indeed, globally. 

IITC—A Tribal 8(a) 

At ITEA, one of our first initiatives to diversify our Native economy based on the 

communal commerce approach is the Intertribal Information Technology Company 

(IITC). It is the first Tribal 8(a) government contractor owned by the three indigenous groups of our great country, consisting of nine federally recognized Indian 

Tribes; two federally recognized Alaska Native Corporations and one Native Hawaiian nonprofit. There are no individual investors, ensuring that the profits of this 

Tribal 8(a) are returned to the social, economic and cultural mission of our respective communities. 

IITC owner firms are located in eight states: Montana, Wyoming, Hawaii, North 

Dakota, Alaska, Oklahoma, New Mexico and South Dakota. Under the SBA Native 

8(a) program, we have forged ahead to make a national impact and also serve our 

nation’s men and women that are serving our country in the military. IITC is providing the Department of Defense with digitized versions of maintenance manuals 

for aircraft, ships, vehicles and a variety of equipment used every day on the ground 

by our troops. We have digitized hundreds of thousands of pages, including maintenance manuals for the Apache Helicopter, Armored Utility Trucks, Landing Crafts 

and Fire Fighting Vehicles. We are proud to be working on a project that we know 

helps to keep our troops safe. 

Tapping into our national labor pool, IITC created over 300 jobs directly inside 

rural Native American communities, from as far north above the arctic circle in Barrow, Alaska to as far west as Anahola, Hawaii, as far east as Parshall, North Dakota on the Fort Berthold Indian Reservation and as far south as the Zuni Indian 

Reservation in New Mexico. IITC, like every Tribal or ANC 8(a), has become a part 

of our national economy and is creating jobs in eight states in the country. It is one 

small example of the good the Native 8(a) program has done and is an example of 

what can be accomplished when a federal program embraces our communal approach to business. 

Non-Gaming Business that In-Sources to Rural America 

There is no question that Indian Gaming has had an unprecedented economic impact in Indian Country. Yet, as we all know, the vast majority of tribes do not benefit from gaming. So, while we know that gaming tribes have generously shared 

their wealth with the non-Native communities around them, and with many other 

tribes, the fact is that gaming cannot, and will not, be the end-all to the socio-economic problems of Indian Country. 

In other words, we must diversify and strengthen the foundation of commerce 

across Indian Country, by embracing our best business tools of Tribal and community enterprises. We can then produce opportunities to in-source jobs and impact 

local and rural economies inside our country versus overseas. But, we have learned 

that if we want it done, we are going to have to do it ourselves. And that is what 

the ITEA brings to the table—initiative. 

The ITEA has taken a new step to build even further on the IITC technology company ability to tap into a national labor pool for data conversion. The ITEA is now 

finalizing a business plan to add call centers in partnership with various Tribes and 

Tribal firms. Call centers have the potential of employing thousands, and establishing our rural communities as hubs for national and international commerce. And 

what we are doing is truly patriotic. Instead of outsourcing jobs to third world countries, we are keeping those jobs, benefits, and spending money in the United States. 

We believe in-sourcing to American Indians works not just for Indian Country, but 

for America. 

Another ITEA project is the first-ever national tribally-run private equity fund. 

As you know, the world of private equity brings significant investment opportunities 

for tribes. The ITEA is taking advantage of this opportunity by partnering with 

major Wall Street firms and advisors to open a private equity fund that will invest 

large sums of money in Native start up businesses, energy projects, real estate as 

well as traditional securities and bonds. With the support of major gaming tribes, 

we are positioning ourselves to make sure that wealth from gaming reaches all of 

Indian Country. 

Another sector worthy of our attention for diversification and expansion is in 

energy resources, and making good use of our Tribal lands and locations around the 

country. Whether oil and gas, or solar and wind development, Indian Country must 

be part of the conversation and policy making decisions to encourage investments 

and partnerships that include our Tribal and Native corporations in the development of cleaner and alternative energy sources. 

48

The ITEA is also partnering with the National Indian Gaming Association to create a Native Business Process Outsourcing company that matches Native suppliers 

and services with Indian gaming enterprises so that the good and services of Indian 

gaming are supplied by Indian businesses. 

The ITEA is also working with Native cattle and buffalo ranchers to identify and 

overcome the barriers to bringing the hundreds of thousands of grass fed cattle to 

market. There are 1.5 million head of cattle raised naturally on 40 million acres of 

tribal lands across the country. We are bringing the unique all-natural, all-American, reservation-bred product of Native ranchers to the national marketplace. 

Summary 

In closing, first urge the Committee to enact and support policies that strengthen 

our communal tribal and Alaska Native corporate status and that eliminate barriers 

and obstacles. For instance, we ask the Committee to strengthen, and fight against 

legislation that would restrict, the Native 8(a) program which has allowed Native 

8(a) firms to succeed in government contracting. Native 8(a) contractors deliver a 

valuable product for the Nation, and use their revenues on the social, economic and 

educational needs of entire Native communities. Native 8(a) businesses are community enterprises and cannot be judged by the same standards as individually-owned 

businesses. 

Second, we ask the Committee to focus its economic development efforts on those 

industry sectors that yield the greatest diversification and impact in our communities. We suggest the following: energy and access to the electrical grid, information 

technology and manufacturing, call centers, tourism, fine arts, ranching and farming, and, most importantly, the support of government contracting. 

Third, we ask the Committee to invest in the economic infrastructure of Indian 

Country and Alaska by investing in workforce development and job training that 

matches the jobs we are seeking to create, and by investing in telecommunication 

and internet connectivity. The Committee should also ensure that Natives have the 

access to capital in order to build that infrastructure and thus we ask the Committee to double the ceilings of the guaranteed loan programs of the BIA and USDA. 

There is no question that America is stronger when its citizens actively participate in our local, national and global economies. At ITEA, we believe that Native 

Americans for too long have been prevented from fully participating by a lack of understanding of the strengths, talent, and value in our communities. Chairman Rahall, Diversifying Native Economies is the right discussion and mirrors the conversations and work taking place all over Indian Country. 

We can forge a new future by continuing this dialogue and working together. Our 

past tells a story of what has been good for America has not always been good for 

Indian Country. This need not be the case—what is good for Indian Country, is good 

for America. In closing, the ITEA would like to offer to partner with the Committee 

and assist the Committee in developing a report on Native American economic development that includes goals and timelines. 

Thank You. 

The CHAIRMAN. Thank you very much, Tex. Joe? 

STATEMENT OF THE HONORABLE JOE GARCIA, PRESIDENT,

NATIONAL CONGRESS OF AMERICAN INDIANS, WASHINGTON, D.C. 

Mr. GARCIA. Singatama. Good morning, everyone. Greetings from 

New Mexico. Good morning, Chairman Hall, and Members of the 

Committee. I am honored to be here today on behalf of the 

National Congress of American Indians, the nation’s oldest and 

largest national organization of Tribal governments. 

We hope this is just the first in a series of important conversations on economic development, and diversification of economic development in the Indian Country, and we are looking forward to 

concrete recommendations and actions as a result. 

Although there are examples of Tribes around the country who 

have prospered, hundreds more are struggling to preserve their 

reservations, their culture, their language, and their sovereignty, 

and economic development is one of those ways that these preserVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00052 Fmt 6633 Sfmt 6602 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
49

vations and security can happen, so I am glad that the hearings 

are being held. 

To address these economic challenges, NCAI has held a series of 

meetings with Tribal leaders, including at the recent National Economic Policy Summit held in Phoenix, and this was in partnership 

with the DOI to explore the best ideas to move Indian economic development forward. 

During these meetings, it has become clear that Tribes have recommended in four key areas: 

Number one, the need to improve and strengthen Tribal government institutions, the codes and basically capacity of those governments; number two, the need to give Tribal governments access to 

traditional governmental tools, like tax-exempt financing and tax 

credits; number three, the improvement of tribal fiscal and human 

infrastructure, things like roads and telecommunications; number 

four, capacity building means the skills to conduct comprehensive 

planning to integrate all of these components. 

True economic development, it must be said that it is not just 

one area of work. 8[a] is one of those areas. 8[a] is one of those 

tools. When you talk about economic development, it transpires 

all—it is a big umbrella, and a comprehensive approach is the best 

approach that we can implement and we can plan for. 

These are examples of things that are not working, the things 

that I just mentioned, so we have included more information on 

them in our written testimony. But an example of something that 

does work is the 8[a] program. 

During these meetings, one thing that Tribal leaders made clear 

was that the government contracting program was one of the few 

things that is actually working in Indian Country. 

Because the Tribal governments do not have the same abilities 

to raise traditional tax revenue, they must turn to Tribal government enterprises to provide the revenue to support services to their 

citizens. The government contracting program is considered one of 

the most effective means for generating revenue and creating local 

economy for Tribal governments regardless of their geographic location or size. 

Over the past two years, NCAI, NACA, and NCAIED have 

hosted numerous forums throughout Indian Country to develop 

joint recommendations for improvement to this program. These 

draft recommendations were recently refined and we are continuing to work on the refinement process. 

Our draft recommendations include the following small business 

government contracting improvements: one, expand small business 

participation for all participants; two, increase the oversight; three, 

provide assistance to small businesses as prime contractors, subcontractors or joint venture partners. 

In reauthorizing the Small Business Act’s contracting programs, 

Congress should include stronger provisions to ensure that small 

business actually receive the Federal contract support that has 

been required by law for many decades. While the Federal contracting market has doubled in size since 2000, small business percentage of that market has declined significantly. 

To enable small businesses, particularly 8[a] firms, to compete 

for a larger share of government contracts, these things need to 

50

happen: expand the pie; modernize the program; include increased 

net worth thresholds; increase caps on individual 8[a]; find a way 

to unbundle contracts; increase small business goals to 30 percent; 

and also maybe demonstration projects; set aside larger contracts 

to a team of small business contracts. 

Increased oversight enforcement by SBA and other Federal contracting agencies of exiting requirements would verify that Native 

enterprises and other 8[a] and small business concerns are good 

stewards of taxpayer funds. In order to promote better SBA administration oversight the Federal government should provide support 

and resources to train SBA staff and authorize an assistant administrator for Native American affairs to oversee and support the 

program. 

While Tribes represent a small percentage of the nation’s population, and receive an even smaller percentage of Federal contracts, 

this program makes a big impact to our local communities. Tribal 

leaders have told us time and time again over numerous years that 

this is one of the few economic development tools that actually 

works in Indian Country. 

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

today. We look forward to continued support of our self-determination efforts and our use of effective economic tools. Thank you so 

much and blessings be with you and the Committee. 

[The prepared statement of Mr. Garcia follows:]

Statement of Joe Garcia, President,

National Congress of American Indians 

Introduction 

Good morning Chairman Rahall and members of the Committee. My name is Joe 

Garcia, and I am Governor of Ohkay Owingeh, formerly known as San Juan Pueblo, 

in the State of New Mexico, and President of the National Congress of American 

Indians (NCAI). 

On behalf of the National Congress of American Indians, the nation’s oldest and 

largest organization of American Indian and Alaska Native tribal governments, 

thank you for giving me the opportunity to testify before you today on the important 

and timely topic of diversifying our Native economies. I would also like to take this 

opportunity to thank you for your ongoing commitment to building healthy and sustainable local economies in Indian Country. It is our pleasure to be here today to 

continue what has been an ongoing discussion about how the federal government 

can best support tribes in our efforts to achieve self-reliance, prosperity, and economic parity through economic development. 

NCAI is fully committed to working with our federal partners in supporting existing federal economic development programs that have led to greater tribal and village sovereignty and self sufficiency. We welcome the opportunity today to discuss 

the current successful components of economic development, suggested improvements, and the need for continued support for the programs that have led to greater 

local economic diversity and individual opportunity. 

We are well positioned to address the challenges and barriers tribal governments 

encounter when trying to develop their local economies and more important understanding opportunities for positive change. NCAI partnered with the Department of 

Interior to host the National Native American Policy Summit (Summit) this past 

may to sort through he challenges and solutions needed to create healthy and vibrant local economies. Vested participants from tribal governments, the federal government, academic community, and the private sector gathered over 3 days to discuss challenges and offer solutions. 

In addition to the 300 plus recommendations received from participants for improving access to capital, business development and infrastructure, the Summit 

identified the overall need for tribal governments to strengthen governing institutions and create effective legal codes for business development. It also revealed the 

need for comprehensive tribal community planning and the need to improve intergovernmental relationships as key components for proactive economic growth. 

51

1Statistics derived from U.S. Census Bureau data; U.S. Department of Commerce, Bureau of 

Economic Analysis, Survey of Current Business; and DataQuick Information Systems, a public 

records database company located in La Jolla, San Diego, CA. 2 Joe Kalt & Jonathan Taylor, Harvard Project on American Indian Economic Development, 

‘‘American Indians on Reservations: A Databook of Socioeconomic Change Between the 1990 and 

2000 Censuses,’’ (2005). 

Today we will be addressing some of the successful components of tribal government economic development, however, there has been a real and compelling need 

established at the Summit and in other NCAI venues to continue this discussion to 

address other challenges and opportunities. 

Native Economies—Success 

The vast majority of tribes remain in desperate need of meaningful, diversified 

economic development opportunities. There are a few high-profile examples of tribes 

around the country who have prospered economically. However, there are hundreds 

more who remain nearly invisible, who are struggling to preserve their reservations, 

their culture, and their sovereignty. The social and economic conditions in many 

Indian communities are comparable to those in developing nations around the 

world. According to recent federal reports 1, an astounding 9 of the 11 poorest counties in the nation, based on per capita income, are home to Indian reservations. 

Conventional thought has often dismissed the feasibility of American Indian economic development. Too often we hear that there is little incentive for investment, 

either public or private, on Indian lands; that many tribal institutions are too unstable or too weak to sustain development; that the location of many Indian lands are 

too remote for many types of business; or that the lack of infrastructure prohibits 

the establishment of businesses on tribal lands. These lines of thinking leads to the 

conclusion that the only option for Indian nations is continued dependence on the 

federal government. 

Over the past few decades, many tribes and villages, by exercising sovereignty 

and self determination, utilizing natural resources and taking advantage of existing 

federal incentives, have begun building successful government enterprises and are 

participating in the American economy. 

It is imperative to note this accomplishment has coincided with the rise of self 

determination. As the Harvard Project on American Indian Economic Development 2

has confirmed, across a number of indicators, socio-economic conditions are improving in Indian country and tribal economies are becoming more robust. From 1990 

to 2000, family poverty rates decreased, real median income went up, housing overcrowding dropped, and more Indians were living in homes with adequate plumbing. 

Significantly, the Harvard Project discovered that these improvements are found in 

both non-gaming and gaming communities alike and credits self-determination policies for the progress. 

Tribes have been able to produce improvements in their local communities and 

generate sustainable tribal government enterprises, in large part, by taking greater 

control of decision making, utilizing available tools, and strengthening governing institutions. 

Success for tribal government enterprises differs from traditional corporations 

that are only responsible for creating a profit for shareholders or from other governments that provide services largely based on tax revenue. Since tribes have limited 

ability to raise tax revenue and, as responsible governments, they look to create 

tribal enterprises to produce revenue that is either reinvested to ensure sustainability or used to develop or supplement much-needed programs and services for 

their citizens’. Congress, in recognition of this unique tribal responsibility and in an 

effort to fulfill its federal trust responsibilities, has created various tools over the 

years that have allowed tribes to better serve their citizens’ needs and become more 

self-sufficient. 

Not surprisingly, the tools that have proven most effective over the years are 

those provide an incentive for tribes to pursue self determination. Providing tools 

and incentives has historically been proven a successful means of positively effecting 

decisions in the general population. This is apparent when Congress continues to 

support tax incentives for citizens to own homes and for businesses that provide 

health insurance for employees. There has also been success when Congress, in honoring our government-to-government relationship, establishes and supports the development of Native economies and fosters government stability through various incentives. As we have learned over the years creating a healthy economy and a stable 

government are not exclusive but inter-dependent. 

52

3 Alaska Native Claims Settlement Act, 43 USC § 1601 et seq. 

4 United States District Court, Western District of Washington at Seattle, US, et al., v. State 

of Washington, et al., C70-9213, August 22, 2007 5 NIGA, Indian Gaming Facts, 2006 (www.indiangaming.org) 

Tribes, villages and communities have been successful in three primary government enterprise areas—natural resource management, gaming and hospitality, and 

government contracting. 

Natural Resource Management 

Tribes have always utilized the management and development of territorial natural resources to serve their populations. Longstanding subsistence activities like 

fishing and farming, once taken for granted by tribes, were diminished with encroachment and resettlement. The federal government, through the ratification and 

enforcement of treaties and various acts, have severely limited a tribal government’s 

ability to remain self sufficient by redefining tribal territories and tribal 

structures—most recently with the Alaska Native Claims Settlement Act of 

1971(ANCSA) 3. With these treaties and acts, the federal government has dramatically reduced 

tribes’ ability to utilize their natural resources, including their land base, to serve 

their populations’ needs. More recently, however, the federal government has supported tribal self determination and a tribal government’s right to serve their members needs by supporting those treaties and acts and providing tools and incentives 

for tribes to continue to utilize the remaining natural resources for the benefit of 

their members. For example; • Water rights in the southwest enable Native farmers to continue to use agriculture to support tribal programs and individual self sufficiency. • Treaty rights, reaffirmed by federal courts as recently as last month 4, allow 

northwest tribes the ability to continue traditional fishing and ensure the natural resource will be available for the next generation. • Self determination policies in the form of land management, rights-of-way and 

market-based land valuation have permitted tribes to go from passive participants to effective competitors in America’s natural resource industries with 

energy being the most notable enterprise. 

As this Committee is aware, 10% of the nation’s energy natural resources are on 

Indian lands; and, Indian tribes are willing partners in natural resource development. Tribes have made decisions to manage and oversee their energy resources 

such as coal and natural gas found within their lands. And today, with tribes exercising self determination by securing the right to manage their own lands and resources, natural resource management serves as an effective industry and economic 

tool for tribes and villages. Harvesting timber, mining coal, farming, and turning 

limestone into cement have all been effective means for tribal governments to meet 

the program and service needs of its citizens. 

Success, however, in the form of natural resource management, can be found in 

a relatively small number of tribes who have managed to hold on to large land bases 

or have managed to remain in areas with resources to manage. The vast majority 

of tribes do not benefit from this economic tool and remain in desperate need of economic stimulus. 

Gaming and Hospitality 

Indian gaming has grown over the past two decades from an uncertain start-up 

industry for tribal governments to an established, mature hospitality industry with 

tribes creating competitive destination resorts. Tribes, when given the support to exercise their sovereignty as governments, have managed to build an industry that 

has allowed them to not only serve their members’ program and service needs, but 

become revenue generators for other governments—all in one generation. 

Gaming and hospitality has been an effective tool and a successful industry for 

those tribes that are located near large population centers and have partner states 

in the same industry. Although the media focuses on gaming as the face of Native 

government enterprises, the gaming and hospitality industry has not been a successful economic alternative for most tribes and villages. Just as natural resources 

as a government enterprise only is successful to a small number of tribes, over half 

of all recognized tribes have no gaming whatsoever 5, and of those that do, some are 

not highly profitable and many serve to create local jobs for tribal citizens—especially for those tribes located in rural and remote areas. 

Government Contracting 

Government contracting has gradually begun to emerge as viable industry for successful tribal enterprise development. Successful contracting proves that, with the 

53

6Federal Contracting Support for Alaska Natives’ Integration into the Market Economy, Professor Duane Champagne (Sociology), Professor Carole Goldberg (Law) Native Nations Law & 

Policy Center, UCLA School of Law, Los Angeles, CA—‘‘Alaska Native Claims Settlement Act 

of 1971(ANCSA) has been modified numerous times by Congress, including an amendment in 

1988 designating ANCs as minority business enterprises and Congressional language in 1992 

designating ANCs as ‘‘economically disadvantaged’’ enterprises. Through this legislation, ANCs 

and their qualifying subsidiaries have been enabled to qualify for federal contracting and subcontracting, including SBA 8(a) and Department of Defense Small and Disadvantaged Business programs. The purpose of ANC status from the Alaska Native point of view is to assist ANCs in 

gaining competitive access and capabilities to successfully generate economic growth within the 

market economy.’’ 7Source: Eagle Eye, Inc 

8See AFGE v. United States, 95 F. Supp. 2d 4, 36 (D.D.C. 2002), aff’d 330 F.3d 513 (D.C. 

Cir. 2003) Federal Contracting Support for Alaska Natives’ Integration into the Market Economy, Professor Duane Champagne (Sociology), Professor Carole Goldberg (Law) Native Nations 

Law & Policy Center, UCLA School of Law, Los Angeles, CA 9Source: Eagle Eye, Inc 

proper incentives, tribal enterprises can generate revenues to help achieve greater 

self determination and offers the potential of allowing all tribes to participate in the 

American economy regardless of a tribe’s geographic proximity near a population 

center or its land-based resources. 

Economic self-sufficiency is the goal of tribal government entities using existing 

economic tools or when exerting rights of sovereignty and self determination. This 

goal can be achieved only through active participation in the U.S. and world economy. In fulfilling the United States’ trust responsibility and in promoting self sufficiency among Native American governments, the federal government has provided 

an economic tool for tribes and villages (through federally mandated Alaska Native 

Corporations (ANCs 6)) to access the largest purchaser of goods and services in the 

world—the federal government. The federal government spent $377 billion on goods and services in 2005. 7 American Indian tribes and Alaska Native Corporations access the federal market 

through participation in the Small Business Administration’s 8(a) program with the 

added incentive of allowing tribal and ANCs to utilize negotiated sole source contracting. The Department of Defense accurately justified the incentive by confirming 

it as ‘‘...further[ing] the federal policy of Indian self-determination, the United 

States’ trust responsibility, and the promotion of economic self-sufficiency among 

Native American communities.’’ 8

Although Native contractors only received less than 1% (.8%) of all Federal contract awards, 9 the program has had notable success for participating tribal governments. The tribal government contracting program has given tribes and villages the 

ability to create local diverse economies which in turn allow tribes to support and 

create tribal citizen programs and offer real and substantial career opportunities for 

members where only limited or no job opportunities existed prior. 

Tribes and ANCs, in the spirit of self determination, are offered a choice of business opportunities, and today, are providing everything from logistic support for our 

troops abroad to environmental services here at home. Tribes and ANCs that are 

not able to utilize the tribal government tool of gaming or leverage their land-based 

resources, now can enter business tracks that were previously the mainstay of mainstream corporate America. 

Individuals, who had little opportunity a generation ago, now have options. Not 

just options for jobs, but options for diverse and challenging careers. Rural tribal 

and village members are now choosing to enter the engineering field or business administration. Members have been able to move up a career path to manage contracts or in some cases, entire companies. 


37848.003.eps
54

10DPHHS Survey—February 2002 11 United States Government Accountability Office, Increased Use of Alaska Native Corporations’ Special 8(a) Provisions Calls for Tailored Oversight, April 2006 Report to Congressional 

Requesters—GAO 06-399. 

More important for tribal governments and U.S. taxpayers is that the program 

allows tribal governments to build an economy, educate its citizens and create tax 

revenues that are returned to the federal coffers. The program has been a proven 

success in giving tribal governments a hand up and not a hand out; meaning our 

taxpayers are receiving far more value. For example, 

• A remote village in Alaska, only accessible by car when the river freezes, now 

has a small local economy created from a Native Alaskan firm’s entry into the 

highly competitive government contracting space. A recent profit was earned by 

its shareholders, many of whom used it to purchase higher-priced diesel fuel 

needed for the long, harsh winters. 

• In Montana, Salish & Kootenai represent their values to the rest of the world 

through their successful government contracting program at S&K Technologies—a firm initially mentored by another tribal enterprise. The Tribe provides information technology and network solutions to the federal government 

that allows the 4,500 Tribal members residing on the Flathead Indian Reservation the opportunity to compete for jobs in software development and technical 

training. The Reservation has struggled with an unemployment rate as high as 

41% 10 proving the federal government contracting program can work in the 

most economically challenging tribal environments. 

• And, in Maine, a small tribe close to the Canadian border manages a border 

security contract that generates enough revenue for the tribe to be able to purchase school clothing for its Tribal youth. 

While this program is just beginning to realize success, it has not been an easy 

path. Most tribal businesses struggle for years with losses or marginal revenue. The 

government contracting businesses, even with the ability to utilize negotiated solesource contracts, is an industry noted for its complexity and thin margins. The net 

revenues that are generated are often routed back into the business to ensure ongoing success and the net revenue that is realized as profit is returned to the tribal 

members and village corporation shareholders in the form of citizen programs. Some 

tribal governments have been able to use funds for various programs including; 

• Scholarship funds established to give tribal members the chance at higher education and fulfilling careers. 

• Cultural centers built as a tribute to each tribe or village contribution to their 

local community and history, and 

• Elder programs established to honor and care for those who paved the way. 

Tribes realize that economic development, while serving as a key component toward self determination, is a part of their responsibly as a government and a key 

component to being able to serve the interests of their citizens. 

We feel it is important for this Committee and Congress to know that these tools, 

created to promote self sufficiency in Native communities, are working as the federal government intended. The government contracting program is still a long way 

from universally building local tribal economies and offering hope to tribal citizens, 

but in its infancy it already has proved to be an effective tool for those tribes and 

ANCs who have had the tenacity to compete and profit in the federal marketplace. 

Our member tribes, ANCs, villages and Native communities have all given us 

input on this issue and the message has been simple and clear—keep this program 

in place, it is working [See Resolution Attached]. 

With a directive from our members, NCAI set out to evaluate the program, listen 

to those who have had concerns, and try to understand misperceptions. We heard 

from our members about economic challenges and opportunities during a national 

summit help jointly with the Department of Interior. In addition, a joint working 

group was formed consisting of NCAI, Native American Contractors Association 

(NACA) and National Center for American Indian Enterprise Development 

(NCAIED) to ensure we were representing the vested American Indian entities and 

speaking with a unified voice. In March of this year at the 2007 Reservation Economic Summit hosted by NCAIED, our three organizations developed a joint statement on contracting issues [see Joint Statement attached]. 

Evaluating concerns meant meeting with and carefully reviewing the report and 

recommendations contained in the April 2006 Government Accountability Office 

(GAO) report on ANC 8(a) contracting. 11 The GAO recommendations centered on 

the need for greater oversight activities by the Small Business Administration 

(SBA) and federal agencies. To evaluate potential program improvements, we also 

55

met with the SBA to discuss and jointly develop proposals to address the GAO’s recommendations as well as its own. 

We listened to other SBA 8(a) participants and worked with various organizations 

like the Minority Business Roundtable. We have been trying to dispel program 

misperceptions that often arose from the statements or actions of a single entity 

striving to promote a universal viewpoint without giving voice to alternative perspectives. 

As a result of the joint efforts of NCAI, NACA and NCAIED, we respectfully submit that Congress should consider the following small business government contracting improvements that would expand small business participation for all participants, increase oversight and provide assistance to small businesses as prime 

contractors, subcontractors or joint venture partners. 

A. Expand Small Business Contracting Opportunities 

In reauthorizing the Small Business Act’s contracting programs, Congress should 

include stronger provisions to ensure that small businesses actually receive the federal contract support that has been required by law for many decades. While the 

federal contracting market has doubled in size since 2000, small businesses’ percentage share of that market has declined significantly. This is a result of a limited procurement workforce in the federal government, an increase in overseas contracts, 

lax compliance with subcontracting plans, and barriers that would allow small businesses to compete for larger contracts. 

To enable small businesses, particularly 8(a) firms, to compete for a larger share 

of government contracts, the federal government should take immediate actions to 

reverse these trends, including enhancing incentives for contracting officers to increase awards to 8(a) and other small businesses. In considering small business contracting legislation, Congress should adopt provisions to: 

• Support tighter 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 enterprises and other small businesses to pursue larger 

contracts, such as contracting agencies issuing a Request For Information (RFI) 

to small businesses so they have a chance to form teams to pursue these larger 

contracting opportunities; 

• Increase the Government-wide contracting goals for awards to small business 

of up to 30% of total contract awards to small business, and not less than 8% 

of total contract and subcontract awards to small disadvantaged business concerns; 

• Include overseas contracts within the Government-wide contracting goals and 

require reporting of awards to small businesses as prime or subcontractors performing contracts overseas; 

• Ease or increase the thresholds on individual net worth and on competition, including annual inflationary adjustments, for individuals seeking to qualify and 

retain eligibility for 8(a) program participation; 

• 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; and 

Revisit size standards, including indexing them for inflation. 

B. Improve Administrative Oversight and Enforcement 

Increased oversight and enforcement by SBA and other federal contracting agencies of existing requirements would verify that Native enterprises and other 8(a) 

and small business concerns are good stewards of taxpayer funds. To foster better 

SBA administrative oversight: 

• Improve SBA’s implementation of the 8(a) provisions applicable to Native enterprises by authorizing an Assistant Administrator for Native American Affairs 

to access all the SBA programs to improve the support provided to Native enterprises through contractual, financial and technical assistance; 

• Strengthen SBA’s authority to negotiate higher goals with individual contracting agencies, and require them to be more accountable for their past performance and future plans for making more small business awards so as to 

meet their goals in each subcategory of small business contracting; 

• Support provisions to reinforce SBA’s and other contracting agencies’ efforts to 

track, monitor and enforce anti-bundling requirements, and set aside and other 

procedures (including subcontracting plan compliance) to ensure that small 

business and small disadvantaged business contracting goals are met or exceeded; and 

56

12Federal Contracting Support for Alaska Natives’ Integration into the Market Economy, Professor Duane Champagne (Sociology), Professor Carole Goldberg (Law) Native Nations Law & 

Policy Center, UCLA School of Law, Los Angeles, CA Sourced as: Scott Goldsmith, Jane Angvik, 

Lance Howe, Alexandra Hill, and Linda Leask Status of Alaska Natives 2004 (Anchorage, AK: 

Institute for Social and Economic Research, University of Alaska, Anchorage, 2004), pp. 2-14, 

3-2 to 3-39, 4-2 to 4-14, 5-2, 6-2 to 6-6; Alaska Native Policy Center, Our Choices, Our Future: 

Analysis of the Status of Alaska Natives Report 2004 (Anchorage, AK: Alaska Native Policy 

Center, 2004); The Harvard Project on American Indian Economic Development, Native Nations, 

pp. 326- 329. 

• Afford SBA sufficient resources to rebuild and train its staff to improve implementation of the 8(a) and other programs to assist all small business contractors in accessing the tools necessary to compete successfully and receive a fair 

share of federal contracting opportunities. 

Conclusion 

A few in Congress have suggested fixes to the government contracting program 

that would disproportionately affect tribal governments and ANC enterprises by 

limiting or removing incentives. The program, while in need of some improvements, 

is not broken and major fixes are unnecessary. This same conclusion was confirmed 

by the GAO in their recommending only administrative, not legislative, proposals 

for improvement. 

Limiting tribal government enterprises’ access to the federal market place will 

have distressing effects to Native communities. Tribal governments will need to look 

to Congress to establish a additional tools to deal with the critical need to strengthen local tribal and village economies so that tribal governments will have more—

not fewer—resources and opportunities to provide programs and services for their 

citizens. 

With high rates of poverty, low per capita incomes, lower levels of education, 

many health problems, many social problems including high suicide rates, high 

rates of crime and incarceration 12, we all should be looking to improve programs 

that work like the tribal government contracting 

We want to thank you for giving us the opportunity to speak today on diversifying 

our economies. We look forward to your continued support of our self determination 

efforts and our use of effective economic tools. 

The CHAIRMAN. Thank you, President Garcia. 

Mr. DuMontier. 

STATEMENT OF GREG DUMONTIER, CHAIRMAN, NATIVE 

AMERICAN CONTRACTORS ASSOCIATION, WASHINGTON, D.C. 

Mr. DUMONTIER. Thank you, Chairman Rahall and Ranking 

Member Young. Thank you for this opportunity to testify before the 

House Natural Resources Committee to create a strong native 

economies. 

My name is Greg DuMontier. I am the Chief Executive officer of 

S&K Technologies. We are an information technology firm owned 

by the Confederated Salish and Kootenai Tribes in western Montana, of which I am a member. I am also the Chairman of the 

Native American Contractors Association, NACA, and I am here to 

speak on behalf of NACA. 

As you know, Congress has focused on a lot of Federal procurement reform and oversight of government contracting practices and 

sole source awards. These reform initiatives have had already a 

significant and disproportionate impact on Native communities. We 

are but a sliver of Federal contracting, as we have discussed. Yet 

we face proposals to eliminate or diminish our contracting preferences. 

The record simply doesn’t support these types of proposals. The 

GAO, as you have heard, studied ANC participation in the 8[a], 

57

and didn’t recommend any legislative change to the program. They 

did recommend administrative actions to improve oversight. 

We are just now getting a foothold in the marketplace after being 

left out, locked out, or elbowed out for decades. With some modest 

success, we now represent that very small slice of the pie, the less 

than 1 percent that we have talked about. However small that that 

might be, it is beginning to have a huge impact in Native communities. 

The benefits and services that Native communities receive result 

directly from the profits that our Native enterprises realize from 

government contracts. It is a win/win for the Federal/tribal relationship. 

Many of the witnesses today have provided different examples of 

our success, but I would like to focus on one of the biggest misconceptions or misperceptions that has been out there, and that is 

that Native enterprises somehow are awarded contracts and then 

simply subcontract all of the work to subcontractors in violation of 

SBA’s limitations on subcontracting regulations. This criticism is 

flat wrong. The SBA’s regulations require 50 percent of personnel 

costs to be borne by any 8[a] performing a service contract, and we 

support this regulation and comply with it. To improve the transparency and compliance with this requirement, NACA developed a 

best practices guide which recommends that Native enterprises develop a mechanism for tracking compliance of this requirement. 

My company, S&K Technologies, has already created a seniorlevel management office whose responsibility it is to monitor and 

track compliance with all SBA 8[a] regulatory requirements, including the performance of work requirement in each contract. 

Also, through the SBA Tribal consultation process, NACA will 

recommend how reporting on this requirement can be improved. 

Moreover, the Federal procuring agencies are responsible for overseeing compliance of this requirement as has already been discussed today. The GAO in its report noted that procuring agencies 

are often not aware of this responsibility. 

The NACA recommends that the SBA revise its partnership 

agreements so procuring agencies are aware that they are responsible for monitoring 8[a] compliance with this requirement. 

Let me be clear. Native enterprises do not simply pass through 

work to subcontractors. That would be self-defeating because it 

wouldn’t provide long-term revenue streams which Native communities need to provide basic services and Native enterprises would 

miss the opportunity to develop new capabilities. It just doesn’t 

happen. 

In conclusion, there is still tremendous work that needs to be 

done to effect positive and sustainable benefits in Native community participation in the 8[a] program. Remarkably, this is already 

being done by providing access to the private sector market, building technical expertise to the Mentor-Prote ́ge ́ and teaming arrangements, and providing access to a market with relatively low capital 

costs. The continued economic success and well being of Native 

communities depends on the combined and sustained efforts of 

Indian Tribes and the ANCs, the Federal government, and the private sector. We are counting on you to help continuing this 

progress. 

58

The Native 8[a] program offers the Federal government great returns and great value with little Federal investment. NACA would 

like to offer the following recommendations: 

First, this committee should play a proactive role in any future 

attempts to restrict or eliminate the Native 8[a] program. We need 

your help in educating others in the importance of this program. 

The second recommendation is that this committee should support and facilitate the efforts of NACA, the National Congress of 

American Indians, and the National Center for American Indian 

Enterprise Development in taking actions to enhance contracting 

opportunities for all small business contractors as well as our ability to work together. 

This could involve facilitating meetings and discussions with 

other committee, such as the House Small Business Committee, or 

the House leadership, and certainly with the administration. 

I thank the Chairman for the opportunity to speak before the 

Committee today, and I certainly look forward to your questions. 

I would much rather talk with you than to you. Thank you. 

[The prepared statement of Mr. DuMontier follows:]

Statement of Greg DuMontier,

Native American Contractors Association 

Good Afternoon Chairman Rahall and Ranking Member Young. Thank you for 

this opportunity to testify before the House Natural Resources Committee about the 

growing success of the Small Business Act’s 8(a) program in advancing the economic 

self sufficiency of Native Americans. My name is Greg DuMontier, and I am the 

President and Chief Executive Officer of S & K Technologies, Inc., a tribally-owned 

Information Technology firm. I am also a member of the Confederated Salish and 

Kootenai Tribes (CSKT) of the Flathead Reservation in Western Montana, and the 

Chairman of the Native American Contractors Association, NACA. I am here before 

your committee speaking on behalf of NACA. 

NACA was formed in 2003 as a voice for Alaskan Native Corporations, Indian 

Tribes and Native Hawaiian Organizations (‘‘Native Enterprises’’). Our mission is 

to enhance self-determination through preservation and enhancement of government 

contracting participation based on the unique relationship between Native Americans and the federal government. NACA represents 19 ANC, Tribal, and NHO Enterprises. 

Introduction 

In the 110th Congress there has been a significant focus on federal procurement 

reform largely in response to contracts awarded for the Iraq war, Afghanistan and 

Katrina resulting in intense scrutiny on investigations and oversight of government 

contracting practices and non-competitive awards. These reform initiatives could 

have a significant and disproportionate impact on Native communities. Notwithstanding the fact that we are but a sliver of federal contracting, we face several proposals to eliminate or diminish the Native 8(a) contracting preferences. 

The record does not support these proposals: 

• The GAO studied ANC participation in the 8(a) program and did not recommend any legislation change to the program. Rather, the GAO recommended 

that the SBA and procuring agencies take a number of administrative actions 

to improve oversight. • The SBA has initiated a tribal consultation to address these GAO recommendations. • The Native American Contractors Association (NACA), the National Congress 

of American Indians (NCAI), and the National Center for American Indian Enterprise Development (NCAIED) are working together to provide recommendations on how 8(a) regulatory compliance can be improved to increase transparency and accountability and to provide legislative recommendations to enhance the ability of all small businesses to have a larger share of contract 

awards. 

Over the past 500 years, Native Americans have suffered from the loss of their 

land, economic assets and culture. These changes have resulted in the breakdown 

of many tribal systems, families and communities. By most social and economic indiVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00062 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
59

cators, Native Americans are at the lowest rung, struggling with the legacy of rural 

isolation and stagnant local economies. Nationwide, American Indian and Alaska 

Natives have suffered from decades of poverty and neglect. The 25.7% poverty rate 

in Indian Country exceeds that of all other race categories, and exceeded twice the 

national average of 12.4%, this contributes to the 40% unemployment rate and exceeded eight times the national average. Native communities experience many of 

the social ills associated with poverty: Inadequate health care resulting in a rate 

of suicide double the national average, and suffering from other disorders such as 

alcohol and drug abuse, diabetes, and obesity. Heart disease is the number one 

cause of death among American Indians with a 71% rate higher than the U.S. average. To top it off, American Indians have a life expectancy of 5 years less than the 

rest of the U.S. population. Bottom line: too many Native Americans are without 

the resources and tools to build their communities. 

Remarkably, amid the widespread poverty and social distress found in Indian 

Country, there are increasingly signs of hope and examples of Tribes and Alaska 

Natives making strides in building strong communities and economies. For example, 

there are many stories of struggle, such as, the village of Chenega Bay that survived 

an earthquake and tsunami and rebuilt twenty years later only to be devastated by 

the Exxon Valdez oil spill. A village member, said that her generation ‘‘had even 

forgotten the word in their native language for hope.’’

But there is hope now, as Chenega Corporation has a big hand in revitalizing this 

economically and physically distressed community. You will hear today of many examples of this success through participation in the 8(a) Business Development 

program. 

Small Business Administration Programs 

Recognizing that small businesses are critical to our economy, the Small Business 

Administration (SBA) is charged with assisting and protecting their interests. Congress found that by providing access to the federal procurement market, the business development of small business concerns owned by those who were disadvantaged could be achieved. The SBA has created numerous government procurement 

programs for businesses owned by disadvantaged individuals and groups. These programs include the 8(a) Business Development program (including Community Development Corporations), the Small and Disadvantaged Business (‘‘SDB’’) program, 

the Historically Underutilized Business Zone (‘‘HUBZone’’) program, and the Service-Disabled Veteran-Owned (‘‘SDVOB’’) program which promote minority and disadvantaged small business owners to do business with the federal government. 

To ensure that small businesses have access to the procurement market, statutory 

goals have been established for the federal government to contract with small businesses, SDBs, women-owned small businesses, HUBZone businesses and SDVOBs. 

The federal government has a 23% mandated small business contracting goal and 

the SBA negotiates with procuring federal agencies to establish agency goals to ensure that the federal government meets these goals. 

The statutory goals for the federal government are as follows: 

• 23% of prime contracts for small businesses; 

• 5% of prime and subcontracts for SDBs; 

• 5% of prime and subcontracts for women-owned small businesses; 

• 3% of prime contracts for HUBZone small businesses; and 

• 3% of prime and subcontracts for SDVOBs. 

America has a long history of using its purchasing power as a means to further 

the business development and economic development of various individuals and 

groups who would otherwise be excluded from the huge government contracting 

market. This furthers social goals but more importantly it increases competition and 

expands and diversifies the sources of supplies and products for the government. 

Native Enterprises are starting to use these procurement programs just as the government intended, to use business approaches and models to further self reliance 

and build strong Native communities. Thereby partially fulfilling the federal government’s obligations to Native Americans. 

Native 8(a) Program 

By creating unique Native 8(a) provisions, Congress recognized the special needs 

and its obligations to Indian Tribes and Alaska Natives. Similar to the legitimate 

policy goals that support business development efforts for other 8(a) program participants (as well as other small business set-asides for woman-owned businesses 

and service-disabled veteran-owned businesses, and small and disadvantaged businesses), the Native 8(a) provisions also embody the unique relationship between 

Native Americans and the federal government. 

60

In fact, hearings held by the Senate Indian Affairs Committee in 1987 and 1988, 

found a need to include Indian tribes and Alaska Native-owned firms in government 

contracting because President Reagan’s ‘‘Commission on Indian Reservation Economies’’ had documented that the government’s procurement policies were significant 

obstacles to economic development and the committee found that tribally-owned 

companies had a difficult time qualifying for 8(a) program certification. The Chairman of the Senate Indian Affairs Committee believed that remedial action was necessary to address the low participation of American Indian and Alaska Nativeowned firms in government contracting. During the 1988 hearing, Chairman Inouye 

stated that ‘‘directing the purchasing power of the federal government to accomplish 

social goals such as assisting disadvantaged members of society is well established’’ 

and he noted that unfortunately, ‘‘this public policy goal has not been achieved with 

respect to the participation of businesses owned by Native Americans.’’

As this committee well knows, the federal government’s unique obligations to 

Native Americans are recognized in the Constitution, federal laws, and by the Supreme Court, and those obligations empower Congress to enact legislation that recognizes the status of First Americans. Indeed, in terms of economic development, 

this special relationship is embodied in the Indian Commerce Clause of the United 

States Constitution. In furtherance of this relationship, Congress enacted legislation 

to encourage the participation of Tribally-owned and Alaska Native corporations to 

participate in the 8(a) program in a manner that advances the federal government’s 

interest in promoting self-sufficiency and economic development in Indian Country. 

The Native 8(a) program was designed to empower Native communities to provide 

for their people, to sustain and expand their economies, and to combat the historic 

economic and social ills these communities face. It is also a way for Indian Tribes 

and ANCs to engage outside communities, outside investors, and other expertise in 

economic activities that benefit Native communities. We are just now getting a foothold in the federal marketplace after being left out, locked out, and elbowed out for 

decades. With some modest success, we now represent a small slice of the total procurement dollars ($1.9 billion). However small, it is beginning to have a big impact 

in Native communities. 

The 8(a) program has fostered a culture of ownership and self-sufficiency and a 

path for diversifying and expanding Native economies. The benefits and services 

that Native communities receive result directly from the profits that Native Enterprises realize from government contracts. It is a hand up—not a hand out. Native 

Enterprises provide benefits in the form of dividends to shareholders, scholarships, 

job training opportunities, and economic stimulus to the local community. A 2005 

NACA survey of its ANC members shows that ten regional and two village corporations paid $33 million in dividends attributable to government contracting—these 

corporations had 86,516 shareholders among them; $9 million was awarded in scholarships; $12 million in other shareholder programs and over 31,000 jobs created nationwide. These figures show that Native American participation in the 8(a) program is enabling them to compete in the American marketplace and to become successful and self-reliant, and to act as engines of growth in their communities. 

Like other 8(a) firms, Native Enterprises can only participate in the 8(a) program 

through small businesses which are subject to stringent program entry eligibility requirements. Native Enterprises have two key unique 8(a) provisions: 

1) The competitive thresholds which limit the amount of sole-source contract 

awards do not apply; and 

2) Native Enterprises can participate in the 8(a) program through more than one 

company. 

This was the intent of Congress, and makes sense in light of the economic and 

social disadvantages with which Native communities must contend and the numbers 

of Native Americans in need. The disadvantages suffered by Native Americans encompass entire communities and villages, as opposed to individuals who are socially 

or economically disadvantaged. The ability to operate more than one company allows Native Enterprises to provide for hundreds or thousands of their people. 

Similarly, Native Enterprises are not subject to low caps for a reason. Unlike the 

typical structure of a small business, with one or a few owners, Native Enterprises 

are responsible for combating historical disadvantage, rural isolation, and the depressed economies that have resulted from a multi-generational dearth of opportunity. The program rules were purposely drafted, and Congressionally-mandated, 

to reflect the social and economic obligations Native Enterprises have to their communities, the size of these communities, and the immensity of the problems we face. 

The Native 8(a) program is exactly what Congress intended: an economic development program to help disadvantaged Native American communities, that lifts our 

people with a hand up—not a hand out. 

61

Native Enterprises provide quality services and cost-effective products to the Federal government. It is no secret that the government contracting marketplace is 

highly concentrated and dominated by a few very large companies. In 2005, the five 

largest contractors received 20% of the total contract dollars awarded. By providing 

additional sources of products and suppliers within the market, Native Enterprises 

give the government alternative procurement vehicles, provide competition to the 

big companies, and give the taxpayers’ more value for their dollars. 

For example, Integrated Concepts and Research Corporation (ICRC) (at the time, 

a subsidiary of Koniag Development Corporation, an Alaska Native Corporation) 

partnered with Qualis, a woman-owned small business, located in Alabama to bid 

on a NASA contract to provide aerospace materials testing. Over the life of the 

$12.3 million five-year contract, the ICRC/Qualis team earned 100 percent of its performance and cost incentive fees. The ICRC/Qualis team has a reputation for consistently running 10 percent under target incentive budgets and through other initiatives has saved NASA close to $1 million in contract costs. Simply put, with more 

sources of supply and services for federal agencies, competition is increased and best 

value is provided. 

Issues Raised 

In recent years, there has been a tremendous amount of focus on the Native Enterprises that contract with the federal government. This increased scrutiny suggests that there is something wrong with the way Native Enterprises are doing 

business. I would like to address these issues one by one. 

First Issue: The numbers—Where are contracting dollars going? Native Americans represent 4% of the American population. Our enterprises today receive less 

than 1% of the federal procurement dollars (but some days it seems that we get 

100% of criticism). Again, looking at the most recent data available, in 2005 the federal government spent a total of $377.5 billion on all contracts. Native American 

contract awards of all types comprised only $3.19 billion, less than one percent of 

(0.8%) of all federal contracting dollars. In addition, in 2005, the Federal government awarded $11 billion in contracts to 8(a) firms. Of that amount, approximately 

$1.9 billion, or 17.2%, was awarded to Native Enterprises through sole source 

awards. Other 8(a) firms received 82.8% of the 8(a) awards. Native Enterprises represent approximately 1% of all non-competitive awards government-wide. We get a 

very, very small share of all federal contracting dollars, and just a fraction of the 

8(a) awards. 

Second Issue: Native Enterprises somehow are awarded contracts and then subcontract all of the work to subcontractors in violation of the SBA’s limitations on 

subcontracting regulations. This criticism is flat wrong for several reasons. The 

SBA’s regulations require 50% of personnel costs to be borne by any 8(a) firm performing a service contract. This performance of work requirement must be met by 

all 8(a) firms, including Native Enterprises. 8(a) firms and Native Enterprises can 

subcontract a portion of work on federal contracts—this practice is not exclusive to 

Native Enterprises. In fact, most federal contractors, large and small, do just that 

for good reasons, most likely benefiting local businesses and workers in each one 

of the states represented by members of this committee. 

To improve transparency and compliance with this requirement, NACA has developed a Best Practices Guide for its members, ‘‘Guide to Industry Best Practices: 

Ethics and Compliance Programs and Establishing Best Business Practices.’’ The 

guide recommends that Native Enterprises develop a mechanism for tracking compliance with this requirement. For example, SKT has created a senior-level management office whose responsibility it is to monitor and track compliance with all the 

SBA 8(a) regulatory requirements including the performance of work requirement 

on each contract. Additionally, NACA through the SBA tribal consultation process 

will make recommendations on how reporting on this requirement can be improved 

to provide more transparency and accountability. Moreover, federal procuring agencies are responsible for overseeing compliance with this requirement. The GAO in 

its report noted that procuring agency officials are often not aware of this responsibility. NACA recommends that the SBA revise its partnership agreements so procuring agencies are aware that they are responsible for monitoring 8(a) compliance 

with this requirement. 

Let me be clear: Native Enterprises do not ‘‘pass through’’ work to subcontractors, 

as a few erroneously allege. That would be self defeating because, it would not provide long-term revenue streams which Native Communities need to provide basic 

services. In fact, teaming arrangements enable Native Enterprises to realize profits 

that are then reinvested in their communities. Teaming arrangements also give 

Native Enterprises the added benefit of learning new core competencies and new 

62

lines of business, giving us more leverage to compete with large businesses, benefiting the taxpayer and Indian Country. 

Third Issue: Native Enterprises can form joint ventures with large, non-Native 

companies, and therefore the implication is that Native Enterprises are somehow 

not qualified to do the work or that the large companies benefit from the 8(a) program. Again, all 8(a) firms, not just Native Enterprises, can form joint ventures 

with non-small business owners. All 8(a) firms can venture with large businesses 

if they are operating under the 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, to forge new business relationships, and to develop expertise. The 

SBA’s Mentor-Prote ́ge ́ program is central to business diversification and expansion. 

The mentor can provide valuable technical/management assistance, financial assistance, and sub-contract opportunities which enhance the capabilities of the Prote ́ge ́

firm. 

For example, Sealaska Environmental Services (SES) is a wholly owned 8(a) subsidiary of Sealaska that was started in 2003. In its short history, SES has partnered 

with Tetra Tech, a leader in the environmental services industry providing environmental remediation, and engineering services. This partnership combines Sealaska’s 

natural resource management experience with the proven systems, controls and 

highly trained people of Tetra Tech. SES and Tetra Tech formed a Mentor-Prote ́ge ́

agreement and a joint venture and have negotiated agreements with the Navy to 

provide environmental remediation services at several Navy facilities on the west 

coast. Through its relationships with Tetra Tech, SES continues to build both its 

environmental remediation capacity and capability to help transition SES from a 

start-up 8(a) to a stand-alone company in a highly complex and competitive 

industry. 

Partnering through teaming or joint ventures is also important once a Native 8(a) 

graduates out of the program and must compete with giants such as Lockheed Martin, Raytheon and Boeing. The giants of the government contracting market have 

had 60 plus years to create their competitive advantages which include the substantial capital needed bid on major contracts. Responding to major contract solicitations 

takes expertise and months of manpower costing up to 3 percent of the contract 

award—a $100 million dollar contract may cost upwards of $3 million dollars to prepare a bid. 

How does a government contractor like Chugach Development Corporation (CDC), 

fresh out of the 8(a) program in 1998, succeed in a market dominated by powerful 

and capital rich companies? In CDC’s case, the management team made the strategic decision to not go it alone. They networked with their competitors convincing 

government contracting giants that CDC could deliver quality, timely, and cost effective work in facility maintenance and logistics. Teaming with Bechtel and Lockheed Martin, CDC won their first major full and open competitive bid contract, and 

they have never looked back. CDC has the reputation of being ‘‘the little company 

that could!’’

The Mentor-Prote ́ge ́ program also is an important way for Native 8(a)’s to work 

with and partner with other small businesses. SpecPro, Inc., an ANC 8(a), formed 

a Mentor-Prote ́ge ́ relationship with TerraHealth, Inc., an 8(a) veteran and minorityowned business and were awarded the Department of Defense Nunn-Perry Award 

for reducing costs for DoD and for developing technical capabilities and increasing 

opportunities for another small business. SpecPro and TerraHealth’s relationship 

furthers both of their growth, and continues to develop and mature as a model for 

new small businesses to follow. 

Native Enterprises are treated no differently and operate no differently than other 

8(a) firms in respect to Mentor-Prote ́ge ́ relationships. Through the tribal consultation process initiated by the SBA, NACA will make recommendations on how reporting requirements on Mentor-Prote ́ge ́ agreements and joint ventures can be made 

more transparent to better demonstrate compliance with the regulatory requirements and to demonstrate that mentors are indeed providing technical and/or management assistance that increases the contracting capabilities of Native 8(a)’s. 

Fourth Issue: executive compensation. To attract the type of talent needed to successfully run a business, all businesses must pay what the market dictates for experienced executives. The salaries paid to our managers are on par with other businesses because we must recruit those who have the talent and expertise to manage 

and oversee companies in a complex and competitive procurement market. We are 

under the gun to produce quality services and provide a good return back to the 

taxpayer. Unlike other industries, profit margins in government contracting are 

small and the competition is great, it takes an experienced manager to be successful 

in this industry. Further, unlike family-owned or closely-held small businesses, 

Native Enterprises have a fiduciary duty to their communities and shareholders. 

63

Native Enterprises seek out the best talent we can get to help maximize revenues 

for our owners—Native Americans. These business managers oversee the day-to-day 

operations of the companies and they are subject to the control of their Tribal Councils or their Native board of directors and shareholders. They are held accountable 

for the work they do and are expected to produce and improve the bottom line. 

Fifth Issue: small business community criticism of the recent successes of Native 

Enterprises. This criticism is misplaced. It distracts from the many issues all small 

business contractors have in common. When you get down to it, we are being criticized for finally realizing some of the benefits that Congress intended—diversifying 

our economies. While the federal contracting market has doubled in size since 2000, 

many small businesses believe they are locked out of the market. While the size of 

the market has grown, the federal government statutory goals which ensure small 

business participation have remained the same. Additionally, the overall small business share has declined due to a number of reasons, such as bundling/consolidating 

contracts beyond the reach of many small business capabilities and barriers to 

growth that make it more difficult for small businesses to compete for larger contracts. The federal procurement market is huge, there is plenty of room for Native 

Enterprises and other small businesses to participate. From a policy standpoint, all 

small businesses stand to gain by advocating with a unified voice on issues like increasing agency contracting goals and size standards for small businesses, as well 

as increasing the thresholds for individually owned 8(a) firms. 

We are working hard to strengthen the relationships between Native Enterprises 

and other small business. NACA has formed strategic alliances with other small 

business trade associations, these alliances serve to facilitate relationships with 

groups that may not have worked with Native Enterprises in the past. These alliances also broaden contractor access and create productive networks among various 

small business contractors. 

In recent years, Native Enterprises have been able to diversify and expand into 

new markets. Last summer, the DOD office of Small Business hosted a small business roundtable with NACA and other small business trade associations. This has 

resulted in several productive working relationships. For example, NACA and WIPP 

(Women Impacting Public Policy) held a workshop on how to form small business 

teams and provided opportunity for Native contractors and women-owned businesses to meet and exchange information on their capabilities. This has resulted in 

productive teaming arrangements among a number of the companies that participated. By teaming and partnering with Native Enterprises, other small business 

owners can also expand the services they offer and enter into new markets. Since 

some Native Enterprises have performed numerous federal contracts, they have an 

impressive past performance record which they can contribute to contracting teams. 

Native Enterprises welcome partnering with those in other small business communities who have similar goals and common interests. 

The non-native communities in which Native Enterprises are working and operating also see the benefits of increased opportunities. We know there are concentrations of Native 8(a)’s working in Alaska, New Mexico, Washington, Oklahoma, Alabama, Florida, Virginia and Maryland; some of these are states with predominate 

Native American populations other are not. With the expansion of Native Enterprises comes increased employment in the local communities. 

The small business community as a whole can benefit from focusing on the areas 

of government contracting that can be improved for everyone, and Native Enterprises in particular are advocating ways to ameliorate some of the adverse effects 

of the current procurement market. For example, speaking on behalf of its members, 

NACA supports initiatives that would increase awards to small businesses and decrease the amount of bundled contracts. Also, NACA supports increases in agency 

goals for contracting with small businesses and set-asides for small businesses. In 

addition, to partnering with other small businesses, NACA through an agreement 

with NCAIED, and through other efforts, is working to develop inter-tribal business 

opportunities by providing training workshops and networking opportunities among 

Native-owned enterprises. 

Conclusion 

In sum, the communities which Native Enterprises serve remain some of the poorest and most under-employed groups in America. There is still tremendous work to 

be done in effecting positive and sustainable benefits for these communities. The 

less than 1% of the federal contracting that Native communities now receive is enabling Native 8(a)s to create jobs and opportunities desperately needed by their communities. Through our self-reliance and business ingenuity, Native peoples are 

starting to provide for the sufficiencies of our communities thanks to the business 

development opportunities provided by Congress. Native participation in the 8(a) 

64

program has helped Congress further two important goals: economic self-sufficiency 

and self-determination. Remarkably, this is being done by providing access to the 

private sector market, building technical expertise through Mentor-Prote ́ge ́ and 

teaming arrangements, and providing access to a market with relatively low capital 

costs. The continued economic success and well being of Native communities depends on the combined and sustained efforts of Indian tribes and ANC’s, the federal 

government, and the private sector. 

Great Returns and Great Value with Little Federal Investment 

To build upon this progress, NACA offers the following points and recommendations: 

1. The Native 8(a) program has resulted in just what Congress intended—

building stronger Native communities that have been devastated by economic 

distress. The Native 8(a) program is a rare federal program that works by providing incentives that stimulate economic development in Native communities, 

diversifying Native economies, and providing revenue for scholarships, training 

and encourages entrepreneurship in Native communities. 

Recommendation: The House Resource Committee, as the committee with 

jurisdiction over federal Indian policy issues, should play a proactive role 

in future Congressional processes involving the Native 8(a) program and 

help educate others of the importance of the Native 8(a) program and the 

federal government’s unique relationship with Native Americans. This 

hearing is a great beginning. 

2. While the federal contracting market has increased significantly, the small 

business share of that market has declined significantly due to bundling/consolidation of contracts beyond the capabilities of most small businesses and 

current barriers to growth that make it difficult for small contractors to compete for larger contracts. 

Recommendation: The House Resource Committee should support and facilitate the efforts of NACA, NCAI, and NCAIED and other disadvantaged 

groups in taking actions to enhance contracting opportunities for all small 

business contractors, and our ability to work together. This could involve 

facilitating meetings and discussions with other committees and with the 

administration. 

I thank the Chairman for the opportunity to speak before the Committee today, 

and welcome any questions your Committee may have. 

NOTE: The ‘‘Guide to Industry Best Practices: Ethics and 

Compliance Programs and Establishing Best Business Practices’’ 

and ‘‘Policy Statement on Small Business Contracting’’ submitted 

for the record have been retained in the Committee’s official files.

65


37848.004.eps
66

POLICY STATEMENT ON SMALL BUSINESS 

CONTRACTING

March 2007

To ensure that small businesses can access its fair share of the 

over $370 billion federal procurement market, the Federal Government set a goal of awarding 23% of all federal contract dollars to 

small businesses and 5% to small disadvantaged businesses. Prominent among the several federal programs designed to stimulate 

small business contracting is the Small Business Administration 

(SBA) Section 8(a) Business Development Program to enhance the 

competitive viability of firms owned by socially and economically 

disadvantaged individuals through the provision of contractual, financial and technical assistance. The purpose of these federal goals 

and programs has always been to ensure the maximum practicable 

utilization of these underrepresented firms, and to expand the base 

of suppliers to the federal government. 

Congress originally based eligibility for the 8(a) program, in part, 

on whether the applicant is an individual of certain racial or ethnic 

heritage, or is a member of a group indigenous to this country. In 

later reforms of the 8(a) program. Congress extended eligibility to 


37848.005.eps
67

Indian Tribes, Alaska Native Corporations (ANCs) and Native Hawaiian Organizations (NHOs) representing those indigenous peoples who have a time-honored special trust relationship with the 

federal government that obligates the government to implement 

policies to facilitate self-determination and self-sufficiency within 

Native communities. 

For many individual entrepreneurs, the 8(a) program has helped 

them grow their business successfully and benefit personally from 

that growth. For Indian Country, the 8(a) provisions applicable to 

Tribes, ANCs and NHOs have enabled the Native enterprises they 

own to generate revenues and create jobs that benefit their entire 

Native communities. Despite the success of many 8(a) companies, 

many more still struggle to break into the highly concentrated federal procurement market that is dominated by much larger companies, including the five largest contractors that alone hold 20% of 

all federal contract award dollars. 

To expand the contracting opportunities for all small business 

contractors, our organizations pledge to work together to broaden 

the base of 8(a) and other small business suppliers and service providers available to the federal government by: 1) developing innovative incentives for agencies to award more and larger contracts 

to 8(a) and other small business contractors; and 2) advocating for 

the use these incentives and other procedures that will ensure that 

the SBA and other federal contracting agencies ramp up their 

award of contracts so as to meet and exceed their small and minority business contracting goals every year. 

Policy Positions 

For the foregoing reasons, our organizations pledge our support 

for the initiatives outlined in the attached document.. 

A. Expand Small Business Contracting Opportunities. 

The SBA’s regulations and policies have not kept pace with 

changes in the federal contracting market, such as increases in the 

average size of contracts often exceeding the capacity of small 

firms, the prevalence of teaming arrangements and joint ventures, 

the bundling and consolidation of contracts, and the consolidation 

of government contractors to perform larger contracts. These 

changes have made it harder for small businesses, particularly 8(a) 

firms, to compete for government contracts. Consequently, there 

have been steep declines in the total value of contracts awarded to 

8(a) companies in particular and to all small businesses in general. 

The federal government must take immediate actions to reverse 

these trends, including retaining some incentives and enhancing 

other incentives for contracting officers to award to 8(a) and other 

small businesses, such as: 

1. Fulfill Congressional intent to provide important incentives 

for agencies to contract with underrepresented Native community-based enterprises without diminishing or eliminating the 

8(a) provisions applicable to these enterprises owned by 

Tribes, ANCs or NHOs that help build stronger, more self-sufficient Native economies. 

68

2. Enhance the ability of individuals to qualify for certification 

as 8(a) program participants and to pursue larger contracts on 

a competitive or non-competitive basis. 

3. Support agency efforts to track and monitor federal agencies’ 

achievement of their 23% small business and 5% minority 

business contracting goals, and advocate for approval of increases in these two goals, and/or a new goal for 8(a) contract 

awards. 

4. Identify new ways to participate in the concentrated federal 

procurement market, including innovative teaming arrangements for Native enterprises and other small businesses to 

pursue larger contracts in teams, such bundled contracts set 

aside for competition among teams of small businesses. 

5. Encourage small businesses with larger contracts to implement subcontracting plans to develop stronger business alliances among all types of small business contractors. Currently 

subcontracting plan requirements apply only to large prime 

contractors and describe how they will subcontract a portion 

of the prime contract work to 8(a), small disadvantaged, service disabled veteran-owned, HubZone, women-owned and 

other small businesses. 

B. Administrative Oversight and Monitoring. 

Scrutiny of government contractors, whether excessive or not, 

will continue. Even permissible relationships, such as a mentorprote ́ge ́ agreement with a large business, can be cast as improper, 

and suspicion thrives on the scarcity of accurate data. Increased 

SBA and other agencies’ oversight of existing requirements would 

verify that Native enterprises and other 8(a) companies are good 

stewards of taxpayer funds. The following steps can foster better 

administrative oversight: 

1. Improve SBA’s implementation of the 8(a) provisions applicable to Tribes, ANCs and NHOs by: a) enhancing existing policies and procedures to improve outreach and assistance to, 

and oversight of, Native enterprises; b) redesigning and improving the Tribal 8(a) certification process to reflect the 

unique nature of Tribal enterprises; and c) authorizing an Assistant Administrator for Native American Affairs to access 

the various programs of the SBA to improve the support provided to Native enterprises through contractual, financial and 

technical assistance. 

2. Afford the SBA with sufficient resources to rebuild and train 

its staff to improve implementation of the 8(a) and other programs to assist all small business contractors in accessing the 

tools necessary to compete successfully and receive a fair 

share of federal contracting opportunities. 

3. Design a method to identify and track contract awards to 

Native enterprises owned by Tribes in federal procurement 

data systems. 

4. Establish a small business 8(a) training program to provide 

annual training sessions for both 8(a) contractors and contracting officers. 

69


37848.015.eps
70

The CHAIRMAN. Thank you. In order to give our final witness appropriate time, the Chair is going to recess for approximately a 

half-hour so we can answer roll call votes on the Floor of the House 

at this time, and we shall return. 

[Recess.] 

The CHAIRMAN. The Committee on Natural Resources will resume its sitting, and for purposes of introducing the next panelist, 


37848.016.eps
71

the Chair will yield to the Ranking Member from Alaska, Mr. 

Young. 

Mr. YOUNG. Thank you, Mr. Chairman, and again it is my privilege and honor to introduce our next witness, Julie Kitka, who has 

been President of the Alaska Federation of Natives for how many 

years, Julie? 

Ms. KITKA. Seventeen years. 

Mr. YOUNG. Seventeen years, and watch it grow from a fledgling 

operation to a very viable unit within the State of Alaska, conveying the thoughts and beliefs of the Alaska Natives, and I believe 

one of the greatest supporters of the 8[a] contracting program that 

we have. 

So with that, I would like to yield this time to Ms. Kitka for her 

testimony. 

STATEMENT OF JULIE KITKA, PRESIDENT,

ALASKA FEDERATION OF NATIVES, ANCHORAGE, ALASKA 

Ms. KITKA. Thank you, Mr. Chairman, and thank you Vice 

Chairman Young. 

First of all, I wanted to thank you personally as well as members 

of the Committee for the important role your committee has had 

over the years for the Native people of Alaska and other Native 

Americans, and I want you to understand that the work that you 

do and that the decisions you make have real impacts on the 

ground, and we are very grateful for you and your staff’s dedicated 

work over the years. Because of your work, I can say our people 

have greater opportunities, our elders are living longer, healthier 

lives, our children are receiving better educations, and our people 

are living in safer homes. The improvements are real and immeasurable, and we are very grateful, and I just have to say that right 

from the start because it is important that you understand that. 

Again, I am the President of the Alaska Federation of Natives, 

which is the largest statewide Native organization in Alaska, representing more than 130,000 Alaska Natives. 

I wanted to also mention we recently over the last year and a 

half had the chance to meet and have serious conversations with 

the renowned Peruvian economist by the name of Hernando De 

Soto, who wrote the international best seller on the mystery of capital, and I wanted to share a comment with you that he made in 

regard to the Native people in Alaska to give you an idea of what 

is going on in our state. 

Mr. De Soto said that what he sees going on in Alaska with Alaska Natives is ‘‘living proof that life is not a roll of the dice, harsh 

and brutal; that government can work with people to set up systems where people can make a difference and improve their lives.’’

I think that is an absolutely powerful statement that life is not 

a roll of the dice, harsh and brutal, and so it is not just by chance 

that things are happening, and I just wanted to convey to you the 

partnership that we have had over the years with this committee 

and with the committees that have taken jurisdiction over Native 

issues on that have really made a difference, and our Native people 

in Alaska are living proof of what can be done if we have the appropriate tools and structures, and we are very proud of the accomplishments that we have had since our land claim settlement, and 

72

growing our Native corporations, growing our Native entities, and 

making a difference in the lives of our people and other citizens in 

our state. 

One of the points I made in our testimony is the great diversity 

among our people in the state. We have Yupik, Cupik, Inupiat Eskimos, Athabascan, Tlingit, Haida and Tsimshian Indian peoples, 

so we are not all the same in the state. There is great diversity 

across generations, across geographies, and across gender among 

our people, and because of these differences and diversities we feel 

very strongly that there is no one solution that fits all. There is no 

one economic tool that meets the needs of all the people, and we 

really encourage you to take a look at economic development and 

initiatives as a whole cluster of economic health and educational 

initiatives as opposed to just one initiative. 

Basically, the current situation, we believe, is, and as has been 

told out by the Secretary of Treasury and other very distinguished 

branches of the government, is that the U.S. economy is strong and 

growing stronger, and it is expanding, and what we feel that, and 

other people have said that as the United States economy grows 

and expands, that there is still pockets in our country which are 

not sharing in the tremendous economic growth that is going on, 

and Native American communities are among those pockets that 

still aren’t getting the full measure of the strong U.S. economy and 

the growth. 

We feel strongly that what needs to happen in order for us to 

share more fully in the economy is that we need additional targeted assistance to, one, keep up with changing technology, there 

is a lot of rapid change in technology, and to ensure that the economic pie continues to expand, and that the committees don’t look 

at ways to constrict and limit participation in economic opportunities, but how can we make the pie bigger and grow participation 

in many ways. 

Like I said, that said the remainder of my testimony is going to 

cover two things. One is the 8[a] government contracting in which 

we feel unequivocally has been a success, and it is something that 

our regional and village corporations and Tribes in Alaska have 

participated and they have worked very hard providing value and 

quality work for the government. This is not a hand out. This is 

delivering work for the government that the government wants and 

needs and doing it at a value. 

In our testimony, we have given specific examples of our participation in the 8[a] program and how the work that has been provided by our people that are contracting meets and exceeds government standards in so many ways. There is just stacks and stacks 

of commendations that our companies have gotten from the Federal 

agencies on that, commending our people for the quality work that 

has been done. 

I really want to encourage this committee to stay engaged in the 

8[a] contracting issue as it surfaces in the various committees, and 

please assert your jurisdiction to the fullest extent to protect our 

interests as Native Americans. It is just vitally important that people understand the trust responsibility between the government 

and Native Americans that understand our history and background 

73

to be able to judge the issues all around the 8[a] program, and it 

is very important that this committee stays engaged. 

I want to also bring up quickly another economic initiative, 

H.R. 3351, which is sponsored by you, Vice Chairman Young, a 

demonstration project of a domestic version of Millennium Challenge Account. That I will just bring briefly because, as I mentioned, not all solutions fit all groups of people in all circumstances, 

and we have 87 villages in our state that want to be part of this 

demonstration project, a pilot if you will, with representatives in 

Hawaii and reservation states, and we are very excited about the 

potential of what this demonstration project can do, and it is basically a domestic version of the Millennium Challenge Corporation, 

which the United States set up, and Members of Congress supported, creating a Federally chartered corporation to provide the 

assistance. 

We are not asking for a Federally chartered corporation. We are 

just asking for the models of results-based management and accountability, and that whole unique compacting model to be tested 

within our communities to see if that model which is just being 

used internationally can have some measures of success with some 

of the real intractable areas of poverty in our communities. 

I am very proud to say that has been introduced, and we anxiously await consideration by this committee, and hopefully passage of that and that demonstration pilot to go forward. 

In our testimony, we have also included quite a number of other 

recommendations in the economic arena. We feel very strongly that 

there has been a lot of rapid change happening in the economy and 

the economies that our businesses participate in, and we feel very 

strongly that the U.S. Congress and the government needs to protect U.S. businesses, including Native businesses, so that we can 

be competitive in the global economy, and as this rapid change in 

globalization occurs we really think there is new tools that need to 

be added to the toolbox for companies to depend on, and that it is 

vitally important that American companies are able to be competitive and that Native companies and our business enterprise can be 

among the best in the country and protect jobs and opportunities 

for our people. 

I include nine recommendations in there, and I won’t cover them 

because of the time restraints on that, but I urge your consideration of them, and want to firmly put our organization on record 

in support of the wonderful work that is being done by Native contractors under the 8[a] program and urge your continued support 

of that program. 

Thank you. 

[The prepared statement of Ms. Kitka follows:]

Statement of Julie E. Kitka, President,

Alaska Federation of Natives 

Chairman Rahall, Ranking member Young and distinguished members of the 

committee, thank you for the opportunity to appear before you today on behalf of 

the Alaska Federation of Natives (AFN) to talk about the importance of diversifying 

Native economies, the Small Business Administration’s 8(a) program to the Native 

people of Alaska and other important considerations. 

My name is Julie Kitka. I am testifying today in my capacity as President of the 

Alaska Federation of Natives (AFN), a position I have held for seventeen years. 

74

First, on behalf of the Native people of Alaska, thank you for your many years 

of service in the Congress, in the House of Representatives, and on this Committee. 

We are grateful for you and your dedicated staff’s hard work over the years. On the 

ground, at home, your work has made a difference. Our people have greater opportunities. Our Elders live longer, healthier lives. Our children receive better education. Our people live in safer homes. The improvements in our lives are real and 

measurable. We are grateful. 

By way of background, AFN is the largest statewide Native organization in Alaska representing more than 130,000 Alaska Natives. We are a young, growing population—projected to double in size every 23 years and so our need for a solid economic base is absolutely essential. 

The Alaska Native population, although united in AFN, are a very diverse group. 

We have Yupik, Cupik, and Inupiat Eskimo peoples; Athabascan, Tlingit, Haida and 

Tsimshian Indian peoples; and Aleuts. Our Native cultures are land-based, and our 

occupation and use of our land predates Plymouth Rock and the pyramids. And 

within each cultural group, there is diversity—across generations, across geography, 

and across gender. Because of this great diversity, there is no ‘‘one solution fits all’’. 

We need a cluster of economic, health and educational initiatives which empowers 

our Native people to be able to maintain our unique land-based cultures and participate fully in the larger society. 

Background: 

AFN was organized 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. 

With the discovery of oil in Prudhoe Bay-and the need for clear title in order to 

build a pipeline to bring that world-class discovery on line in order to provide for 

the energy needs of our country—a sense of urgency created an historic opportunity 

for the settlement of our land claims. In December 1971, after years of effort by 

Members of the U.S. Congress and Alaska’s Native leadership, the Alaska Native 

Claims Settlement Act, (ANCSA), P.L. 92-203 was signed into law by President 

Richard Nixon. In extinguishing aboriginal claims, Alaska Natives were compensated with fee simple title to 44 million acres of land and $962.5 million for 

lands lost to state, federal and private interests. The Act created 13 regional forprofit corporations and more than 200 village corporations to receive and oversee 

the land and monetary entitlements. 

Native Corporations—Value-based Entities 

We have now had thirty-six years working in corporate structures, modifying 

them over time with your help, to better meet the aspirations of our people. Our 

corporations continue to be value-driven entities—let me share one small example: 

NANA Regional Corporation, representing the Inupiat people in Northwest Alaska 

has as its corporate values the following statements: 

Honesty and integrity will govern all activities 

All individuals treated with respect 

Commitments made will be fulfilled. 

This is what the NANA leaders say and believe. This is what they instill in all 

their employees and strive to be. Other Native corporations have similar statements 

of values, and they are not just on paper. We are deeply influenced by our cultural 

values as we go about the hard work of building sustainable economies. It makes 

for high standards, but in respect for our Elders, we can do nothing less than our 

very best. 

Current Situation: The U.S. Economy is Strong and Expanding, but pockets 

in the U.S. are still excluded from the economic growth 

As Americans, we are fortunate in the last few years to be living within a strong 

U.S. economy, which continues to expand. But we know this strong U.S. economy 

is not shared throughout the country and there are pockets of communities still 

struggling. We in Alaska, live in a homeland full of potential. We need your continued attention and support to ensure that all our Native people have the opportunity 

to fulfill the promises of both our land settlement and as citizens of the United 

States, living in the strongest, most powerful country in the world. 

The rapid pace of change with technology and globalization requires the United 

States to look closely at the regional economies in our country. The Congress must 

provide targeted assistance, as necessary, so we may have access to, and keep up 

with changing technology, and ensure that the ‘‘economic pie’’ continues to expand, 

rather than constrict. We need a level playing field and a hand up, to allow Native 

75

entities to participate fully and keep the United States competitive in the world 

economy. 

The remainder of my testimony will cover the following areas: 

1. 8a Government Contracting and the Special Trust Relationship 

2. Alaska Native Participation in the 8a Program—Part of the Solution 

3. Other Economic Initiatives—Applying Fifty Years of U.S. Development Experience—A New Demonstration Project (H.R.3351) 

4. Recommendations and conclusion. 

8(a) Government Contracting and the Special Trust Relationship 

Over the years since ANCSA was passed, Congress has enacted many laws to foster self-sufficiency and economic development in Native communities. Among the 

most successful of these laws are the special provisions implementing Section 8(a) 

of the Small Business Act. The contracting status offered by the 8(a) program is 

based on the trust and statutory relationship between Native Americans and the 

federal government. As you are well aware, there is a special legal and political relationship between the United States and Indian and Alaska Native Tribes, and 

that special legal and political relationship is grounded in treaties, the United 

States Constitution, federal statutes, court decisions and a history of negotiations. 

We also note that this special legal and political relationship between the United 

States and Native American tribes includes Alaska Natives. Although the legal status of Alaska Native corporations is different than that of Tribes, it has long been 

recognized that a special legal and political relationship exists between the United 

States and Alaska Natives. 

The federal government has an obligation to foster self-sufficiency and economic 

development in Native communities. Congress amended ANCSA to help Alaska Natives overcome barriers to economic development in rural Alaska by allowing them 

to be eligible to participate in the 8(a) program. We consider this an integral part 

of the original ANCSA economic settlement. 

The ANCSA regional and village corporations and tribes in Alaska that have participated in the 8(a) SBA program have achieved success by providing real value 

and quality work for the government at a fair price. By paying attention to detail, 

and by being careful stewards of the responsibility entrusted to us by the government, we have delivered a needed service to the government while at the same time 

providing job opportunities and economic upward mobility opportunities for our 

Native people. 

Since our land base and resources are held by our Native corporations, and are 

not trust lands held by tribes with reservation status, the financial health of our 

Native corporations is extremely important to our continued existence as distinct, 

land-based cultures and peoples living in the United States. Contracting opportunities have allowed us to contribute to our country, gain experience, continue to build 

capacity, and reinvest profits back into our corporations and people for the future. 

As First Americans who have used and occupied our homelands in Alaska for over 

10,000 years, and who continue to live in the farthest Northern corner of the United 

States, we are here to stay. We have a land base, are building our capacity in the 

use of corporations, and are modifying the corporate structure with the help of the 

Congress to better meet the needs of our people. Every Congress since 1971 has had 

a package of technical amendments to fine-tune various aspects of the original settlement. 

As I said, we have 36 plus years enmeshed in capitalism as a result of our 1971 

land claims settlement in which you—the Congress—chose the corporate form of 

governance for our people. We have had a steep learning curve. 

Participation in the 8(a) program has enabled our Native-owned businesses to develop the experience, skill and expertise necessary to succeed in the competitive 

business market. The 8(a) program has helped Alaska Native entities overcome significant economic barriers, create and expand competitive businesses in the private 

and federal markets, create new business opportunities in remote rural areas of our 

state and return profits to our communities. 

Alaska Native Participation in the 8(a) Program—Part of the Solution 

One of the reasons we are here today, with a united voice, is to tell you that we 

need this program for our people. It is an exceedingly rare example of federal Indian 

policy that successfully promotes economic development and self-sustainability without large direct federal appropriations. 

There have been many examples stated earlier in this hearing from Native participation in the SBA 8a program. Others at this hearing will place into the record 

statistics and concrete examples. I would like to highlight several areas: capacity 

building, improving productivity, learning from mistakes and shared best practices. 

76

In my view, participation in the 8a program builds capacity in our people to contribute to U.S. competitiveness in the global economy. This is not a hand-out. We 

are helping the government by providing quality services which the government 

wants and needs. It is not all about us and what we want. It is about what the 

government wants and how we can help. 

Participation in the SBA 8a program forces us to be as productive with our resources and manpower as possible. We make improvements continually and this 

makes for tighter operations and less waste. This makes the government more productive and it builds work practices which are superior and strives to be nothing 

short of excellence. 

Participation in the SBA 8a program and government contracting in general will 

never be free of errors or mistakes. When we identify areas of improvement, or errors we have systems for self-correcting. This is an important capacity and bodes 

well for the future. You can look at stacks and stacks of letters of commendation 

that Native contractors have received for improving services on specific jobs for the 

government. We are very proud of this. 

Participation in the SBA 8a program allows us to learn. We have opportunities 

to identify and share best practices—basically the unlimited opportunity to marry 

best practices learned to other endeavors within our Native communities. Incentives 

must be put in place to drive this experience to other sectors within our communities. For example: our experiences in logistics in contracting should carry over to 

our housing and health systems; our experience in growing Native managers and 

professionals—carry over to governance and not-for-profit sectors; and accountability—applies to all we do. For example, one of the best things I have felt personally about the SBA 8a experience, especially with Department of Defense contracts, 

is the need for Native leadership and managers to go through the government security process and obtain top security clearances. Nothing tells a Native leader or 

manager more about the importance of the contracting work than to know your federal government depends on you. You rise to the challenge. 

Lastly, the program is the cornerstone of our future and we need to strengthen 

it for the benefit of all Alaska Natives and American Indians. As less and less funding is available for Indian concerns including health and social benefits, Congress 

should look more closely at programs like this one that benefit both Alaska Natives 

and American Indians by helping them attain economic independence. 

Other Economic Initiatives: Applying 50 Years of U.S. Development 

Experience, A Demonstration Project (H.R. 3351) 

Earlier in my testimony, I spoke of the diversity within the Native people of Alaska. I also mentioned that no one solution fits all. An exciting new initiative, outlined 

in H.R. 3351 speaks to testing out another model of building Native economies. 

H.R. 3351, the ‘‘Native American Challenge Demonstration Project Act’’ has been 

introduced by Congressman Young and is pending in this Congress. The Alaska 

Federation of Natives is very supportive of this bill, which we believe represents a 

welcome paradigm shift in the way the federal government promotes economic development in Native America. It also represents the fruition of several years of intense discussion within parts of the Alaska Native community on how we can meet 

the challenge of reducing poverty and promoting sustainable economic growth in our 

rural villages. 

Briefly, the underlying concept of the bill is to apply the lessons learned from decades of American experience in providing foreign aid in the developing world, and 

applying those lessons domestically in remote parts of Native America. The bill 

builds heavily on the approach used by the Millennium Challenge Corporation, in 

that it uses a compacting model to channel a significant amount of development 

funds for implementing locally designed economic development strategies. As introduced, the bill would authorize $100 million over five years, for disbursement in five 

pilot projects nationally, one in Alaska, one in Hawaii, and three in the Lower 48 

States. 

For the Alaska component, AFN has worked closely with two Native regional organizations in southwest Alaska, the Association of Village Council Presidents and 

the Bristol Bay Native Association. Together these adjacent Native regions span 

96,000 square miles, and contain 87 Native villages and one-quarter of the Native 

population of Alaska. These regions have a rich cultural heritage, and truly incredible natural resources, yet paradoxically have among the highest poverty and unemployment rates in the state, and in the country. 

We believe that these regions are ripe for this demonstration project. Both regional organizations are experienced with operating federal programs under Indian 

Self-Determination Act compacts, have a history of collaboration, and have done 

77

much of the planning legwork for undertaking economic development using this 

model. 

The experience of the AFN, BBNA and AVCP and others, is that many federal 

programs that should foster economic development are splintered, suffer from lack 

of coordination between federal agencies, are often poorly timed, and are complex 

and poorly understood by their intended beneficiaries. They thus remain under-utilized, as was borne out by the 2001 General Accounting Office report, GAO-12-193, 

which reviewed the effectiveness of some 100 federal programs that serve Native 

Americans. 

The Alaska Federation of Natives urges Congress to take self-determination to the 

next level, and to foster—and adequately fund—locally created strategies for reducing poverty and fostering economic growth. H.R. 3351 will do this. 

Recommendations and Conclusion: 

The following recommendations are offered in the spirit of positive dialogue on the 

role of the federal government to constantly seek to expand the ‘‘economic pie,’’ and 

to share the prosperity of our growing economy to the pockets of people within the 

United States that are often left out, and left behind. 

1. We ask the Committee to closely follow the SBA Administration’s 8a consultation process and support administrative recommendations to strengthen the 

program. There is no need to enact legislation now. Let’s let the administrative 

process proceed. AFN, together with the National Congress of American 

Indians and others are assisting in the consultation process. In fact, the first 

Alaska meeting is on October 24th in Fairbanks, prior to our Annual AFN Convention. AFN would be pleased to provide the Committee a detailed report and 

our recommendations following all the consultation meetings. 

2. Congress should support and enact this year, H.R. 3351, a demonstration 

project applying fifty years of U.S. development experience to Native American 

communities. Give our project a chance for success. 

3. Recognizing that U.S. businesses, including Alaska Native corporations, are 

not just competing with other states for jobs, but are also competing with 

China, India, Korea and other countries for the capital to build businesses, and 

recognizing that the jobs go where the businesses go, Congress should make 

high-speed telecommunications a national priority to help drive up our country’s productivity and potential for economic growth. We need fast, accurate 

communication networks to stay competitive in the global economy. Given the 

geographic breadth of Alaska, and its strategic location in the growing EastWest sphere, we need the most advanced telecommunications services in order 

to continue to build our capacity and to compete for jobs and capital. 

4. Congress should enact legislation to change the investment climate in rural 

Alaska and within reservation economies across the country. The Congress 

should support economic development by creating investment guarantees by 

expanding current U.S. economic policy to offer domestically the same incentives that are offered to investors in China, India and Brazil. 

5. Congress should authorize a feasibility study of a demonstration project in 

Alaska to be the first outsource free trade zone in the United States. Similar 

feasibility studies should be authorized for other Native American communities, if there is interest. In order for the U.S. to compete worldwide for jobs 

and capital, we must offer business advantages that can compete with other 

major out-source suppliers in China, India, and now Dubai in the United Arab 

Emirates. Recent reports indicate that Dubai is looking at a targeted share of 

5 percent of the global outsourcing industry in five years. Dubai has set up a 

trade zone that offers advantages such as streamlined bureaucratic processes, 

zero corporate income tax, and zero personal and sales taxes. The country is 

also funneling a large amount of funds into construction and diversification 

plans. A feasibility study of a demonstration project in Alaska, and within 

other Native American communities, would examine the pros and cons of such 

an approach in the United States, and tell us whether or not it makes sense. 

If Congress decided to authorize such a feasibility study, the AFN would like 

to be a part of it. 

6. Congress can enact legislation to create ‘‘knowledge economy ecosystems’’ designed to support the business and government needs of information and communications technology and include other sectors. Congress is aware that 

knowledge is the most valuable commodity in the economy of the post-industrial world. Congress can ensure that Alaska Natives are able to participate 

in the global economy, even among business giants that have tremendous 

wealth and the ability to innovate beyond what we can now imagine. Congress 

should note that Dubai is setting up what is called the Dubai Knowledge VilVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00081 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
78

lage—described as a vibrant, connected learning community that will develop 

the region’s talent pool and accelerate its move into the knowledge economy. 

Congress must not allow U.S. businesses to fall behind or be hobbled in their 

drives to be competitive entities in the global economy. 

7. Congress can support multiple demonstration projects on workforce development for the knowledge economy, including one in Alaska. A multi-department 

initiative including the U.S. Departments of Labor, Education and Commerce 

is needed immediately. 

8. Congress should authorize and fund a knowledge-management/financial entity 

to capture best practices in government contracting. This entity would foster 

innovation in developing the capacity of Alaska Native peoples and their organizations. It would identify strategic drivers, forecast various economic scenarios and trends, and review developing models for promising practices in the 

delivery of services for both the government and private sector. Most importantly, it would help facilitate expanding mentorship opportunities and breathe 

fresh air into technical assistance efforts. A focus on improved productivity and 

best practices would equal savings to the government and improved services. 

Again, a similar entity to focus on reservation specific contexts should be considered if there is interest. 

9. Congress should establish two different financial funds, a Native American 

Economies Diagnostic Studies Fund and a Native American Incubation Center 

Fund. The first fund—the Native American Economies Diagnostic Studies 

Fund—would be designed to provide comprehensive economic analyses of 

Native economies and, in turn, offer recommendations to remove or ameliorate 

inhibitors to greater investment and job creation. AFN has recently created an 

Economic Diagnostic Fund, which is a public-private partnership to begin this 

needed effort. The support of this Committee, and action by the Congress to 

ramp up this effort would be very helpful. The second development fund—the 

Native American Incubation Center Fund—would be designed to encourage the 

design and implementation of pro-growth economic policies to help stimulate 

Native economies. AFN strongly supports the underlying rationale behind the 

establishment of funds designated for these purposes and believes they would 

assist economic development throughout Alaska, and within other Native 

American communities, if they were enacted into law. 

In closing, I would like to commend the committee for their commitment to the 

issue of economic development and for looking at strategies for building healthy 

Native economies and stronger Native communities. I ask you on behalf of the Alaska Native people to consider the enormous benefits the 8(a) program has provided 

to Alaska Natives and the role it plays in fulfilling the federal government’s obligation to foster self-sufficiency and economic development for our people. The continuation of the program is essential in helping Native people gain control over our future, over our lives, and over our destinies. It is also equally important to support 

a cluster of new economic initiatives which fosters innovation, economic growth and 

shared prosperity. 

Thank you for the invitation to testify, and I welcome any questions you might 

have. 

Attachments: 

1. Matrix of Alaska Native Organizations and State and Local Governments 

2. Matrix on Native Peoples and Languages of Alaska 

3. Several maps of Alaska for comparison purposes 

Native Peoples and Languages of Alaska 

The aboriginal affiliation of Alaska Natives is derived from ancestral linguistic 

groups. The two major Alaska Native language families are the Eska-Aleutian and 

Na-Dene. Eska-Aleutian languages are further divided into Aleut and Eskimo—the 

two major languages in Eskimo are Yupik and Inupiaq. The Na-Dene family language includes the Athabaskan languages, Eyak and Tlingit. Other language families in Alaska are Tsimshian and Haida.

79

Geographic Divisions: The Inupiat live in North Alaska, along the Beaufort and 

Chukchi Sea coasts (and inland), along the Kotzebue Sound, and down to Unalakleet in the Norton Sound. The Siberian Yupik (Eskimos) live on St. Lawrence Island, while the Central Yupik can be found along the coast (and inland) of Norton 

Sound from Unalakleet to Egegik in Bristol Bay. The Alutiiq (Eskimos) are found 

primarily on the Alaska Peninsula, Kodiak Island, and along the coast into Prince 

William Sound up to Eyak. The Aleuts live primarily on the Aleutian Islands. 

Athabaskans (Tanaina, Ahtna, Ingalik, Upper Kuskokwim, Holikachuk, Koyukon, 

Tanacross, Upper Tanana, Han, and Gwich’in) are found in Interior Alaska. The 

Eyak, Tlingit, Haida and Tsimshian live primarily in southeast Alaska.


37848.006.eps 37848.007.eps
80

Background: To gain perspective, it is helpful to realize that the United States 

is about half the size of Russia, about 3/10th the size of Africa, about 1/2 the size 

of South America, or slightly larger than Brazil, slightly larger than China and 

about 2 1/2 times the size of Western Europe. Within the United States, Alaska is 

the largest state, about 2.3 times the size of Texas and about 1/5th the size of the 

lower 48 states.

Alaska has one of the largest Native populations in the United States. Our people 

make up about 22 percent of the total population in Alaska and our people are scattered across the entire breadth of the state. Our Native cultures are land-based, and 

our occupation and use of our land predates Plymouth Rock and the pyramids. 

For comparison purposes, the next map is created by overlaying the boundaries 

of the State of Alaska over Europe. As you study the overlay, you will see how many 

countries of Europe are totally engulfed, or touched within the boundaries. They include Portugal, Spain, Germany, France, Switzerland, Italy, Austria, Slovenia, Macedonia, Bulgaria, Romania, Ukraine, Hungary, Belarus, Slovakia, and the Czech Republic. If you stop and think about this for a minute, you will understand how large 

Alaska is as a land mass and how great the logistics and infrastructure needs are 

in terms of building sustainable economies. To survive and prosper in such an environment requires tremendous effort and supportive government policies.


37848.008.eps 37848.009.eps
81

The CHAIRMAN. The Chair thanks the panel for their testimony, 

and travel sacrifices to be with us today. 

The Chair will recognize first the Ranking Member from Alaska, 

Mr. Young. 

Mr. YOUNG. Thank you, Mr. Chairman. Sorry. I hit the jackpot. 

The CHAIRMAN. Yes, and you didn’t know it. 

Mr. YOUNG. Before I ask a couple of questions, thanks to the 

panel for your presentation. I would like to see everybody involved 

in this activity, and your recognition of how good the 8[a] contracts 

have worked. 

But it hasn’t been brought up, Mr. Chairman, I want to make it 

clear because this whole interest in the other committee has been 

on our 8[a]s in Alaska, Alaska Native Corporations, and for some 

reason they are saying that only they can have multiple contracts, 

and large contracts, that is not true. All Tribes are eligible for that, 

and that is why I would like to see you gentlemen at the table specifically because this is a nation issue. It is not just Alaska. Alaska 

is sort of in the forefront because they have been attacked, and I 

hope you encourage your tribes and your reservations, everybody to 

get involved because it is a great program. The government has 

been very successful. 

Along those lines, Ms. Kitka, the Alaskan 8[a] programs have or 

are eligible for unlimited negotiated direct award or sole source 

contracts from the Federal government when individuals have dollar thresholds or capped amounts. The criticism I mentioned about 

this perceived disparity has plagued Alaska Native contractors. 

Why do you think the structure is fair? 

Ms. KITKA. Why do I think that the structure is fair? 


37848.010.eps
82

Mr. YOUNG. As it is done today. 

Ms. KITKA. Well, I think that the structure is fair because of the 

nature of our business enterprises and our corporations. In our 

land claim settlement in 1971, our land and resources were put 

into corporate structures, not the reservation economy. So our 

Native people are shareholders in these corporations, and so it is 

not one person that is benefitting in the 8[a]. Many of our corporations have thousands of shareholders, and so the beneficiaries of 

the work and the small return from the work on that is shared 

among a very large group of people. 

Mr. YOUNG. That is what I wanted you to say because there has 

been some perception that because it is a Native corporation, or 

Alaska corporation or any other Native corporation, that those dollars are going to an individual when it is really being spread out 

in shareholder payments, and it is not one contractor which under 

the 8[a] program it goes directly to the benefit of that one person. 

But in reality, as we will hear from another witness today, the corporation, small village, Afognak, for instance, has 240 people. Any 

monies that is generated by a contract is dispersed between the 

240 people, not just one person. 

Ms. KITKA. Yes, Congressman Young, and in fact many of our 

corporations are expanding their shareholder roles, including the 

younger generation. Sealaska Corporation just voted to open up 

their rolls to expand to increase their shareholders, Arctic Slope, 

Nana, Inc., Doyon Limited, and others. So our corporations are 

growing in membership as our population increases. So the number 

of beneficiaries on that actually increases the Alaska Natives as 

more people are born. 

Mr. YOUNG. Good. Again, though, Tex, I liked your comment too 

about there is a different culture. There is a sharing concept, and 

this program has been very successful in sharing any gains that 

were gotten, and it is again a classic example of a success story, 

and I just hope more people participate in it. 

You mentioned, you know, added value products. The Alaskan 

and American Indian lands, native lands have huge possibilities of 

wealth of all types, and it should be used to create entrepreneurship by those shareholders and not just farmed out. I am talking 

about natural resources of all types, renewable and new. I just 

think it is a good program. 

Anyone want to comment on that, and then I am through with 

my comments. 

Mr. HALL. Congressman, just a brief comment. I appreciate your 

questions and your advocacy, but I guess my point is, to follow 

what you are saying, ITEA is multi-tribally owned by 15 Tribes 

that have an 8[a] contract with the SBA and the Marine Corps. So 

that is an example of more than one Tribe. And we started a beef 

and buffalo and foods, so we are going to need salmon. You know, 

we are going to need buffalo. We are going to need beef to enter 

into a DOD contract. I mean, one Tribe cannot supply. You need 

a multitude of Tribes and Native Alaskans, and we also have 

Native Hawaiians as part of our consortium. They might have 

some good fish there too. 

83

So the bottom line is we can fulfill a contract if we have a consortium, so you are absolutely right, and that is the direction we are 

going. 

Mr. YOUNG. One thing you have to keep in mind, we don’t say 

‘‘might’’ in Alaska. We have good fish in Alaska. 

[Laughter.] 

Mr. HALL. Got it. 

Mr. YOUNG. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Young. 

Tex, let me ask you my first question. Do the different regulatory 

criteria for ANCs and Tribal 8[a] and Native Hawaiian organization affect the operation of ITEA? You know, ITEA is a component 

of each. 

Mr. HALL. Not at all, Mr. Chairman. Not at all. And ITEA is 

multi-tribally chartered. We have a for-profit—well, ITEA is a nonprofit, but has six for-profit companies, and with the 8[a] my understanding in talking with the SBA, and I think I mentioned it 

to Bill Largent as well when they hosted a meeting, ITEA is the 

only multi-tribally owned 8[a] contractor that has an 8[a] contract, 

but it just goes to show that if it is Tribal, lower 48 Tribes, Alaska 

Natives, or Native Hawaiians, the way the government is treating 

us is that we are a Tribal 8[a], and we have the same access that 

a Tribe in Sisseton, South Dakota, has as an 8[a] company. So 

there is no difference in the way that we are being treated by the 

SBA. 

The CHAIRMAN. So as a holding company then, ITEA is not subject to the same nonFederal contracting requirements as other 8[a] 

companies? 

Mr. HALL. Yes, that is correct. 

The CHAIRMAN. OK. President Garcia, let me ask you. At the end 

of your testimony NCAI makes several recommendations on how to 

improve the 8[a] program. Do Alaskan Native and Native Hawaiians agree with your recommendations, and have you shared these 

recommendations with the SBA? If so, what are their responses to 

all above? 

Mr. GARCIA. Yes. I think, Mr. Chairman, the most important 

thing to acknowledge is the fact that we have not worked in a bubble ourselves as NCAI or NACA or any of the other alliances. We 

have shared and we have held summits. There has been a lot of 

discussions about what factors might be the most feasible to push 

forward, and all of the recommendations that we made have been 

shared with the entities that you ask of, and so the recommendations have been put forth with that light, and with that in mind, 

so that we have more flexibility, we have strong partnerships, and 

that if we work together we solve the right problems. If Mr. Kildee 

was here, I think he would appreciate that we are solving the right 

problems, and so there are two partnerships in the discussions and 

the effort that we have put forth. 

The CHAIRMAN. What can this committee do to help preserve 

these programs and expand the opportunities for those that are not 

participating therein? 

Mr. GARCIA. One of the most important things I think that would 

be helpful is for this committee to use their judicial strength or 

their jurisdiction strength for also working with other entities withVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00087 Fmt 6633 Sfmt 6602 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
84

in Congress or within other funding sources, funding mechanisms, 

projects, and grants that are available, and help promote that and 

support the efforts that we put forth, but as well, I think, to help 

the other agencies in the Federal government to understand from 

this level perspective, from a congressional and a committee perspective that there are these good solutions, and Indian Country is 

a good risk for economic development. 

To give you one prime example is that energy is a big issue in 

this country, and part of the solutions that this country ought to 

have is to go and work with the Native American community because the energy resides naturally in those regions and areas. And 

so if we partner up, then we have found partial solutions, not completely solution, but partial solution for the energy in this case, but 

there are numerous other areas that we can continue to work on 

like education, like housing, like infrastructure development, and 

those kind of things. 

So I think that it would be very, very, very beneficial to all of 

us in terms of the country and what we can provide doing partnerships. 

The CHAIRMAN. Great. Thank you. 

Chairman DuMontier, how do you respond to those that claim 

that the Native 8[a] provisions give Native contractors an unfair 

advantage over other minority contractors? 

Mr. DUMONTIER. I have a difficult time with the term ‘‘unfair’’ 

as a Tribal person, especially when it comes to economic development. I am certainly not going to lecture to this committee about 

the history of the Federal Tribal relationship or the fact that the 

United States Constitution has in it the Indian commerce clause 

that some 200 years later we are just getting around to doing 

something about. 

What I do want to say is it is not unfair what Tribal people and 

Tribal businesses are doing. What is unfair is how we are being 

judged. The lack of information that goes with that judgment, the 

concerns that are being raised by opposing parties are not founded 

in fact. They are not founded with an understanding of what is 

happening in Indian Country, and that is the unfairness or the injustice that we are dealing with here, not the 8[a] program. 

The CHAIRMAN. Beautiful response. Thank you. 

My time is up. Let me yield to the gentlelady from California, 

Ms. Napolitano. 

Ms. NAPOLITANO. You have heard some of the questions that I 

have had to the prior panel in regard to the funding that has been 

put in for assistance to minorities, especially Native Americans. Do 

you have any comments or any assistance that we can begin to 

focus on to be able to expand that assistance for economic development for training and education of the Tribe youngsters for a whole 

host of things? 

I would like your comments, sir, Mr. DuMontier, in regard to it 

has been in the act for many years and we are just now moving 

forward. How can we not only accelerate it but put the emphasis 

on without having legislative mandate, which is ignored half the 

time? 

85

Mr. DUMONTIER. I thank you, Congresswoman, for that question. 

I began my Tribal career over 30 years ago in Tribal education. So 

dealing with youth is near and dear to my heart. 

What I do want to say is this. If we want to build Tribal entrepreneurs out of this current generation for the future, then what 

we have to do is support the Tribal entrepreneurs that we have in 

this generation. And if we want to support the Tribal entrepreneurs that we have in this generation, then we also need to 

take a look at the Tribal entrepreneurs that have succeeded over 

the last 20 some years, and I am referring to our friends to the 

North, the Alaska Native Corporations. 

We talk in terms of the ANC problem or we talk in terms of the 

8[a] problem, but the reality here is what we are talking about is 

Tribal business success. If we are going to build a good future, we 

have to not penalize those who are demonstrating the success and 

give our children something to look forward to, something that we 

can encourage them with. 

Ms. NAPOLITANO. Explain penalize. 

Mr. DUMONTIER. To date, even though there have been no regulatory nor legislative changes to the 8[a], it has been referred to at 

one point in time about five years ago by the Department of Defense as ‘‘bullet proof acquisition strategy for the war fighter.’’ 

Today, it is referred to as a ‘‘loophole gone wild.’’ There is a great 

deal of fear about using the 8[a] contracting tool because of all of 

the chatter and the noise that has been created around the very 

marginal successes the Tribal people are just beginning to demonstrate in this area. 

So if a little bit of success is going to be met with opposition and 

fear, then what are our children going to learn from that, and what 

type of economy are the going to have to work and to build upon 

in the years to come? 

We need to solve this problem now and embrace what is happening instead of fearing it. 

Ms. NAPOLITANO. Could part of the solution to being able to develop strategy to help those economies be part of teaching, and I 

am talking in terms of teaching then health issue, how to address 

the alcohol issue, how to address all those issues, and have that be 

part of something that we can begin to not legislatively but 

through the administration, the agencies themselves be able to infuse more attention and funding toward that? 

Mr. GARCIA. I would like to answer that if I may. The first thing 

is that when we talk about economic development there are assumptions in the country about infrastructure already exists, and 

when you talk about Indian Country that is so far from the truth. 

So I think it is important to realize that. If we are going to start 

projects, if we are going to start programs and grants, that is just 

a step in the right direction, but we have to realize that the 

infrastructure needs to be in place. That is the prerequisite of any 

business. 

So if you talk about an infrastructure, infrastructure, I am a 

strong believer that the human infrastructure has to be in place because if you don’t have the human infrastructure, then we are looking for people coming onto the businesses that we have to hire from 

elsewhere, and so what better protocol, should we have our own 

86

protocol about building and growing our own, and that means talking about all of the opportunities that our children could have, but 

they have to be educated and we have to continue to promote that. 

So in the bigger picture as I always say, we have to look at the 

educational process and build our own and grow our own so that 

they have opportunities, but also promote that if you have economic development, if you have diversity in your economic development, then our children can come back and they can help, and they 

will then build their own, and that is part of self-determination. 

So I am proposing that that is where the partnerships within the 

other entities, Federal agencies, and any other program, that there 

ought to be a lot more flexibility when we develop grants and funding sources and other things, that the flexibility ought to be there 

so that we can integrate, and that is going to be the primary solution, otherwise it is a piecemeal approach which is the piece that 

we have been doing and it hasn’t worked. Thank you. 

Ms. NAPOLITANO. I believe Mr. Hall can answer that, please. 

Mr. HALL. Madam Congresswoman, we, at ITEA, made an assumption that if we are going to create a couple hundred thousand 

jobs that there would have to be training dollars to go along with 

it. You just can’t create that many jobs or 25,000 businesses with 

100 employees each equals that, you just can’t do that without 

training dollars. 

So I just don’t think that there are set aside that kind of dollars 

for the initiative that we at ITEA are talking about, but you are 

totally on point. When I was principal back in 1995, I don’t even 

know if it still exists, it was called School to Work Program in Education, I got talked out of education because we would get them 

into grade 9 or grade 10, and then they would have to do job shadowing. Well, there were no jobs on the reservation, so that program 

kind of went to the side. 

But now that jobs are really being focused on and being created 

in Indian Country, I think the training and those dollars have not 

come with it. So I really think there needs to be a special initiative 

that is discussed about the amount of dollars that are needed to 

create these amount of businesses and these amount of jobs. It is 

just not there. 

Ms. NAPOLITANO. Thank you. Thank you, Mr. Chair. 

The CHAIRMAN. The gentleman from American Samoa, Mr. 

Faleomavaega. 

Mr. FALEOMAVAEGA. Thank you, Mr. Chairman. It is always a 

pleasure to see our dear and close friends, Tex Hall and Mr. Garcia, to testify, and Mr. DuMontier, I didn’t have a chance to get to 

know you, and as the gentleman from Alaska had indicated earlier, 

always a real pleasure to welcome Julie Kitka to testify this 

morning. 

I would be remiss if I did not also recognize the presence of a 

dear friend, a former member of the staff of this committee, say a 

fond ‘‘ya’ah’teeh’‘ (hello) to Chris Sterns. Chris, are you there? I 

thought it was you. You picked up a little weight, but don’t hide 

from us, Chris. Good to see you. 

I am really torn by so much information and also for something 

that—I am torn by the fact of what can we do. Now, I know it 

sounds like a dreamy idea on my part to suggest that the very bill 

87

that the gentleman from Alaska introduced earlier, a domestic 

version of the Millennium Account. I think it is an excellent idea, 

and my question is why can’t we have a domestic version of the 

Marshall Plan? Why can’t we have a domestic version of the free 

trade agreements that we have with all other countries of the 

world? I mean, why can’t we do that, Mr. Chairman? 

The CHAIRMAN. Why can’t we do here what we are doing in Iraq? 

[Laughter.] 

Mr. FALEOMAVAEGA. Only $3 billion a week, we have already expended $600 billion. Anyway, I sit on the House Foreign Affairs 

Committee, and there is a program that I want to bring to the attention of our good leaders here and put it out in Indian Country. 

It is called the Overseas Private Investment Corporation. They sit 

on a $6.2 billion pot to allow American companies or to encourage 

American companies and businesses to set up shop in a foreign 

country, and in return you provide jobs for those, especially Third 

World countries, jobs, employment, business opportunities, and I 

just wanted to share that with our friends here. It is out there, and 

please, if I could be of any help, why can’t we do that? There is 

a pot in that little program that we have there. 

I wanted to ask Mr. DuMontier, you noted quite well the fact 

that our friend from GAO really didn’t have any more than just to 

suggest that we do more oversight of the 8[a] program. Could we 

put a little more teeth or maybe even more substance by way of 

amending the current law to satisfy some of the concerns that you 

raised here? 

Mr. DUMONTIER. To satisfy the concerns that I have, all that 

needs to be done is for the program as it currently exists be given 

an opportunity or given the time to work. We don’t need any regulatory or legislative changes to the existing tools that are in place. 

The successes that you have heard about today are a direct result 

of the tool that is in our place. 

Our problem here is that there are those who now want to remove that tool or diminish that tool. All we are arguing for is an 

opportunity to continue the track that we have demonstrated some 

success on. 

Mr. FALEOMAVAEGA. Can you share with us who are those who 

are trying to destroy the program? Is that a better term, destroy 

the program? 

Mr. DUMONTIER. There are political leaders in the Congress that 

have gone on the record as indicating that the sole source provisions of the 8[a] program, combined with the inadequate oversight 

of the SBA, is a very dangerous tool to have in place. 

We are Tribal people. We are first Americans. We understand 

working with the Federal government better than most people do. 

We would not do anything to harm it. We would not do anything 

to hurt the future of our children or what it is that we are trying 

to achieve with today’s businesses. We are first American. We are 

putting America first, and those people who don’t understand that 

need to learn about what we are here for. 

Mr. FALEOMAVAEGA. Mr. DuMontier, I could not say more than 

what you have suggested here after 250 years, unfortunately, because every two years we have new members who have no concept, 

88

no understanding, no appreciation of the problems with our first 

Americans. It is sad but that is the reality of the——

Mr. YOUNG. Would the gentleman yield? 

Mr. FALEOMAVAEGA. I would gladly yield. 

Mr. YOUNG. Would you please go back to my state and tell them 

that they need somebody with knowledge, and that type of thing. 

I would really appreciate it. 

[Laughter.] 

Mr. FALEOMAVAEGA. And taking my time back, I want to say to 

the gentleman from Alaska, and I really mean, sincerely mean 

what I say, I am not trying to comb his hair or whatever is left 

of his hair. 

[Laughter.] 

Mr. FALEOMAVAEGA. This is our saying in my culture. When you 

are trying to pat someone on the back don’t comb his hair. OK. And 

I am not combing his hair. I really truly, truly of the years that 

this gentleman has served, and the 20 years that I have served on 

this committee, I cannot think of a person who is more committed 

to the needs of the Native Alaskan people, and Alaska, and should 

be because that is the people he represents, and by all means. So 

I won’t say a White man. I am saying a human being, and I say 

this sincerely because, you know, when I saw the movie ‘‘Dances 

with Wolves’’ and the dream of the medicine man as he is taking 

Costner somewhere along the river, and you know what it seemed, 

the highest tribute of a Native American to live as a true human 

being, and I think that is something that we here in America 

should learn a lot more, and unfortunately, like you said, Mr. 

DuMontier, it is just really sad that not many of our fellow Americans know enough about the plight, the sufferings and the problems that our Native American community have had to endure. 

Now, our African American brothers say ‘‘We shall overcome.’’ 

You know what I say about our Native Americans? ‘‘We shall endure.’’ This is after 500 years, and you are still enduring. 

Julie, I am sorry, I didn’t mean to put you out. I just wanted to 

say thank you, this proposed bill and what you are trying to do, 

and my good friend from Alaska is trying to do. I hope that every 

member of this committee should co-sponsor this legislation because it is an excellent pilot project of being more self-sufficient 

economically, and I want to say to the members of the panel, I always say this to my own people, education is the salvation to our 

Native American people. That is the bottom line. I don’t care how 

you cut it. We have to focus on the fact that we need education for 

our Native American community. That is my humble opinion. 

I am sorry, Mr. Chairman, I have taken too much of the time, 

but again I want to commend an excellent panel for bringing all 

of this, and my good friend from Alaska. 

Mr. DUMONTIER. Sir, if I may address a portion of the 

question——

Mr. FALEOMAVAEGA. Sure. 

Mr. DUMONTIER.—about what can you do. We talked about oversight, and part of the oversight issues have been raised because 

there is no real office or person designated at SBA to provide that 

oversight, and the questions you asked earlier about data. You 

know, there is no data that is categorically the Native American 

89

side or 8[a], if you will, and I think that if the office was in place 

there would be plenty of opportunity to decipher and look at that 

data, gather the data, number one, and then to use the data to 

then further enhance all of the things that are happening in Indian 

Country relative to not just 8[a], but how it then helps economic 

development overall. 

Mr. FALEOMAVAEGA. And if we do that, then they will say, well, 

this is race preference. I mean, I get hit with that all the time too. 

Every time we try to help our Native Americans, they say, oh, it 

is race preference. It is unconstitutional. 

Mr. DUMONTIER. But there are other offices established in other 

entities like the Department of Energy. We just heard a confirmation about a person appointed to the Indian Office at the Department of Energy, and there are other agencies that have that same 

level of leadership, if you will. So it would be just a—I don’t know 

if it requires legislation, but if it does, maybe that would be one 

thing, but if it can be done administratively, so be it. That would 

be more power to us. Thank you. 

Mr. FALEOMAVAEGA. Thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Eni. And I would say the words you 

had to say about our Ranking Member where appropriate, and 

most of them true only because of the strong women that has 

always stood behind him. 

[Laughter.] 

The CHAIRMAN. In this case, sitting behind him, and that is his 

wife, Lou. 

Mr. FALEOMAVAEGA. Mr. Chairman, I second that. 

[Laughter.] 

[Applause.] 

The CHAIRMAN. The gentlelady from South Dakota, Ms. HersethSandlin is recognized. 

Ms. HERSETH-SANDLIN. Thank you, Mr. Chairman and the Ranking Member. It is a pleasure to see our guests here today. I do 

want to commend all of the folks on the panel here, and say to the 

Chairman how much I appreciate the priorities he is giving these 

issues, and the importance of economic development, and the diversity of our economies in Indian Country to give our young people 

hope because, as you know and as Mr. Hall states in his testimony, 

as we all know, the vast majority of Tribes do not benefit from 

gaming. I would agree that we all know that sitting in this room, 

but I don’t know that some of our colleagues and some of the other 

folks throughout the Executive Branch of government know that. 

When I have my constituents come back from Washington and 

tell me that it seems like they think we can solve all of these problems without the obligations and commitment to the treaties because they think that the gaming facility we have in a remote part 

of south-central South Dakota is as lucrative as gaming facilities 

elsewhere in the country, and that is what leads to epidemics of 

teen suicide throughout Indian Country for young people who feel 

they have no hope. 

So I think we have to tear down these barriers and these walls. 

We have to work more effectively to help inform and educate our 

colleagues and others across the country who are spinning and 

spreading misinformation about the 8[a] program and how it has 

90

been used, spreading misinformation about the relative wealth of 

Native Americans in different parts of the country, and the culture, 

and the importance of community, and the misunderstanding that 

has been with us since the country began, of the culture and the 

sense of community and how you structured Tribal enterprises, and 

the importance of what that gives to individual members of a certain Tribe or, as Mr. Hall was telling us, all of the different Tribes 

that are participating in the Inter-Tribal Economic Alliance. 

I just have a couple of questions on energy. Mr. Hall, could you 

explain further to the Committee the issues and the challenges 

that we are having in access to the electrical grid, especially as it 

relates to the Western Area Power Association? 

Mr. HALL. Thank you, Congresswoman. Good to see you. I really 

appreciate that question. 

At ITEA, we formed MTEC, Multi-Tribal Energy Consortium, a 

for-profit consortium, to follow what ICU, Bob Goff and Pat Speers 

have done with ICU on doing all of the feasibilities and the wind 

studies, now they are ready for development, but the number one 

problem is not having access to that grid in addition to the 

turbines. 

Turbines, you know, that is another issue, but you can always 

find or manufacture or create a manufacturing company on a reservation to manufacture turbines, but getting access to the grid, 

when it runs through many reservations, it is really disheartening. 

And so working through these initiatives through the Western 

Area Power Administration, I mean, I wish I could say it was better, but a lot of lip service, and I have wrote a letter to Senator 

Dorgan, who is the Chair on the Senate side on the energy, water 

and power, to look at legislation, and I would ask the Committee 

to consider that as well, that says that Native wind power will 

have preferential access to the transmission to the WAPA grid. 

Then we can truly help with other—Congresswoman Napolitano 

was talking about blackouts in California. We can’t take the wind 

power from South Dakota or North Dakota or Montana, Wyoming, 

wherever in Indian Country because that is what MTEC was created for, to get to the development side, and then be able to wheel 

that power out to help those states and who are in a drought as 

well. Then, of course, we are in that. So we can’t depend on the 

same types of energy sources. 

But in order to really take advantage of this wind, and I think 

it is going to be—if not bigger than gaming, just as big, and gaming 

is a $25 billion industry—we are not going to get there unless we 

have access to that grid. In my opinion, Congresswoman Herseth, 

is to have legislation, to have priority and preference to that grid. 

Ms. HERSETH-SANDLIN. Thank you, Mr. Hall, and I would just 

ask my colleagues. You know, there is access, or excuse me, there 

is room on the grid. Oftentimes when you talk about the wind resource in the Great Plains there is the issue of transmission that 

comes up, and the lack of transmission capacity to get it to the 

West coast or the East coast. There is room on grid. It is just that 

we have these barriers, and the focus on hydropower, which we in 

no way want to neglect, but we have to develop further this tremendous wind resource that can be beneficial not only to those who 

91

live in the Great Plains, but those in every part of the country if 

we break down this barrier. 

Again, I appreciate, and would just suggest, in light of the comments that were made earlier about working with other committees 

of jurisdiction, other agencies, that clearly there is, given the number of veterans, Native American veterans, the highest number per 

capita of any minority group in the country that serves in the 

Armed Services, that there clearly are opportunities as well 

through programs that benefit veterans in particular to continue to 

find partnership where they are actively involved across Tribes, 

building on the model that ITA has used. 

So thank you, Mr. Chairman. Again, I appreciate the hearing. 

The CHAIRMAN. Thank you. 

Mr. GARCIA. Mr. Chairman, if I may add just a note. 

The CHAIRMAN. Yes. 

Mr. GARCIA. I think there is already Federal law that exists that 

says that if you generate energy or power within whatever location, 

that it is law that the power companies have to buy that power 

from you. First you serve your community initial lower power 

needs. But any left over if you generate a lot of power, you can sell 

that back to the power company and the power companies are obligated to buy that power. It is just, I think, a more technical issue 

about interfacing where that power comes into the grid. 

And if interface is a problem, that is something that can be 

solved technically. I mean, its capabilities is already there. It is 

just a matter of forking up the dollars to make that interface 

happen. 

The CHAIRMAN. Thank you. The gentleman from Arizona, Mr. 

Grijalva. 

Mr. GRIJALVA. Thank you, Mr. Chairman. Just brief comments 

and one question/example. 

I appreciate the comments, Mr. Garcia’s comments about there 

has to be human infrastructure along with the capital infrastructure. That is the whole strategic way to deal with it. 

I am a member of the Small Business Administration, and the 

8[a] provision that we are talking about, sole source, I believe very 

strongly is a necessary mechanism to assure fairness and opportunity for all peoples, and I continue to believe that. 

I think also, as pointed out by one of the witnesses, that we have 

had—in my four years there we have had no oversight hearings at 

SBA relative to things that are going on within the agency, let 

alone this provision. So nevertheless, I really feel that the oversight 

hearings that need to happen there on this issue can be of great 

benefit in strengthening it, strengthening the office that is responsible for this, and doing away with a lot of misconceptions and misunderstandings that are occurring about that. Then I think the 

Small Business Administration Committee needs to pursue that as 

well. 

I want to use an example. I think, as we talk about a comprehensive approach to economic development in Indian Country, which 

is vital, that involves the human and the capital infrastructure, one 

of the things, Mr. Chairman, that I think this committee needs to 

look at as well, and we have tried to correct it in some of the approVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00095 Fmt 6633 Sfmt 6602 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
92

priations process, is the issue of our tax code and what it does and 

doesn’t do for Indian Country in terms of providing opportunity. 

On the issue of renewable energy, alternative energy, one foot 

outside the reservation that is 100 percent credit, tax credit. Inside 

the reservation, it is 50 percent tax credit. I think those are the 

kinds of adjustments that I think go a long ways to making Indian 

Country competitive in joint ventures with a private entity. If the 

private entity can go to a municipality and get 100 percent tax 

credit, they are going to go there. It is their pocketbook. 

So those are the kinds of adjustments and a comprehensive look 

at economic development, which is the tax code as well, I think 

could be beneficial. 

With that, Mr. Chairman, I really don’t have any questions unless any of the witnesses would like to comment. 

Mr. GARCIA. I have a simple comment. Thank you for the suggestions, and I think that was one of the other things that asking 

what can this committee do is to use your influence to hold the 

SBA oversight hearings or other hearings, if you will, and so thank 

you for that. 

In terms of renewable energy or tax credit, there is a gasoline 

tax credit in place in the State of New Mexico, and it has to do 

with the fuel tax. Now, if a Tribe owns a gas station, it used to be 

that the 17 cents tax that was collected used to be paid to the 

state. Well, we have mustered up enough political clout, I guess, 

and wherewithal to say that it can be a joint powers agreement 

that the 17 cents tax on Tribal lands goes to the Tribe. It doesn’t 

go to the state, and it is not even channeled to the state and then 

get reimbursed. It goes directly to the Tribal entities, and I think 

it would be the same thing in terms of energy if that becomes law. 

I don’t know that there needs to be a Federal law. If it could be 

part of a state, then that would be just as well, but I think those 

credits are workable, and I don’t really remember what the Federal 

law says about tax credit, but it ought to be offered. 

Mr. GRIJALVA. Thank you. 

Ms. KITKA. Mr. Chairman, could I respond to that? 

I think that the issue of the investment climate in our country 

needs to be revisited regularly because of all the overseas competition and what other countries are doing to incentivize business 

going to their area. I would be happy if the United States provided 

to Native Americans the incentives that we as a country provide 

to China, India, and Brazil. 

I think that one of the biggest things that we can do to increase 

economic development to benefit Native Americans is to change the 

investment climate and incentivize business creation and opportunities. In our testimony, we have outlined a number of things that 

could be done, and we would be pleased to provide legislative language for consideration of ideas and work with the Committee further on that, but we feel very strongly that the economic climate 

in the world changes so rapidly that in order to keep Native American businesses competitive with all the other global competition, 

we have just got to keep paying attention to that and focus, and 

create those opportunities and support our businesses. Like I said, 

we would be delighted to provide any backup or further work on 

that. 

93

The CHAIRMAN. Thank you. Yes, Tex. 

Mr. HALL. Mr. Chairman, I just have one final thought and recommendation, and it kind of goes back to what everybody was talking about, more of a bigger, broader report, but this is the language 

that Congressman Kildee was talking about with the small business bill I passed, and it is talking about a report on the 8[a], and 

it is due December 31, 2007. 

But I think my recommendation is that the Committee should 

consider a report on what we talked about. I mean, I learned from 

the lady at GAO that no legislation is needed, and I think that is 

why Congressman Kildee said what he said, and then with the tax 

codes that the Congressman from Arizona was talking about, the 

tax codes, he is absolutely right. There is a difference, and so that 

is why there is part of the problem there is a lack of development 

from the renewable side of it because you don’t get the same equal 

tax credit, and lack of training and more education. 

We also talked about there is misunderstandings from other 

Americans, I will just say that, that not all Tribes are rich from 

gaming, and that Tribes and the Federal contracts are less than 1 

percent. So I think a report would go a long ways toward really 

helping in that matter, Mr. Chairman, so I would encourage. And 

I know that I and our staff, and I am sure everybody else that testified here today and their staffs would be happy to help, and then 

you have the SBA, the BIA would help the Committee to put forward such a report about the real status of the economy in Indian 

Country. So I would encourage that, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Lady and gentlemen, we thank you very much for your testimony 

today. Very interesting. Very helpful to us. 

Our third panel compose the following individuals: First, Ms. 

Sarah Lukin, Director of External Relations, Afognak Native Corporation and Alutiiq, LLC, from Anchorage, Alaska; Mr. Neal 

McCaleb, McCaleb, sorry. 

Mr. MCCALEB. McCaleb. 

The CHAIRMAN. McCaleb, thank you. Chairman of the Board of 

Directors, Chickasaw Nation Industries, Incorporated, Ada, Oklahoma; and Mr. Jonathan Taylor, Research Associate, The Harvard 

Project on American Indian Economic Development, Harvard University, Cambridge, Massachusetts, and Senior Policy Associate, 

Native Nations Institute, University of Arizona, Tucson, Arizona, 

and President of The Taylor Policy Group, Incorporated, Cambridge, Massachusetts. Wow, speaking of wearing several different 

hats. 

The Chair will recognize the Ranking Member to introduce our 

first panelist. 

Mr. YOUNG. Thank you, Mr. Chairman, and it is my pleasure 

again to introduce a lovely lady that is a classic example of how 

successful 8[a] programs have been in Alaska from a small village, 

and the results, and I think her testimony will be very telling of 

how important this is to this area, and it is Ms. Sarah Lukin, who 

is a little bit nervous now, but she is doing a great job. She didn’t 

expect to be first, but we decided to put the lady first this time and 

the gentlemen second. 

So Sarah, you are on. 

94

STATEMENT OF SARAH LUKIN, DIRECTOR OF EXTERNAL 

RELATIONS, AFOGNAK NATIVE CORPORATION, AND 

ALUTIIQ, LLC, ANCHORAGE, ALASKA 

Ms. LUKIN. Cama’i. Hello, Chairman Rahall, Ranking Member 

Young, and Distinguished Members on the Committee of Natural 

Resources. 

My name is Sarah Lukin. Quyanaa. Thank you for allowing me 

the opportunity to provide a village perspective in this hearing, and 

to discuss how the 8[a] program has impacted my life, my family, 

and my community. I have a short statement to read and would 

like to submit my longer written testimony with appendix for the 

record. 

The CHAIRMAN. Without objection, all testimonies will be made 

part of the record. 

Ms. LUKIN. Thank you. Under the SBA 8[a] program, Alaska 

Native Corporations and Tribes perform government contracts and 

perform them well. The earnings from these contracts are, in turn, 

distributed to provide benefits for entire Native communities. My 

family is living proof of the positive impact and Alaska Native Corporations success in the 8[a] program has had on my village. It 

isn’t a hand out, it is a hand up. I worked hard for everything that 

I have. 8[a] gave me the fortitude to fight my way out of poverty 

to achieve my dreams. It unlocked my potential and my family, my 

community, and the local Alaskan economy have all benefitted as 

a result. 

I am Alutiiq from the Native village of Port Lions on Kodiak Island, a remote community of 250 people in the Gulf of Alaska. I 

am a shareholder of the Afognak Native Corporation, my village 

corporation, and Kodiak, Incorporated, my regional corporation. I 

serve on the Native Village of Afognak Tribal Council. There are 

no roads connecting my village to other communities. It is only accessible by small boat, small airplane, or a seasonal ferry from the 

mainland. 

This remoteness, so common among our rural Alaska Native villages and many Tribes in the lower 48 states means there are few 

economic development opportunities for our community. Like so 

many of our Native children, I was a statistic. I come from a broken family that faced substance abuse and poverty. I remember 

how ashamed I would feel when I had to buy groceries with food 

stamps and wear secondhand clothes. No one in our family had 

ever earned a degree before, but my two sisters and I had been 

given an opportunity our parents never had, one that has empowered us to overcome enormous odds and experience our own American dream. 

Scholarships from my Native corporations helped me to attend 

college. I earned a bachelor’s degree from the University of Alaska, 

Anchorage, in 2001. I worked hard, excelled in my classes while 

employed as an intern at my regional corporation, getting on-thejob skills. I graduated with a master’s degree in rural development 

from the University of Alaska, Fairbanks, in 2005. 

Today, I am the Director of External Relations for Afognak 

Native Corporation in our government contracting subsidiary, 

Alutiiq, LLC. I am a Native shareholder in a leadership position, 

95

working directly in support of our business, serving our 700 shareholders and their families. 

Both of my sisters have earned master’s degrees as well, and 

have worked for various Native organizations to improve the 

quality of life for our Native people. 

My dad had been a carpenter and a fisherman his entire life. A 

couple of years ago at age 53, after Afognak had begun to experience success in the 8[a] program, he decided to build his own sports 

fishing charter business in our village. He received Native Corporation scholarships to cover the costs for the required Coast Guard 

training and certification, and he utilized his Native dividends to 

help purchase a boat and other needed equipment. 

Today, he is focusing on expanding his business and employing 

young students, directly impacting the local village economy. 

Alaska Native Corporations and Tribes, unlike individually 

owned 8[a] companies, are responsible for providing benefits to entire communities. In addition to dividends, jobs, and scholarships, 

my Native corporations support a variety of programs to help sustain our culture and values. One of my favorite programs is the Dig 

Afognak Cultural Camps run by the Native Village of Afognak. At 

these camps are children, like my son, Kadin, are learning Alutiiq 

history, culture, language and traditional ways from our elders. 

But my village is only one of many Native communities benefitting 

from Alaska Native Corporation and travel participation in the 8[a] 

program. 

Other Alaska Native Corporations and Tribes are building community infrastructure and capacity, developing drug abuse prevention programs and management trainee programs, just to name a 

few. 

Through the contracts we successfully perform, 8[a] empowers 

our Native corporations and tries to improve the quality of life of 

our people and strengthen our communities by providing job opportunities, scholarships, dividends, social and cultural program support. 8[a] must continue so that younger generations of Alaska Natives and Natives Americans may have the same opportunity to improve their lives. 

I am one person representing many more young Alaska Native 

and Native American professionals. We are the future of our communities. We will continue to stand on the shoulders of the Native 

leaders before us, and overcome enormous odds to help shape the 

future for the next generation. We will continue to focus on economic self-determination. 

Quyanaasinaq, thank you very much for your time, and I would 

be happy to answer any questions you may have. 

[The prepared statement of Ms. Lukin follows:]

Statement of Sarah L. Lukin, Director of External Relations,

Afognak Native Corporation and Alutiiq, LLC 

Cama’i (hello) Chairman Rahall, Ranking Member Young, and distinguished 

Members of the Committee on Natural Resources. My name is Sarah Lukin. 

Quyanaa (thank you) for allowing me the opportunity to provide a village perspective in this Hearing, and to discuss how the 8(a) program has impacted my life, my 

family and my community. I have a short statement to read and would like to submit my longer, written testimony for the record. 

I am Alutiiq from the Native Village of Port Lions on Kodiak Island, a remote 

community of 250 people in the Gulf of Alaska. I am a shareholder of Afognak 

96

Native Corporation, my village Corporation, and Koniag Incorporated, my regional 

Corporation, each of which were created and mandated by the Congress through 

passage of the Alaska Native Claims Settlement Act (ANCSA) in 1971. I serve on 

the Native Village of Afognak Tribal Council and the National Congress of American 

Indians Executive Council. 

There are no roads connecting my Village to other communities. It is only accessible by small boat, small airplane or a seasonal ferry from the mainland. This remoteness, so common among our rural Alaska Native villages and many lower 48 

Tribes, means there are few economic development opportunities for our community. 

Alaska Natives cannot pursue gaming, leaving 8(a) as one of the only other viable 

economic engines available for our remote communities. The Alaska Native Corporations 2005 Economic Data Wooch Yaayi: Woven Together elaborates, ‘‘In the early 

years, the successful [Alaska Native] corporations were those blessed with an abundance of various natural resources. Now, under 8(a), the playing field is more level. 

Smaller corporations, or those with few natural resources, can compete in non-resource based industries and grow their businesses for their shareholders’ (ANCSA 

Regional Corporations Presidents & CEOs, Inc., 2007). 

Like so many of our Native children, I was a statistic. I come from a broken family that faced substance abuse and poverty. I remember how ashamed I’d feel when 

I had to buy groceries with food stamps and wear second hand clothes. No one in 

our family had ever earned a degree, but my two sisters and I have been given an 

opportunity our parents never had—one that has empowered us to overcome enormous odds and experience our own American Dream. 

Scholarships from my Native corporations helped me attend college. I earned a 

Bachelors Degree from the University of Alaska Anchorage in 2001. I worked hard, 

and excelled in my classes while employed as an intern at my regional corporation 

gaining on-the-job skills. I graduated with a Master’s Degree in Rural Development 

from the University of Alaska Fairbanks in 2005. Today, I am the Director of External Relations for Afognak Native Corporation and our government contracting subsidiary Alutiiq, LLC. I am a Native shareholder, in a leadership position, working 

directly in support of our business. 

Both of my sisters have earned Master’s Degrees and have worked for various 

Native organizations to improve the quality of life of our Native people. 

My dad had been a carpenter and fisherman his entire life. A couple of years ago, 

at age 53, and after Afognak had begun experiencing success in the 8(a) program; 

he decided to build his own sports fishing charter business in our village. He received Native corporation scholarships to cover the costs for the required Coast 

Guard trainings and certification, and he utilized his Native dividends to help purchase a boat and other needed equipment. Today, he’s focusing on expanding his 

business and employing young students, directly impacting the local village economy. His story clearly illustrates the spirit of intent for Alaska Native Corporation 

and Tribal participation in the 8(a) program—to provide the tools necessary for people like my dad to give back to our communities, in more ways than just employment with the corporation. 

My family is living proof of the positive impact an Alaska Native corporation’s 

participation in the 8(a) program has had on our village. It isn’t a hand out, it’s 

a hand up. I worked hard for everything I have. 8(a) gave me the fortitude to fight 

my way out of poverty—to achieve my dreams. It unlocked my potential: my family, 

my community and the local Alaskan economy have all benefited as a result. A 

paper, published last week by the Native Nations Law & Policy Center of the UCLA 

School of Law, titled Federal Contracting Support for Alaska Natives’ Integration 

into the Market Economy, states, ‘‘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.’’ My company, Afognak Native Corporation, works hard, providing much needed services to the federal government at good value and, as a result, it is able to 

help shareholders like me and other members of my family achieve a better future. 

I am no longer a statistic. 

Alaska Native corporations and Tribes, unlike individually owned 8(a) companies, 

are responsible for providing benefits to entire communities of Native people. Afognak Native Corporation, like most of the Alaska Native corporations, has staff dedicated to assisting shareholders find employment within our family of companies, 

and with other organizations. The staff also helps shareholders obtain the training 

and educational opportunities necessary to improve their skills and job prospects. 

Afognak recently started a formal Internship Program to provide shareholders and 

descendants with valuable work experience which in turn, will provide them with 

marketable skills. (‘‘Descendant’’ is the term used in ANCSA for shareholders children. Descendants often qualify for the same benefits in a Native Corporation as 

97

their parent[s] and may hold a different class of stock.) Interns will receive competitive pay and a full benefits package, including insurance and a retirement plan. 

To increase the quality of life for our over 700 shareholders, Afognak has been 

able to provide a substantial annual dividend, as a direct result of our participation 

and success in the 8(a) program. In 2005 Afognak paid $10.8 million in dividends, 

providing the average shareholder (holding 100 shares) with $21,000. In 2006 Afognak paid $11.1 million in dividends, providing the average shareholder with 

$21,688. In addition, Afognak has a Shareholder Permanent Fund and a Trust so 

that future generations will also benefit from today’s business success. These dividends mean a tremendous amount to our members—young families just starting 

out, elders, and families who live a subsistence lifestyle in our traditional village. 

Scholarships are a vital component for our future to ensure we have educated, experienced shareholders to lead our corporations. Karl McLaughlin, a shareholder of 

Afognak Native Corporation, is an excellent example of this. Karl began his career 

over 14 years ago as an intern at Afognak and later became a network technician. 

He climbed the ranks of the company as he finished his formal education with financial assistance from Afognak’s scholarship program. Karl graduated with a 

Bachelor’s degree from the University of Alaska and later earned additional information technology related certifications. Today Karl is a leader in our company. As 

the Senior Vice President of Information Technology for Afognak Native Corporation 

he is part of our executive team, and oversees all IT related operations for a company with 4,700 employees nationwide. 

In addition to dividends, jobs and scholarships, my Native corporations support 

a variety of programs run by local organizations to help sustain our culture and values. One of my favorite programs is the Dig Afognak Culture Camps, operated by 

the Native Village of Afognak. At these camps our children, like my son Kadin, are 

learning Alutiiq history, culture, language, and traditional ways from elders. Perpetuating Alutiiq traditions is a core value of our people, and keeps our youth grounded 

in their identity as they move forward in corporate America, strengthening our community. 

Supporting the Alutiiq Museum & Archeological Repository through financial and 

in-kind contributions is a top priority for Afognak Native Corporation. The Museum 

has implemented several programs to save and revitalize Alutiiq language, culture, 

and traditional ways. For example, the Alutiiq Museum, working closely with our 

Native corporations, has conducted numerous archeological digs to save 10,000 

years of Alutiiq history from vandalism and erosion. To date the Museum has gathered tens of thousands of artifacts. These fragile irreplaceable treasures, gathered 

for our people by our people, are truly a library. They contain incredible information 

on our ancestor’s lives. They hold the stories of our people that are available from 

no other source. Thousands of our artifacts are currently housed at the Alutiiq Museum in Kodiak and at Afognak Native Corporation’s recently constructed 1,200 

square foot museum facility in Anchorage. 

But my village is only one, of many Native communities, impacted by Alaska 

Native corporation and Tribal participation in the 8(a) program. The Native American Contractors Association (NACA) compiled data from 12 Alaska Native corporations in 2005 on the benefits they provide to their shareholders. NACA reports that 

Alaska Native shareholders received $33.6 million in dividends while $5.5 million 

was donated to various cultural and social programs and $9.5 million was awarded 

in scholarships to Native students (NACA Briefing Packet, http://www.alutiiq.com/

pdf.8a-Program-Data.pdf, last visited September 13, 2007). There are many examples of the unique ways in which Alaska Native Corporations fulfill their responsibilities to their shareholders. 

For example, Chenega Native Corporation provides essential health and insurance 

components for its shareholders, in an effort to meet the ongoing, everyday needs 

of its villagers. 

The Aleut Corporation last year provided free homes to 52 shareholder families 

on Adak Island and will be providing additional affordable housing in the near future. This new Adak community will be an excellent employee base for a local SeaBased X Band Radar Project under its Missile Defense Agency Contract. 

Ahtna Incorporated, has donated significant time, materials, and labor to the construction of a community recreation and learning center project in the Native Village of Kluti-Kaah. The recreation and learning center, once complete, will promote 

healthy living, cultural pride, and positive alternatives to substance abuse. Ahtna 

has been working with the local community to train and employ local shareholders 

to construct the center, building workforce skills and boosting the local economy. 

Although Alaska is remote, it is not isolated from the methamphetamine abuse 

epidemic sweeping the country, especially Indian Country. Arctic Slope Regional 

Corporation has taken a leadership role within their region to fight the war against 

98

substance and alcohol abuse. In partnership with local organizations, Arctic Slope 

Regional Corporation has a full-time position dedicated to fighting the War on 

Drugs. 

Chugach Alaska Corporation has an entire department committed to Shareholder 

Development. The Shareholder Development Department recently created a Succession Plan/Program that provides training, education and other skills to Shareholders 

and Descendants demonstrating ‘‘high potential’’ for becoming a leader within the 

Corporation. Programs like this are designed to incubate our own Native executives 

to lead our companies in the complex global market. As Alaska Natives continue to 

learn the skills to provide the executive leadership necessary to carry our companies 

into the 22nd century, we need to have the ability to hire experienced capable staff: 

In order to be competitive and enhance Alaska Native Shareholder and corporate self sufficiency, ANCs must have the flexibility to hire talented staff 

and executive leadership—This means that many employees and top managers will not always be Alaska Natives. Innovative executives with the social and cultural skills to navigate and serve the interests of Alaska Native 

corporate boards are rare and should be praised and compensated accordingly, if they are improving assets, profitability and the missions of serving 

and upholding Alaska Native cultural, self-determination, and economic 

goals. (Champagne & Goldberg, 2007, attached.) 

Not every shareholder or descendant desires employment with their Alaska 

Native corporation, nor should they be expected. Native corporations recognize this 

and embrace the opportunity to provide tools to help shareholders succeed in various walks of life. For example, Chugach Alaska Corporation’s Shareholder Development Department administers a Shareholder Business Assistance Program (SBAP). 

Under the annual SBAP, shareholders and descendants who have an existing business, or an innovative concept, can apply for a grant to further their plans. The 

shareholder must submit an application and a summary business plan. The applications are scored by an independent third party for merit and chance for success. 

This is an excellent way the corporation can assist shareholder owned businesses 

to encourage economic self-determination in their rural villages. Some of their recent awards went to a Fur Sewing Business, expansion of a hair salon, a construction company, a mortgage business, an equipment rental operation, a sports lodge, 

an ice cream shop, a jewelry business and a feed and grain store. 

Oolognik has, for the last few years, had a summer work program in the Village 

of Wainwright. This local program is funded from the profits generated by 

Oolognik’s participation in the 8(a) program. Through the summer work program 

Oolognik is able to employ 10 to 20 shareholders to perform various improvements 

to the corporation’s hotel, store, offices and other assets in the village. This program 

has been a great success; providing jobs, training, and payroll while improving the 

infrastructure of the local community. 

NANA Regional Corporation represents the remote northwest arctic region of 

Alaska. Their villages face extraordinarily harsh winters. Each year shareholders 

are swept away in icy waters or lost on the tundra in white-out conditions when 

hunting, fishing or traveling between villages. In an effort to save lives, the NANA 

family of companies began researching several technologies available to help with 

search and rescue operations. The three-year project was spearheaded by NANA’s 

Alaska Native interns. As a result of the interns’ work, NANA has purchased several Personal Locator Beacons (PLBs) for their 11 northwest villages. The PLB is 

a small hand-held device that villagers can check out free of charge and, when activated, transmits a signal to the Alaska Rescue Coordination Center so a rescue operation can be coordinated immediately between local, state and federal authorities, 

decreasing the chance of a fatality. 

8(a) empowers our Native corporations and Tribes to improve the quality of life 

of our people and strengthen our communities by providing job opportunities, scholarships, dividends, social and cultural program support. 8(a) must continue so that 

younger generations of Alaska Natives and Native Americans may have the same 

opportunity to improve their lives. ‘‘Continued support and guidance from SBA programs will incubate market competitiveness among ANCs allow[ing] Alaska Native 

and Congressional goals of economic self-sufficiency and greater local self-government and cultural recovery [to be achieved] more quickly and efficiently’’ 

(Champagne & Goldberg, 2007, attached). 8(a) is the shining light that completes 

the ANCSA story. 

I am one person representing many more young Alaska Native and Native American professionals. We are the future of our communities. We will continue to stand 

on the shoulders of the Native leaders before us and overcome enormous odds to 

shape the future for the next generation—our children. We will continue to focus 

on economic self-determination. 

99

1The law that grants contracting benefits to minority and economically disadvantaged businesses, popularly known as Section 8(a) of the Small Business Act is codified at 15 U.S.C. 

§ 637(a). In 1988 and 1992, Congress enacted laws specifying that ANCs shall qualify as minority and economically disadvantaged businesses so long as the corporations remained majority 

owned and controlled by Alaska Natives. Likewise, subsidiaries and joint ventures involving 

ANCs qualify, so long as a majority of ownership and control remain with Alaska Natives. Pub. 

L. 100-241, § 15, Feb. 3, 1988, 101 Stat. 1788; Pub. L. 102-415, § 10, Oct. 14, 1992, 106 Stat. 

2115. A similar provision affords a preference in defense contracting to ANCs. Section 8014(3) 

of the Fiscal Year 2000 Defense Appropriations Act, Pub. L. No. 106-79, enacted October 25, 

1999, 113 Stat. 1212, 1234. 2David E. Cooper, Alaska Native Corporations: Increased Use of Special 8(a) Provisions Calls 

for Tailored Oversight. Testimony Before the Committees on Government Reform and Small 

Business, House of Representatives (Washington, DC: U.S. GAO, 2006), 3http://ezcertify.com/certificationfacts/8afact12.asp. Federal courts have upheld the constitutionality of preferences for ANCs in government contracting, finding that the preferences do not 

constitute discrimination on the basis of race, but rather the expression of Congress’s constitutional power over Indian affairs. See AFGE v. United States, 95 F. Supp. 2d 4 (D.D.C. 2002), 

aff’d 330 F.3d 513 (D.C. Cir. 2003). For an extended analysis of this issue, see Carole Goldberg, 

American Indians and ‘‘Preferential’’ Treatment, 49 UCLA L. Rev. 943 (2002). 4See Jerry Reynolds, ‘‘Native 8a Program: The Other Economic Initiative Success Story,’’ 

Indian Country Today, June 6, 2007, p. 2 (pointing out that because of increased procurement 

demands post -9/11, ‘‘Federal procurement contracts became bigger, and personnel cutbacks at 

the SBA, charged with overseeing the Native 8a program, meant procurement officers could put 

a premium on the quick, large and legal contracts Native 8a firms alone were eligible to execute.’’). 5See AFGE v. United States, 95 F. Supp. 2d 4, 36 (D.D.C. 2002), aff’d 330 F.3d 513 (D.C. 

Cir. 2003), in which the Department of Defense argued that a contracting preference similar 

to 8(a) is justified because it ‘‘furthers the federal policy of Indian self-determination, the United 

States’s trust responsibility, and the promotion of economic self-sufficiency among Native American communities.’’ 6GAO, Contract Management: Increased Use of Alaska Native Corporations’ Special 8(a) Provisions Calls for Tailored Oversight, GAO-06-399 (Washington, DC: April 2006), pp. 67-77. 7GAO, Federal Procurement: Spending and Workforce Trends, GAO-03-443 (Washington, 

D.C.: April 30, 2003); GAO, Contract Management: Impact of Strategy to Mitigate Effects of 

Contract Bundling on Small Business is Uncertain, GAO-04-454 (Washington, D.C.: May 27, 

2004); GAO, Small Business Contracting: Concerns About the Administration’s Plan to Address 

Continued

Quyanaasinaq (thank you very much) for your time. 

Federal Contracting Support for Alaska Natives’ Integration

into the Market Economy 

Professor Duane Champagne (Sociology)

Professor Carole Goldberg (Law)

Native Nations Law & Policy Center

UCLA School of Law

Los Angeles, CA

September 13, 2007

Introduction 

The SBA (Small Business Administration), according to current law, supports 

Alaska Native Corporations (ANCs) and American Indian tribal businesses in 8(a) 

contracts, as minority and economically disadvantaged businesses. 1 In compliance 

with statutory and administrative guidelines, 8(a) government contracts can be 

awarded to minority and economically disadvantaged businesses on a sole-source 

basis without requiring multiple competitive bids. In addition, federal legislation allows American Indian and ANC firms to bid on larger contracts than other 8(a) contractors, and also allows tribes and ANCs to operate multiple 8(a) firms. 

A recent GAO (Government Accountability Office) report on ANCs and 8(a) 2 does 

not challenge the legislation or the eligibility of ANCs for 8(a) contracts, so long as 

they qualify as an ANC or non-profit and are more than 50% tribally owned. 3 And 

some personnel in government agencies find working with ANC’s in non-competitive 

contracts is often more efficient and effective than competitive contracting processes. 

4 Furthermore, government vendors often understand the government’s purpose and 

intent of providing ANCs with contract opportunities that will encourage long term 

market enterprise and self-sufficiency within tribal communities. 5 The Native 

American Contractor’s Association encourages the SBA to give more attention to the 

market enterprise goals of tribal communities, 6 and the SBA has discussed the 

issue in reports over the last several years. 7

100

Contract Bundling Issues, GAO-03-559T (Washington, D.C.: March 18, 2003); GAO, Reporting 

of Small Business Contract Awards Does Not Reflect Current Business Size, GAO-03-776R 

(Washington, D.C.: May 7, 2003); and GAO, Interagency Contracting: Problems with DOD’s and 

Interior’s Orders to Support Military Operations, GAO-05-201 (Washington, D.C.: April 29, 

2005). 8Prepared Remarks of Rep. Henry A. Waxman, Chairman, House Committee on Oversight 

and Government Reform, The Center for American Progress, Forum on a Return to Competitive 

Contracting, May 14, 2007, available at http://oversight.house.gov/documents/

20070515121402.pdf (describing ANCs’ participation as ‘‘a major procurement loophole’’). 9Small Business Fairness in Contracting Act, H.R. 1873, 110th Cong. This bill, which passed 

the House on May 10, 2007, would lower the limit on 8(a) contracts as a whole, cap the contract 

amount on noncompetitive contracts, and prohibit ‘‘bundling’’ of multiple contracts in order to 

facilitate execution by larger firms. 10 Alaska Native Claims Settlement Act, 43 USC § 1601 et seq. 11See note 1, above. 12For a history of the Act, see Robert D. Arnold, Alaska Native Land Claims (Anchorage: Alaska Native Foundation, 1978); Donald Craig Mitchell, Take My Land, Take My Life: The Story 

of Congress’s Historic Settlement of Alaska’s Native Land Claims, 1960-1971 (Fairbanks: University of Alaska Press, 2001). 13Gigi Berardi, Natural Resource Policy, Unforgiving Geographies, and Persistent Poverty in 

Alaska Native Villages, 38 Nat. Resources J. 85, 93 (1998). 14 Id. at 96. Berardi points out that ‘‘consumers served by the Four Dam Pool hydroelectricity 

projects in Alaska have benefited from $485 million in state grants and loans, equivalent to 

about $16,000 per beneficiary.’’ 15See Thomas R. Berger, Village Journey: The Report of the Alaska Native Review Commission (New York: Hill & Wang 1985); Arthur Lazarus, Jr. & W. Richard West, Jr.,The Alaska 

Native Claims Settlement Act: A Flawed Victory, 40 Law and Contemporary Problems 132 

(1976). 

Very recently, however, the House of Representatives Committee on Government 

Oversight and Reform has been questioning the desirability of ANCs’ participation 

in 8(a) contracts. 8 As part of a larger challenge to Administration use of no-bid contracts in the Iraq war and elsewhere, Congress has been considering measures that 

would curtail ANCs’ share of 8(a) contracts. 9 Whether ANCs’ current 8(a) status is 

warranted, and should continue, is the subject of this paper. 

Nature and Purpose of Alaska Native Corporations (ANCs) 

ANCs were created by the Alaska Native Claims Settlement Act of 1971(ANCSA) 

and have been modified numerous times by Congress, 10 including an amendment 

in 1988 designating ANCs as minority business enterprises and Congressional language in 1992 designating ANCs as ‘‘economically disadvantaged’’ enterprises. 11

Through this legislation, ANCs and their qualifying subsidiaries have been enabled 

to qualify for federal contracting and subcontracting, including SBA 8(a) and Department of Defense Small and Disadvantaged Business programs. 

The purpose of ANC status from the Alaska Native point of view is to assist ANCs 

in gaining competitive access and capabilities to successfully generate economic 

growth within the market economy. ANCSA created the ANCs as part of the land 

claim settlement for most of the present state of Alaska. 12 Alaska Natives gave up 

aboriginal title claims (surface and subsurface, as well as hunting and fishing 

rights) to most of the land of Alaska, constituting nearly 375 million acres. In exchange, the Natives received approximately 40 million acres (about 12% of the area 

of the state) and $962.5 million, divided among over 200 village corporations and 

12 (later 13) regional corporations. Each village was given an option to form a village for-profit corporation and most shareholders hold shares in both their local village and regional corporations. Village corporations received surface title to another 

27.6 million acres, while the regional corporations got the subsurface rights to that 

same territory. Finally, regional corporations received full title to an additional 16 

million acres. 13 While the amount of the settlement may at first seem large, it looks 

less bountiful when considered in light of the per acre payment ($3.00) and when 

compared with recent forms of Alaska assistance financed by oil revenues from state 

lands. 14

The corporate entities established to receive settlement lands and funds were an 

experiment, intended as an alternative to putting the settlement in federal trust for 

tribes on reservations. 15 Corporations were supposed to free Alaska Natives from 

oppressive and inefficient federal control, and ease their adjustment to a market 

economy. The corporate shares were to be alienable to non-Natives after 20 years, 

in 1991. Soon, however, Alaska Natives realized that the corporations would not 

achieve Congress’s goal of establishing economically viable and protective corporate 

entities by 1991. Furthermore, Alaska Natives came to view the provisions for 

transferability of corporate shares as termination in disguise, and they began to 

101

16 Charles Wilkinson, Blood Struggle: The Rise of Modern Indian Nations (New York, NY: W. 

W. Norton and Company, 2005), p. 239. 17 In 1980, Congress passed the Alaska National Interest Lands Conservation Act (ANILCA), 

which affords Alaska Natives some protection for subsistence uses on public lands, this protection appearing in the form of a preference for ‘‘rural Alaska residents.’’ 16 U.S.C. § 3101 et seq. 

ANILCA allowed the state to regulate such uses if it could do so consistent with the federal 

preference; but the Alaska courts have invalidated every state effort to introduce a rural preference. Accordingly, since 1989, the United States has been regulating subsistence hunting and 

fishing on public lands in Alaska. See Nell Jessup Newton et al., Cohen’s Handbook of Federal 

Indian Law 354-360 (Newark, NJ: LexisNexis, 2005). 18Wolfe, Robert J. Subsistence in Alaska: A Year 2000 Update (Juneau, AK: Alaska Department of Fish and Game, March 2000), p. 2.; Gigi Berardi, Natural Resource Policy, Unforgiving 

Geographies, and Persistent Poverty in Alaska Native Villages, 38 Nat. Resources J. 85, 96-100 

(1998); The Harvard Project on American Indian Economic Development, The State of the 

Native Nations: Conditions Under U.S. Policies of Self-Determination (New York, NY: Oxford 

University Press, 2007), pp. 327. 19 Alaska v. Native Village of Venetie, 522 U.S. 520 (1998). 20 As Berardi notes, ‘‘three of the regional corporations—stress the ability of their shareholders 

to keep their cultural identity and subsistence lifestyle while participating in the wage economy 

on their own terms as Native corporation employees.’’ Gigi Berardi, Natural Resource Policy, 

Unforgiving Geographies, and Persistent Poverty in Alaska Native Villages, 38 Nat. Resources 

J. 85, 102(1998). 

work with Congress to restrict that possibility. 16 The very same amendments to 

ANCSA that made ANCs eligible for 8(a) contracts are the amendments that protected settlement lands and funds from falling into non-Native hands. 

Alaska Natives have lived on the land, and the loss of land seriously constrained 

access to land and subsistence life-style. The rights of Alaska Natives to use the 

land for their economy and subsistence has been in contention almost since passage 

of ANCSA, and federal authorities have had to reassume management of Alaska 

Native hunting and subsistence rights, since they were not protected under state 

law. 17 In effect, most Alaska Natives have lost the right and access to make a living 

in the traditional subsistence economy of hunting and gathering. The forty million 

acres left to Alaska Natives by ANCSA are not enough, or appropriately positioned, 

to fully support a subsistence economy. 18

Both Congress and Alaska Native leaders created the ANCs as a means by which 

Alaska Natives could control settlement funds and land in for-profit corporations 

that would enable direct participation in the market economy. Alaska Native leaders agreed to the corporations since they wanted to avoid the paternalism and control exerted by the Bureau of Indians Affairs (BIA). Both Congress and Alaska 

Native leaders believed that the bureaucratic administration of Indian land assets 

in the lower forty-eight states did not create conditions conducive to active market 

participation in the economy and constrained management and initiative. Recent 

court cases affirm that Congress did not intend to put remaining Alaska Native settlement lands in trust with the U.S. government, 19 and in principle, the land is fee 

simple, most under management of the ANCs. ANCSA invites Alaska Natives to 

enter the market economy, and to support Alaska villages and individuals through 

increasing integration into the U.S. national market economy. 

ANCs are organized along similar principles as most U.S. corporations, with an 

elected board of directors and individual shareholders. However, Congress, in 

ANCSA and subsequent amendments, recognizes that ANCs are organized to promote the economic interests of Alaska Native villages and individuals. Most ANCs, 

through their boards, shareholders, and tribal leaders, work to engage the market 

system with the goal of maximizing the benefits to their shareholders, many of 

whom live in traditional villages and who share common traditional indigenous cultures, values, communities, and identities. Alaska Native villages retain many 

rights and obligations to self-government as they exercised from time immemorial. 

For most Alaska Natives, the ANCs are institutions for ensuring the economic, political, and cultural well-being of their communities. In this regard, the ownership of 

ANCs and their purposes are different from most private corporations in the U.S. 

market place. The for-profit ANCs are designed to enable Alaska Natives to participate in the market economy, and follow shareholder interests, which for ANCs requires efforts to enhance community well being, support self-government, uphold 

language, and assist shareholders preserve their subsistence economy while opening 

new opportunities for market participation. 20 ANCs are like municipal utility corporations, that are serving the collective interests of the shareholder community, 

not only their individual finances. The ANCs administer land, assets, and moneys 

for the benefit of Alaska Native shareholders, who value their communities, lands, 

102

21For a discussion of contemporary form of American Indian economic organization see: 

Champagne, Duane ‘‘Tribal Capitalism and Native Capitalists: Multiple Pathways of Native 

Economy’’ Social Change and Cultural Continuity Among Native Nations (Lanham, MD: 

AltaMira Press, 2007), pp. 45-65; See also Hosmer, Brian and Colleen O’Neill Native Pathways: 

American Indian Culture and Economic Development in the Twentieth Century (Boulder, CO; 

University Press of Colorado, 2004); Smith, Dean Howard Modern Tribal Development: Paths 

to Self-Sufficiency and Cultural Integrity in Indian Country (Walnut Creek, CA: AltaMira Press, 

2000). 22 ‘‘Wooch Yaayi’’ Woven Together Alaska Native Corporations, 2005 Economic Data. A Look 

at Thirteen Regional Corporations and Three Village Corporations (Anchorage, AK: ANCA Regional Corporation Presidents and CEOs, Inc., 2007), p.4. 23Scott Goldsmith, Jane Angvik, Lance Howe, Alexandra Hill, and Linda Leask Status of 

Alaska Natives 2004 (Anchorage, AK: Institute for Social and Economic Research, University 

of Alaska, Anchorage, 2004), pp. 2-14, 3-2 to 3-39, 4-2 to 4-14, 5-2, 6-2 to 6-6; Alaska Native 

Policy Center, Our Choices, Our Future: Analysis of the Status of Alaska Natives Report 2004 

(Anchorage, AK: Alaska Native Policy Center, 2004); The Harvard Project on American Indian 

Economic Development, Native Nations, pp. 326-329. 24See Letter from Sheri Buretta, President, Association of ANCSA Regional Corporation Presidents/CEOs, in MALRUGNI YUULUNI: Walking In Two Worlds With One Spirit: Alaska Native 

Corporations Annual Economic Report Based on 2003 Financial Data (Association of ANCSA Regional Corporation Presidents/CEOs, 2005), available at http://www.chugach-ak.com/pdf/

7136ANCSA2005report.pdf: ‘‘ANCs have become the main vessel for our people to compete in 

the marketplace. They are the economic engines charged with creating economic value and opportunities in our homelands, employing our people, and supporting social and cultural programs important to our people. ANCs also are engaged in the larger economic arena to capture 

new technologies, build greater capacities in management and labor, and transform the way we 

do business.’’

languages, and continued community organization. 21 Alaska Natives are relatively 

new to competitive market-based economies, and have locations and limited resources that do not position them well for advantageous participation in markets. 

ANCs, 8(a) Contracting, and the Road to Market Participation 

A primary goal of U.S. policy is that ANCs will help alleviate poverty and economic and social disadvantage among Alaska Natives. 22 Alaska Natives continue to 

endure high rates of poverty, low per capita incomes, lower levels of education, 

many health problems, and many social problems such as high suicides (three times 

the rate of other Alaskans), high rates of crime, and incarceration. 23 These conditions are exacerbated by the decline of local subsistence economies, and loss of access to land and resources. 

The path to participation in the market economy is not easy for any culture or 

community. Alaska Natives seek greater ability to manage their for-profit corporations in order to provide employment, management skills, experience with business 

partnerships and business opportunities for their shareholder-community members. 

Economic self-sufficiency is the goal of the ANCs and their shareholders. 24 This goal 

can be achieved only through active participation in the U.S. and world economy. 

Most likely ANCs will need to be full participants and competitive players in the 

market place. Most ANCs may not have local advantages that will not enable them 

to succeed easily. Rights to the most lucrative oil and natural gas reserves in Alaska 

were not retained by Alaska Natives under the ANCSA. The main economic advantage of the Alaska region is not directly in the control of the Alaska Native communities, and therefore, ANCs must use other means and less advantageous resources 

to achieve a permanent foothold in the market economy. 

How do ANCs benefit shareholders? As mentioned already, some primary concerns for ANCs are supporting village life and community, helping preserve language and culture, assisting in the transition to the market economy, protecting and 

sustaining the remnants of their subsistence economy, and promoting education, 

health, and the well being of shareholder-community members. Most U.S. corporations are not so socially and culturally responsible or have shareholders who require 

their corporation to invest in the community and future of their shareholders. Most 

U.S. corporate shareholders are individuals and are seeking to maximize their incomes. Although it is not a foreign concept for investors and beneficiaries of large 

funds, such as retirement funds or endowments, to insist that investments only go 

to enterprises that are ecologically sound, or tobacco free, or that are showing responsibility as corporate citizens, most corporations are not as thoroughly responsible for the well-being of their shareholders as are ANCs. 

In the annual report for the 13 major ANCs and three village corporations for 

2005, the corporations collectively had revenues of $5.85 billion and assets of $3.83 

billion. The major ANCs paid $88.7 million in dividends to shareholders. The corporations employed 3,380 Alaska Natives and employed 13,604 individuals in the 

state of Alaska. A total of $8.97 million was given in charitable donations, most benVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00106 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
103

25 ‘‘Wooch Yaayi’’ Woven Together, p.8; ‘‘ABMs Top 49s: Alaska’s New Gold Standard for Business’’ Alaska Business Monthly (October 2006): 82-109; Alexandria J. McClanahan, Cindy Alfred, Jason Evans, and Michael Orr ‘‘Ch’elbuja-We Share It. 2005 Alaska Native Corporation 

Report; ‘‘The Trends 100 - Alaska’s Largest Private Employers in 2006’’ Alaska Economic Trends 

(August 2006): 6-7. 26McClanahan, ‘‘Ch’elbuja-We Share It.: 6-7; GAO Report Highlights Successes & Challenges 

of Tribal Business Development Program. Press Release Native American Contractors Association, April 27, 2006. 27 In the interest of full disclosure, several ANCs recently donated a total of $25,000 to UCLA 

School of Law for scholarships directed toward students working on Native law and policy 

issues. 28The figures presented in this paragraph are based on self-disclosures by the ten regional 

ANCS and two village corporations that engages in most government contracts. All figures are 

from the year 2005. See Native American Contractors Association website on page 3: http://

www.nativeamericancontractors.org/pdf/NACA-Pktl040607.pdf Last visited on 8/29/07. 29 ‘‘Alaska Native Regional Corporations’’ Wikipedia, [http://en.wikipedia.org/wiki/Alaska—Native—Regional—Corporations] 

efiting community organizations related to shareholders, and $4.4 million was distributed in scholarships benefiting 3,228 students, mostly shareholders. 25 In 2005, 

shareholder equity for the 13 major ANCs grew 19.3 % to $2.15 billion for a growth 

total of about a third of the original ANCSA payment of $962.5 million. Revenues 

for ANCs have shown steady growth over the 1995-2005 period. The 13 major ANCs 

had total revenues of about $1 billion in 1995, about $2.8 billion in 2001, and $4.4 

billion in 2005. From 1995 to 2005, the total assets of the 13 major ANCs grew from 

about $1.6 billion in 1995 to $3.24 billion in 2005. Net income has been variable 

from year to year among the 13 major ANCS, but collectively positive from 1995 

to 2005, ranging on average in the $120 million range, with a high of about $460 

million in 2001 and a low of about $25 million in 2001. Net income for the major 

ANCs was $361 in 2005, an increase over $125 million in 2004. In 2005, 18 ANC 

regional and village corporations were among the top 49 businesses in the state of 

Alaska. ANCs claimed seven of the top ten spots, and Arctic Slope Regional Corporation and Chugach Alaska Corporation were numbers one and two. The 18 largest ANCs accounted for 11,000 jobs in Alaska and for 34,000 jobs worldwide. 26

In 2005, ten regional ANCs and two villages ANCs, Alutiiq and Chenega, were 

the most significant participants in government contracting. The twelve leading 

ANC government contractors provided dividend income to shareholders totaling 

$33,663,803. Furthermore, the same twelve ANCs provided nearly $5.5 million for 

cultural and social support to Native communities, and $889,835 for non-Native social programs. 27 School programs, Elders Trust Funds, Potlatches and intern pro- grams were supported with over $7 million from the twelve ANCs, and Native Permanent Fund programs had funds valued at $88.2 million in 2005. Government contracting through ANCs paid business payrolls in the State of Alaska totaling over 

$413.5 million, and employed 9,750 in Alaska, of which 3,170 were Native employees. In 2005, Government contracting ANCs were operating in 49 states, 2 U.S. Territories, and the District of Columbia. In the same year, 2005, the twelve ANCs engaged in 871 government contracts, and retained 31,717 employees in the United 

States. 28 ANCs are responsible corporate citizens, both Native and non-Natives are 

benefiting from employment opportunities, business growth, and charitable contributions generated by the Alaska Native Corporations. 

The thirteen original ANSCA regional corporations serve approximately 109,000 

shareholders, and more generally the entire current population of 140,000 Alaska 

Natives, as well employing many non-Natives. 29 ANCs serve a significant number 

of disadvantaged shareholders, and both policy goals of promoting competitive market entry and generating self-sufficiency among minority and disadvantaged communities can be achieved through fostering the market opportunities for ANCs. The 

SBA’s promotion of development of small businesses, including American Indian and 

minority small business enterprises should remain a primary policy goal. Nevertheless, the long term advantages of competitive and profitable ANCs and other tribal 

businesses promise to fulfill not only business development goals for disadvantaged 

minority firms, but also helps fulfill the goals and intent of ANCSA as well as many 

agreements, policies, and legislative acts aimed at the well-being of Alaska Natives 

and American Indians. 

In order to be competitive and enhance Alaska Native shareholder and corporate 

self sufficiency, ANCs must have the flexibility to hire talented staff and executive 

leadership, as well as have the ability to use partnerships and subcontracting tools 

any competitor business might use. This means that many employees and top managers will not always be Alaska Natives. Innovative executives with the social and 

cultural skills to navigate and serve the interests of Alaska Native corporate boards 

are rare and should be prized and compensated accordingly, if they are improving 

104

30Kimberly Palmer, ‘‘Congressmen Probe Contracts with Alaska Native Firms’’ Government 

Executive.Com, March 8, 2005 [http://www.govexec.com/dailyfed/0305/030805k1.htm]. 31 Berger, Thomas Village Journey: The Report of the Alaska Native Review Commission (New 

York, NY: Hill and Wang, 1985). 32See Gigi Berardi, Natural Resource Policy, Unforgiving Geographies, and Persistent Poverty 

in Alaska Native Villages, 38 Nat. Resources J. 85, 101-102 (1998). 33 : For the importance of control over economic assets and management see: Stephen Cornell 

and Joseph P. Kalt ‘‘Sovereignty and Nation Building: The Development Challenge in Indian 

Country Today’’ American Indian Culture and Research Journal 22(Summer 1998): 187-214. For 

the role of culture in Native economic development, see Ron Trosper ‘‘Mind Sets and Economic 

Development on Indian Reservations’’ What Can Tribes Do? Strategies and Institutions in 

American Indian Economic Development ed. Stephen Cornell and Joseph P. Kalt (Los Angeles, 

CA: UCLA American Indian Studies Center, 1992), pp 303-333. 34 Jake Adams is now retired as CEO of Arctic Slope Region Corporation. For the citation see: 

MALRUGNI YUULUNI: Walking In Two Worlds With One Spirit: Alaska Native Corporations 

Annual Economic Report Based on 2003 Financial Data (Association of ANCSA Regional Corporation Presidents/CEOs, 2005), available at http://www.chugach-ak.com/pdf/

7136ANCSA2005report.pdf 35David E. Cooper, Alaska Native Corporations: Increased Use of Special 8(a) Provisions Calls 

for Tailored Oversight. Testimony Before the Committees on Government Reform and Small 

Business, House of Representatives (Washington, DC: U.S. GAO, 2006), pp. 2-11; Peter Homer, 

assets, profitability and the missions of serving and upholding Alaska Native cultural, self-determination, and economic goals. Similarly, ANCs must have the capability to form partnerships and subcontracts, in order to complete jobs and make 

profits. Most corporations resort to similar tools to complete tasks that are not within their current organizational capabilities. Recent criticisms about non-Alaska 

Native CEO hired by some ANCs and the practice of partnering up to 49% of certain 

8(a) contracts will constrain ANCs in ways that will make them less competitive, 

and therefore less able to achieve their self-sufficiency economic, political, and cultural goals. All Small Business Administration and government contractors have the 

right to subcontract minority portions of government contracts, and ANCs should 

have the same opportunities. 30

While partnerships and non-Alaska Native managers may seem to constrain the 

benefits to shareholder-community members, ANCs are managed by boards and 

shareholders, who are elected to office to carry out the interests and values of the 

shareholder community. Unlike most U.S. corporations, the ANCs are understood by 

their shareholders as instruments of economic development, asset management, and 

community preservation and cultural continuity. The ANCs are more than profitmaking engines, but are the economic means to support preservation of land, equity, 

and entree into the market economy. The ANC shareholders are in control of their 

corporations, and see them as protectors of their heritages, as well as the means 

to engage in the globalized market economy of the 21st century and future. 31 Without the capability to compete in markets, Alaska Native assets certainly would be 

lost, communities impoverished, and communities and cultures destroyed. 

ANCs are a primary economic hope for Alaska Natives to gain self-sufficiency and 

economic stability that will enable their communities and cultures to flourish well 

into the future. ANC communities and shareholders have strong commitments to 

achieving their goals, and will not allow corporate managers to deter them from 

their goals. 32 ANC boards nowadays are filled with community leaders, many with 

decades of experience with the market and cultural issues facing their corporations. 

Many ANC boards chose the path of not delegating their corporations and assets 

to managers unknown to them, and decided to learn how to navigate the corporate 

and market world by first hand experience. This was a risky path, and profit margins were sacrificed for many years to ensure Alaska Native control and to provide 

time for community leadership to gain valuable first hand experience. Now many 

board members have decades of experience, Alaska Natives act as CEOs and corporate managers, and many ANC boards are elected with Alaska Native business 

persons, lawyers, and individuals with business degrees. The ANC boards are entrusted with responsibilities to ensure community assets and long term economic 

goals are preserved. Alaska Natives are in control of their corporations, and they 

see them as more than profit-making engines, but as a critical institution for ensuring the future of their cultures and communities. 33 As one report by an association 

of ANC Presidents and CEOs has pointed out, ‘‘Many Alaska Native Corporation 

leaders have become sophisticated business managers, but they all retain their respect for the cultures and many of them continue to participate in subsistence activities. Jake Adams of Barrow serves as president and CEO of Arctic Slope Regional Corporation, and he is also a whaling captain.’’ 34

A recent GAO report suggests that the SBA should exert greater oversight on 8(a) 

contracting to ANCs. 35 The report did not find any wrong doing by ANCs, but 

105

‘‘Congressional Probe of Alaska Native Corporations an Attack on Indian Country’s Economic 

Future’’ Indian Country Today March 19, 2005; Jerry Mandel, ‘‘House Committees Probe Alaska 

Native Contracting Program’’ Government Executive June 21, 2006 

(www.GovernmentExecutive.com). 36GAO, Contract Security Guards: Army’s Guard Program Requires Greater Oversight and 

Reassessment of Acquisition Approach. Report to Congressional Requesters, April 2006, page 93. 37 Havemann, Joel ‘‘Rise in Spending Tied to Contracts’’ Los Angeles Times Thursday June 

28, 2007, p. A 20. 38 ‘‘Wooch Yaayi’’ Woven Together, p. 10. 39 Native American Contractor’s Association (NACA) Annual Meeting 2006, Seattle, Washington. See [http://www.alutiiq.com/pdf/8a-Program-Data.pdf], last visited September 10, 2007. 40 Native American Contractor’s Association (NACA) Annual Meeting 2006, Seattle, Washington. See [http://www.alutiiq.com/pdf/8a-Program-Data.pdf], last visited September 10, 2007. 

Source: Eagle Eye. 41 Charles Wilkinson, Blood Struggle: The Rise of Modern Indian Nations (New York, NY: W. 

W. Norton and Company, 2005), pp. 231-240. 

rather suggests that stronger oversight be created to avoid possible future abuses. 36

Comments by the SBA were less agreeable about the report’s findings, but were 

agreeable about possibilities of increased monitoring of non-competitive contracts 

and expanding competitive contracting. 37

The SBA emphasizes that the ANC program helps fulfill Congressional intent to 

allocate 23% of government contracts to small businesses and five percent to minority and disadvantaged businesses. In recent years, ANCs incrementally have gained 

management capabilities that enable them to start competing and negotiating for 

government and 8(a) contracts. In 2000, ANCs were contracting about $265 million 

through 8(a) programs and in 2004 contracting increased to $1.1 billion. Non-competitive contracting with agencies of the U.S. government totaled $207 billion in 

2006, and $145 billion in 2005. 38 In 2005, all federal contracts awarded to ANCs 

and American Indian tribal businesses collectively totaled $3.197 billion, which represented less than one percent (0.847%) of all government contracts. 39 Total small 

business procurement in 2005 totaled $65 billion or 17.2% of total government contracts. In the same year, $11 billion in government contracts were awarded to 8(a) 

firms, and $1.9 billion or 17.2% was awarded to ANCs and tribal businesses. ANCs 

received $1.5 billion in 8(a) contracts in 2005. 40 The gain to ANCs is not coming 

at great expense to other government contractors, especially when one considers 

that 8(a) contracts with ANCs benefit thousands of Alaska Native shareholders, not 

a single small business owner. 

Conclusion 

Alaska Natives ceded large parts of Alaska to the United States and possibly trillions of dollars of natural gas and oil reserves. In return, Alaska Natives retained 

some land and less than a billion dollars as assets to develop for-profit and nonprofit regional corporations and associations. Market entry and eventual economic 

self-sufficiency of ANCs are primary goals of ANCSA and several subsequent Congressional amendments. ANC access to federal contracts helps fulfill Congressional 

mandates for government contracting aimed at providing training and market opportunities for minority and disadvantaged businesses. Alaska Native communities 

are in shareholder and board control of ANCs and are the primary beneficiaries of 

dividends, equity, and philanthropy generated by ANCs. The primary goals of ANCs 

are economic self-sufficiency, and community and cultural development and continuity of Alaska Native tribes and villages. 41 In recent years, ANCs have made 

strides toward greater participation in the market and are in a better position to 

take advantage of federal government contracts and 8(a) programs. Collectively 

ANC and tribal contracts represent less than one percent of all government contracts. While a GAO report suggests greater SBA oversight and management of contracts granted to ANCs, the report does not find any wrong doing on the part of 

ANCs. Alaska Native communities and leadership most likely will welcome SBA 

oversight and guidance as long as it fosters corporate learning and enhancement of 

market-based competitive capabilities and the efficient use of taxpayer funds, as is 

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 allow Alaska Native and 

Congressional goals of economic self-sufficiency and greater local self-government 

and cultural recovery more quickly and efficiently. 

106

The CHAIRMAN. The Chair recognizes the gentleman from Oklahoma, Mr. Cole, for the purposes of introducing our next panel 

member. 

Mr. COLE. Thank you very much, Mr. Chairman. Very kind of 

you. 

I don’t know that Secretary McCaleb particularly needs an introduction to this panel as he has been here in other capacities before, 

but I do want to note for the record some things you may not know 

about him. He was very distinguished and is a very distinguished 

business person in Oklahoma; was elected to the Oklahoma Legislature, if I recall, in 1974, and rose to the position of the Republican Leader in the House of Representatives; was a candidate for 

Governor; and along the way he persuaded my mother to run for 

office. 

[Laughter.] 

Mr. COLE. And she persuaded me to be her campaign manager, 

and she was very successful. She was in the State House and the 

State Senate. So I certainly would not be here today, because politics was the last thing I had in mind, if he hadn’t talked my mother into this stuff, and she didn’t talk me into it, she just told me 

what I was going to do. 

[Laughter.] 

The CHAIRMAN. Did that include being a Republican. 

Mr. COLE. It absolutely did. 

[Laughter.] 

Mr. COLE. It absolutely did, and if you knew her, you wouldn’t 

have argued with her either. 

[Laughter.] 

Mr. COLE. But Mr. McCaleb is just a tremendous family friend, 

and more than that, he has been an extraordinarily leader for the 

State of Oklahoma, and certainly for the Chickasaw Nation in what 

he has been able to accomplish with them and working with them. 

It is quite remarkable. So he is somebody in Oklahoma that we are 

extraordinarily proud of, and I think in Indian Country, all of us 

are proud of and appreciate his efforts over the years. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Mr. Secretary. 

STATEMENT OF NEAL McCALEB, CHAIRMAN OF THE BOARD 

OF DIRECTORS, CHICKASAW NATION INDUSTRIES, INC., ADA, 

OKLAHOMA 

Mr. MCCALEB. Chairman Rahall, Ranking Member Young, and 

Distinguished Members of the Committee, and especially to my fellow Tribesman of the Chickasaw Nation, Congressman Cole. I am 

very, very pleased to have the opportunity to be here and make a 

few remarks this morning as a preamble to the written statement 

that I have submitted. 

I am privileged to serve as the Chairman of the Board of the 

Chickasaw Nation Industries, and as the Chairman of the Chickasaw Nation Economic Development Council, and we also own a 

bank, Bank II. It is wholly owned by the Chickasaw Nation that 

I am privileged to serve on the board. 

I am here this morning to talk about the Tribal SBA 8[a]s and 

the need to provide continuity for this program as it is operated 

107

today and its effectiveness for tribally owned business and its impact on emerging economies in Indian Country. I will speak from 

my personal experience of over more than 40 years in efforts to develop self-sustaining economies in Indian Country, most of the time 

without a great deal of success, I am afraid. 

During my service to the Oklahoma Indian Affairs Commission, 

the National Council on Indian Opportunity, the President’s Commission on Indian Reservation Economies, as Assistant Secretary 

of Interior for Indian Affairs, and my current role with the Chickasaw Nation. I have had a unique opportunity to see what works 

and what doesn’t work. 

I am a civil engineer, and my early involvement beginning in 

1966 and through the seventies with Tribal governments were directed to Federally funded programs, largely for infrastructure improvement. I don’t want to demean it in any way, but for many 

years we kind of had a—the program de jour of that year for developing economies in Indian lands, related largely to infrastructure 

improvement, and it was intended to attract outside investment 

and to create jobs on Indian lands. 

While these expenditures were very valuable to architects and 

engineers like myself that worked for Tribes on those projects, unfortunately, they were ineffective in creating sustaining economies 

on Indian lands, and have not resulted in significant residual employment on reservations. 

I was privileged to serve on the President’s Commission on 

Indian Reservation Economies in 1983, and the findings of the commission after a year-long investigation and visiting most reservations, or many reservations through Indian Country led us to the 

conclusion that there essentially was no sustaining economy or financial infrastructure in the vast majority of Indian Country. 

Now, to the successes that I have observed. I have had the personal experience with the success in the Tribal 8[a] program as a 

board member of the Chickasaw Nation Industries, and its positive 

economic influence for prosperity not only for Chickasaws but also 

for non-Indians benefitting directly from employment and collateral 

economic growth. It is my considered opinion that the Tribal 8[a] 

program as it is operated today offers a great potential for self-sustaining economies in Indian Country, maybe the greatest potential 

in the long pull of any program that is advocated, principally because it doesn’t have to be near population centers like gaming 

does. It can be in the remote, most remote areas. The Tribal 8[a] 

program offers not only marketing advantages necessary to stimulate sustained effort in developing marketing skills and to compete 

in the larger marketplace, but also the continuity, and I want to 

emphasize that, the continuity to encourage Tribal investment and 

to recruit the highly skilled managers and technicians hired for 

long-term success. 

The profits of these successful enterprises has been eloquently 

said before go back to Tribal purposes, to either expand the business or they go for help or education or housing or public safety. 

So the profits are for the people. 

The SBA 8[a] program has been said very clearly before is not 

a hand out, it is hand up program, and it doesn’t cost a dime in 

extra Federal money. All the monies that go into this contracting 

108

have already been appropriated and determined by Congress to be 

for good public purposes. 

The written testimony that I am presenting deals with the GAO 

report and our recommendations for the mechanisms and how to 

comply with that GAO report. That is Appendix 1. Appendix 2 

deals with some recommendations that we have to the SBA on how 

to improve their delivery of the service. We have 38 Federally recognized Tribes in Oklahoma, less than a third of those are participants in the 8[a] program, the Tribal 8[a] program right now, and 

we have many that are in the queue to have applications in, so 

that needs to be—that barrier to entry needs to be removed. 

The opportunities for emergency of Tribal economies in today’s 

environment are excellent because of two converging economic vectors. The first is technology in communication. We can be in remote 

locations and be competitive, and that has only happened in the 

last 15 years. The second is the expanded government contracting 

program to out-source all kinds of services, and these vectors are 

converging, but the pivotal ingredient necessary to make this happen for Tribes is the Tribal 8[a] program, and I hope that we won’t 

do anything to do harm to that program as it exists, and we will 

focus on administratively improving its operation. 

Thank you for the great privilege of being here with you today, 

and I will be happy to answer any questions at the appropriate 

time. 

[The prepared statement of Mr. McCaleb follows:]

Statement of Neal McCaleb, Chairman of the Board of Directors,

Chickasaw Nation Industries, Inc. 

Good Morning Chairman Rahall, Ranking Member Young, and Members of the 

Committee, my name is Neal McCaleb and I am honored to bring you greetings on 

behalf of the Unconquered and Unconquerable Chickasaw Nation and to represent 

Chickasaw Nation Industries, Inc. at today’s important hearing on Diversifying 

Native Economies. I am an enrolled member of the Chickasaw Nation, a federally 

recognized Tribe of approximately 38,000 members located in south central Oklahoma, and I serve as the Chairman of the Board of Chickasaw Nation Industries, 

Inc. I bring today the perspective of a career spent in private sector business, service to the great State of Oklahoma, federal service to our great Nation, and now 

service to the Chickasaw Nation. 

I am also honored because the subjects we are discussing today are so critical to 

the future well being of Native peoples, their governments and economies. Indian 

Country and its Tribal Nations are now experiencing some of the benefits of the 

modern era of Self-Determination in Federal Indian Policy. While so many discussions in this modern era have focused on economic development, our focus today and 

for moving forward needs to be on developing economies. That is, rather than focusing on what federal, Tribal, and private sector policies and program mechanisms can 

provide for a single, or even a series, of good businesses, we should focus instead 

on the elements of those policies and programs that create an entire atmosphere in 

Native communities for empowering entrepreneurialism and sustaining economic 

opportunities. While increased opportunities for Tribal jobs are an important and 

valuable byproduct, the focus of the Chickasaw Nation’s businesses is on the bottom 

line, with the ultimate goal of creating market leading companies that have their 

own strong capabilities, with sustainable acumen and corporate infrastructures. 

Tribal Nations and the Federal Government must work together as partners to 

ensure that opportunities for economic success grow, and the prosperity experienced 

by Tribes now are not diminished. Tribal lands are not easy places to grow an economy. Not every Native Nation is well positioned. Basic elements of economic opportunity that exist outside of Indian Country often are not available to those within 

it. Tribes cannot tax their citizenship to create investment revenue, and lands held 

in trust, or that are trust restricted, cannot effectively be used to collateralize a 

business loan the way I could use my own home. 

109

It is also important to recognize that successes of Native people and their governments come only after they have endured the residual effects of the eras of removal, 

reservation, assimilation and termination. One should also note that certain of these 

historic eras, and the actions taken in them, were responses to the then increasing 

economic strength of Tribal nations as land owners and market participants. While 

in the past our presence served to threaten others, today we represent an important 

opportunity for partnership and shared success across America, especially in rural 

and remote America. As Tribes work toward modern prosperity and enjoy varying 

degrees of economic success in our times, we remember well what happened in those 

eras. Working together with the federal government, the private sector and our 

neighbors, will ensure that the experiences of those eras never return. In that vein, 

our charge today is to discuss those elements that will help Native economies grow 

and prosper. 

Over the past two decades under the leadership of Governor Bill Anoatubby, the 

economy of the Chickasaw Nation has experienced unprecedented levels of success 

in the history of the Chickasaw people. I believe, however, that every Chickasaw 

would agree we have much more to do in strengthening our economy. The Chickasaw Nation has built businesses, acquired firms and their expertise, and expanded 

its strategic alliances. These successful economic development and business diversification efforts provide a number of benefits which help the Tribe accomplish its 

sovereign mission to enhance the quality of life of Chickasaw people. Governor 

Anoatubby has often stated, ‘‘A nation cannot be truly sovereign until it is economically independent.’’

Creating a robust Chickasaw economy is part of the Chickasaw Nation’s overall 

plan to promote a better way of life. Chickasaw Nation business interests include 

Chickasaw Nation Division of Commerce; Chickasaw Nation Industries, Inc.; Solara 

Healthcare; and, Bank2, a full service bank. Chickasaw Nation Division of Commerce employs 6,488 workers and operates more than 57 businesses including motels, restaurants, travel plazas, gaming centers, recreation centers, convenience 

stores, two commercial radio stations, a golf course, a newspaper, and a chocolate 

factory. Chickasaw Nation Division of Commerce operates its business enterprises 

largely within the historical boundaries of the Chickasaw Nation in south central 

Oklahoma. Its successful gaming enterprises and business operations have enabled 

the Chickasaw Nation to invest in a number of new businesses. Investment in 

Solara Healthcare, which operates health care facilities in Oklahoma, Texas and 

Louisiana, is an example of business diversification efforts aimed at providing the 

best opportunity for stable long-term returns. Successful gaming enterprises have 

also enabled the Chickasaw Nation to develop other business interests, including 

Bank2, which has enjoyed rapid expansion and consistent profits since it was established in 2001. 

Chickasaw Nation Industries, Inc. is a family of companies that provides a variety 

of products and services that include professional services, construction management, manufacturing, property management, information and communications technologies, aviation technology services, records management, environmental, logistics, 

and medical and dental staffing. Currently, Chickasaw Nation Industries, or CNI, 

manages business enterprises that collectively employ more than 2,200 people, providing services to a wide variety of government entities in over twenty five federal 

agencies and a number of private firms. Currently, CNI is made up of twelve different companies that include seven federally designated Small Business Administration Tribal 8(a) companies and five non-8(a) or graduated 8(a) companies all 

working under the CNI umbrella. 

CNI was created in 1996 by a vote of the Chickasaw people. We are a federally 

chartered corporation with our charter granted to us by the Department of Interior. 

Our Board of Directors is appointed by the Governor and confirmed by our Legislators to serve a three year term and may be reappointed. All of our board members 

are Chickasaw. The long-term strategy of CNI is to continue to grow our market 

share in the federal and private sectors by delivering exceptional products and services at competitive prices. With the mission of creating commercial strength in new 

geographic and subject matter markets, CNI has offices located in Ada, OK; Albuquerque, NM; Atlanta, GA; Chicago, IL; Huntsville, AL; Marietta, OK; Norman, OK; 

Oklahoma City, OK; Purcell, OK; Ridgeland, MS; San Antonio, TX; Cape Canaveral, 

FL; and Washington DC. 

Business entities of both Chickasaw Nation Division of Commerce and Chickasaw 

Nation Industries have received national and state wide awards and acclaim, however, perhaps the most important benefit of economic development is providing more 

opportunities for individual Chickasaws to succeed. Because the Tribe is focused on 

increasing the number and quality of opportunities available, its success is measured by the number of people who seize those opportunities. By that measure, tribal 

110

economic development has been very successful, as the Chickasaw Nation now employs more than 10,400 workers. 

Another measure of success is the ultimate use of business revenues, which directly enable the Tribe to develop programs in addition to those supported by federal government programs, and to supplement federal funding of federal services 

that have seen steady reduction in several past budgets. Recently implemented 

health, education, housing and aging services developed for Chickasaws living beyond the tribal service area are one example of these augmented services. Funding 

specifically for our youth workers is another. Other examples include our elders’ 

prescription program and our medication assistance program. The Chickasaw 

Nation also operates several Community Centers and Wellness Centers and will 

soon open one of the first Sick Child Care Centers in the State of Oklahoma. 

Because it is so important to the vitality of a Tribal nation to support its people 

through the profits of its economic efforts, allow me to highlight some of the ways 

in which the Chickasaw Nation utilizes its business revenues at home. Last year 

alone the Tribe awarded $3.1 million in grants and scholarships to 4,273 students 

pursuing a higher education. This is nearly three times the amount of total Tribal 

assets in 1988 when Governor Anoatubby took office, before gaming became a significant source of income and before the Tribe stimulated its diversification efforts. 

In the areas of healthcare and wellness, according to 2006 records, the Chickasaw 

Nation Health System had more than 336,000 patient visits at the Carl Albert 

Indian Health Facility in Ada, the seat of Chickasaw Government, and the five 

health clinics located throughout the 13-county area of the Chickasaw Nation. Last 

year, more than 800,000 prescriptions were filled through six pharmacy sites. The 

Chickasaw Nation operates two wellness centers, and has a third center currently 

under construction. Through an interactive cooking show called the ‘‘Get Fresh!’’ 

program, the Chickasaw Nation Health System offers free demonstrations and 

healthy and nutritious cooking to everyone in the community. Nutrition sites and 

food distribution grocery stores ensure adequate access for all citizens in need of 

healthy food options. The Chickasaw Nation also operates partnerships with other 

programs such as the Oklahoma University Medical Center, Oklahoma Blood Institute, Juvenile Diabetes research Foundation, Dean McGee Eye Institute, Oklahoma 

State Health Department, and the National Diabetes Education Program. 

Several efforts are made to care for our elders. Healthy, nutritious lunches are 

provided free of charge for those 60 and over at 10 senior nutrition centers throughout the Chickasaw Nation. An eleventh location is also currently under construction. 

Health screenings, home health care services, transportation to medical appointments, home maintenance, an over-the-counter medication program and wellness 

education are also available to seniors. Continuing education opportunities are 

available through language and computer classes provided at all senior nutrition 

center locations. This exposure to technology has opened doors for seniors to learn 

new computer programs and hundreds have received free computers through the 

Tribe’s computer distribution program. 

The Tribe is also dedicated to its youth. More than 650 Native American youth, 

aged 14-21, participated in the Chickasaw Nation Summer Youth program, which 

is aimed at recognizing, identifying, and promoting the talents of young workers. 

The program offers paid employment in many fields for various employers. The 

Chickasaw Nation is devoted to year-long learning and 15 camps, offered free of 

charge to Chickasaw youth, keep the children’s skills sharp. Whether participating 

in our premier sports camps like basketball and baseball, our paramount trade 

camps like arts, aviation and space, or our entrepreneur academies, youth have the 

opportunity to perfect a skill or just learn something new. Nearly 900 students participated in the camps last year. 

In ensuring the vitality of our families, the Chickasaw Nation knows that children 

raised in strong families are much more likely to be happy, healthy and successful. 

In its second year, the Governor’s Family Initiative offers several methods to help 

families grow stronger, including relationship enhancement programs, fatherhood 

accountability groups, abstinence education, and single parent support groups. 7,000 

area residents and employees have participated in the classes. Our nationally recognized child support services program has collected more than $5.1 million dollars 

to ensure the financial stability of our families. The office also administers the tribal 

employment placement program that assists and monitors the progress of non-custodial parents in obtaining and maintaining employment. In support of continuing 

education, last year, numerous grants and scholarships were awarded totaling more 

than one half of a million dollars toward continuing education. 

The Chickasaw Child Care Development program provided child care services to 

587 children ages six weeks through 6th grade, focusing on physical, intellectual, 

emotional and social development. Chickasaw Nation Child Care incorporates proVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00114 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
111

grams like the Reading is Fundamental program where more than 750 books were 

distributed to 256 Head Start students. In addition, computer-driven SmartBoards 

were installed in several of our Head Start classrooms, to provide first-hand innovative technology to pre-school children. In addition, a newly added program providing 

$200 yearly clothing grants ensure that all school age children from 3-18 are 

dressed for success. 5,500 students participated in the program this past year. 

In the area of housing, the Tribe’s Division of Housing provides a variety of programs and services to assist families including home ownership, homeowner education, rental assistance, storm shelter installation and driveway repair. Since the 

program began in 2003, nearly 900 storm shelters have been installed for Chickasaw families. The innovative and national award winning ‘‘Chuka Chukmasi’’ program has assisted nearly 500 families in more than a dozen states by providing low 

down payment and flexible home loans to Chickasaw citizens and Chickasaw Nation 

employees. Since the Tribe assumed control of housing programs in 1997, more than 

440 new homes have been constructed for Native American families, compared to 

far fewer prior to 1997. 

The Tribe is also working to multiply these opportunities by striving to work with 

individual Chickasaw business owners in a number of ways. A directory of tribal 

businesses was created, giving individual Chickasaw business owners the opportunity to become preferred providers for tribal businesses. Chickasaws considering 

starting a business now have access to a number of important resources through 

the Chickasaw Nation Small Business Development Center (CNSBDC), which offers 

a number of services to aspiring entrepreneurs. These include help in developing a 

business plan, management counseling, marketing assistance, technical assistance 

and assistance in locating financing. Every individual who comes to the center receives individual attention, but that process goes beyond assistance in developing 

a business plan and completing loan applications. Staff at the center also discuss 

the advantages of the different types of businesses and provide direction in registering the business with the state. There are a number of grants, loans and loan 

guarantees available through the CNSBDC and other entities. For that reason, the 

CNSBDC works with a number of other government entities and financial institutions to make the best use of all available resources. 

These diverse business interests will enable the Chickasaw Nation to continue to 

provide a level of service that not only benefits Chickasaw citizens, but has a significant positive impact on the greater community. Dozens of businesses created by the 

Chickasaw Nation have a powerful impact on Oklahoma’s economy. Thousands of 

Oklahomans, both Indian and non-Indian are directly employed by the Chickasaw 

Nation. These jobs and businesses not only increase the Oklahoma tax base, they 

also provide additional funding for the many programs and services provided by the 

Tribe. At the current annual payroll of almost $200 million in Oklahoma, it is estimated those employees pay more than $7.5 million in Oklahoma withholding taxes. 

The nation-wide operations of Chickasaw Nation Industries and Solara Healthcare 

provide similar benefits to those states. 

Chickasaws and many other Oklahomans receive higher quality health care, education, housing and family services because of efficient, effective local administration of federal programs. Programs such as the Women, Infants and Children (WIC) 

nutrition program, Head Start early childhood education program and others serve 

all Oklahomans, enhancing the level of education, health care, family and nutrition 

services for the entire state. In FY 2005, the Tribe donated more than $1.5 million 

to fire departments, schools, churches, civic, and charitable organizations. In addition, millions of dollars are invested in Oklahoma roads and bridges through tribal 

nations. The Chickasaw Nation Roads program joined efforts with various counties 

throughout the year to complete many projects. Examples of this partnership include replacement of a dilapidated bridge and road repairs in many counties. Thus, 

the Chickasaw Nation and its economic enterprises are committed to being a good 

neighbor. 

With these experiences, and our commitment to our sole owner, the Chickasaw 

people, I now wish to address recommendations to you on behalf of Chickasaw 

Nation Industries that will enhance the ability of Tribal Nations to diversify sustainable economies. 

To set the context of our first set of recommendations, I wish to provide our prospective on the importance of the Tribal 8(a) program. CNI is created as a federal 

government contracting entity to utilize the Tribal 8(a) program of the Small Business Administration (SBA) as its primary tool of economic diversification. The Tribal 

8(a) program is one of the best examples of enlightened legislation in the history 

of federal tribal policy. It recognizes the right to act and grow as entrepreneurs, 

without sacrificing or limiting the Native government’s authority to exercise their 

sovereign powers in fulfilling their responsibility to care for their people. Some entiVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00115 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
112

ties outside the program claim that it is federal charity. We know that it is economic 

self-determination. We know that it is based on the sound premise that the federal 

dollar returns two fold—it buys a quality product or service on time at a good 

price—and it circulates in Native communities to help sustain Native economies. 

It is important to recognize that while this legislation gave our businesses significant contracting rights, it did not simultaneously confer instant capabilities. As we 

have demonstrated, we are committed to creating our own capabilities. We also 

know that with our rights come responsibilities. Native communities have assumed 

greater responsibilities to protect the integrity of the program by creating effective 

means of entering the marketplace and by creating strong internal corporate infrastructures, controls, and capabilities. 

At CNI, we have also assumed an unprecedented responsibility to others through 

our Native American Minority Empowerment Program (NAMEP) to engage in team 

relationships that share concepts and business strategies and to coordinate the communication of those concepts to federal partners, with Congress, and the non-Native, 

minority, and small business worlds. The NAMEP program is our own diversity program, and its most important mission is to respectfully encourage and assist other 

small and developing business entities as teammates and subcontractors by sharing 

economic opportunities, experiences and hard lessons learned. NAMEP is a business 

development and empowerment program, not philanthropy, and includes engaging 

teaming opportunities with Tribal and Native-owned businesses, African-American, 

Hispanic, Women-owned, Veteran-owned businesses and minority individuals. 

Thus, over the past several months CNI has engaged with a number of other 

Native business entities and national Tribal policy organizations to address the concerns that have been raised on Capitol Hill and elsewhere about the participation 

of Native entities in the 8(a) program. While these issues and recommendations are 

highlighted here, they are also discussed in further depth in the appendices to this 

testimony. 

Appendix 1 includes a series of three CNI whitepapers shared with other Native 

contracting entities in the ad hoc working group convened by the National Congress 

of American Indians, Native American Contractor’s Association, and the National 

Center for American Indian Enterprise Development, focusing on 8(a) issues over 

the past year and a half. CNI was invited by the SBA and Native entities to take 

part in these discussions and share its policy recommendations from our own experiences in that forum. This working group has also endeavored to address the concerns expressed in the April 2006 Government Accountability Office (GAO) Report 

entitled ‘‘Contract Management; Increased Use of Alaska Native Corporation’s Special 8(a) Provisions Calls for Increased Oversight.’’ (GAO-06-399). While the 2006 

GAO report focused solely on certain Alaska Native Corporations, which are different in legal composition from Tribally-owned businesses, the implications of the 

report concern the same provisions in the 8(a) program which cover Tribal 8(a) businesses. As a Tribal 8(a) entity, CNI has advocated in this forum, with virtually 

unanimous agreement from its peers, that there be recommendations shared with 

the SBA for policy changes in the areas of subcontracting, mentor-prote ́ge ́ arrangements, and reporting—all with the goal of strengthening and honoring the goals of 

the 8(a) program. 

Regarding subcontracting requirements, it is important to note that the 8(a) business entities of Native Hawaiian Organizations (NHOs), Alaska Native Corporations 

(ANCs) and Tribes, collectively referred to here as Native Concerns, are significantly 

different from traditional small businesses. Tribal business entities exist for the economic development of their Tribal governments, as opposed to individual small business owners, who operate for individual wealth. NHOs exist for the benefit of their 

members, and ANC business entities exist for the benefit of their shareholders. In 

spite of the importance of the success of Native Concerns to the public, it is also 

important to assure traditional small businesses that their access to procurement 

opportunities is not negatively impacted by the special provisions applicable to 

Native Concerns. 

The resulting recommendation embodied in Appendix 1 involves a new requirement that Native 8(a) business entities receiving a sole-source contract in excess of 

Twenty Million Dollars ($20,000,000) over the life of the contract, including option 

years, would be required to submit and negotiate a subcontracting plan that separately addresses subcontracting with small business, veteran-owned small business, 

service-disabled veteran owned small business, HUBZone small business concerns, 

small disadvantaged business, and women-owned small business concerns. CNI believes that an appropriate response to the issue raised by traditional small businesses—that the lack of a cap on Native Concerns negatively impacts their contracting opportunities—is to exclude Native Concerns from the small business exVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00116 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
113

emption in circumstances where the sole-source contract is of a size normally only 

available to other than small businesses. 

It is important to note that while CNI’s original recommendation reflected in Ap- pendix 1 was at a $10 million requirement level, the collective working group agreed 

that a $20 million requirement level would be more appropriate for those Native 

business entities that may not have as much experience in the program or with developing subcontracting and teaming relationships, while simultaneously charged 

with developing their own capabilities and corporate infrastructures. While Native 

Concerns acting on behalf of hundreds of thousands of Tribal members have only 

just begun to penetrate a previously unreachable federal marketplace, this proposal 

will effectively respond to these perceived issues, while balancing the interests of 

all of SBA’s constituents. 

Regarding the role of Native Concerns in mentor-prote ́ge ́ arrangements, CNI recommends an approach that recognizes the SBA Mentor-Prote ́ge ́ program is designed 

to encourage large business Mentors to provide various forms of assistance to small 

businesses. These include the provision of technical assistance, management assistance, financial assistance in the form of equity investments and loans, subcontracts 

awarded to the Prote ́ge ́ by the Mentor, or assistance in performing prime contracts 

with the Government in the form of joint venture arrangements. Whether the 

Prote ́ge ́ is a traditional small business or an Alaska Native Corporation, a Tribally 

owned entity, or a Native Hawaiian Organization, the goal of the Mentor-Prote ́ge ́

program is to enhance the capabilities of the Prote ́ge ́ and to improve their ability 

to successfully compete for and perform government contracts. 

Past experience, however, shows that Mentors (especially very large Mentors) approach traditional small businesses differently than they approach Native Concerns. 

This difference is due to the ability of Native Concerns to obtain larger contracts. 

Consequently, some Mentor firms primarily seek a relationship with Native Concerns contemplating the ability of participating in and performing large sole source 

contracting opportunities. This creates an environment wherein the Prote ́ge ́ is at 

risk to be a mere vehicle for the Mentor to obtain a contract that it would not otherwise have been entitled to receive. Without Prote ́ge ́ performance requirements 

under the program, the Mentor is not motivated to grow the Prote ́ge ́’s participation, 

and therefore not motivated to provide mentoring assistance. 

In response to these concerns, CNI recommends that a Prote ́ge ́ in a Joint Venture 

should be required to increase their level of performance annually over the term of 

the contract, including option years. Thus, at each anniversary of the contract, the 

Prote ́ge ́ would be required to increase its performance in increments of 10%, until 

the Prote ́ge ́’s percentage of work is no less than 60%. This proposal would meet the 

objectives of ensuring that sole source contracts awarded to 8(a) Mentor-Prote ́ge ́

joint ventures are not abused as mere pass-through contracts for large businesses. 

And by limiting the required percentage of work to be performed by the Prote ́ge ́, 

the Mentor firms will still see incentives to participate in the program. 

The final policy recommendation embodied in Appendix 1 involves reporting by 

Native Concerns. The 2006 GAO Report asserted that SBA is not providing adequate oversight to assure that Alaska Native Corporation Prote ́ge ́s and other firms 

are performing an appropriate amount of work, are overly subcontracting work, and 

not tracking contract modifications, change orders, and changes in scope. The report 

indicates that failure in oversight of the SBA is in part due to a lack of information 

from government agencies, and that the agencies didn’t provide the appropriate information despite Memorandums of Understanding between the SBA and the agencies, and due to the fact that some data are simply not tracked at this time. 

CNI’s recommendation is that Native Concerns should be required to supply reports to the SBA to demonstrate compliance with the spirit and letter of the 8(a) 

program. This would ensure that Native Concerns are performing at the appropriate 

level or making progress to the appropriate level, thus benefiting the 8(a) participant as the Program intended. Annual reports provided pursuant to existing regulatory requirement regarding the level of attainment of the Mentor-Prote ́ge ́ program 

performance and direct award contracts, and semi-annual reports to SBA upon 

modifications, change orders, and changes in scope, would achieve this and demonstrate compliance. 

In addition to the above recommendations pertaining to broader 8(a) policy issues 

addressed in national forums and Native working groups, I also wish to highlight 

recommendations CNI recently addressed directly to the SBA pertaining to current 

operations of our own businesses and our specific experiences under the agency’s administration of the program. These involve issues that we have experienced to be 

inconsistently administered with the SBA from office to office or, in some instances, 

within the same office. We believe the inconsistency arises primarily from a lack of 

clear standard operating procedures or a lack of defined rules, leaving personnel 

114

with apparent discretion, hazarding arbitrary actions. Without stated rules, standard operating procedures, or a willingness to follow established SOPs, it becomes 

more difficult for a Tribal participant to operate within the program. 

It is important to note at the outset of these concerns that earlier this month 

CNI’s General Counsel met with the SBA’s General Counsel on these matters and 

significant agreement was had upon the perspectives and positions of CNI. CNI is 

encouraged by the receptivity and agreeable, solution-oriented approach of the SBA 

General Counsel and offers these only to be illustrative of issues and reveal a need 

to give SBA personnel clarity and direction as they attempt to oversee and administer this important program. 

Attached as Appendix 2 is a memorandum addressed to Mr. Bill Largent, the 

National Director of SBA’s Office of Native American Affairs, that outlines specific 

actions of the SBA that amount to barriers to entry and growth in four areas. These 

include significant delays in actions regarding the approval of change of managers, 

an unnecessarily repeated requirements of proof of Tribal status as ‘‘economically 

disadvantaged,’’ reluctance or onerous requirements for approval of secondary North 

American Industry Classification System (NAICS) codes requested for the diversification of our 8(a) business entities, and a specious requirement not contemplated 

by the 8(a) certification application rules requesting submission of tax returns by 

all directors and the Chief Executive Officer (CEO) of the Tribally owned holding 

entity, CNI, which owns the applicant company. 

With respect to the economically disadvantaged status of the Tribe, in CNI’s last 

three applications for 8(a) certification, we have been required to provide the Chickasaw Nation’s financial statements. Upon inquiry, we were informed that SBA had 

a right to look at them ‘‘to determine if the tribe needed the 8(a) program.’’ As a 

Tribe that recognizes the potentially limited nature of gaming as its future principal 

source of revenue, the Chickasaw Nation has aggressively pursued business development outside of gaming. The 8(a) program has proven a very effective diversification 

tool, as stated above. It is unsettling to think that gaming revenue, the very activity 

the Tribe is trying to replace, could cause the loss of a valuable economic development tool in that effort. Tribal economies should not be punished for their own successes. Markets vary and conditions change. Lasting corporate capabilities created 

through the 8(a) program will ensure a sustainable economy. 

Regarding the approval of change of managers, we have experienced significant 

delays in the approval of managers named to replace departed managers of participant concerns. With respect to the need for secondary NAICS codes, only some but 

not all SBA regional offices are supportive of the participant’s business development 

opportunities and recognize that products and services offered by a business may 

change during its life in the program due to market forces, strategic decisions, or 

economic conditions. In recent applications filed by companies wholly owned by CNI, 

the SBA has required that the last three years tax returns of the Directors of CNI 

and the CEO of CNI be submitted, along with proof of payment of taxes. Historically, only the manager of the LLC applicant was required to submit returns. This 

requirement is burdensome, time consuming, and for no apparent purpose. 

Again, CNI is encouraged by its recent interaction with SBA on these issues. As 

these concerns relate directly to the ability of our businesses to continue their development and diversification through the use of the program, we look forward to continued coordination with SBA and ultimate solutions on these matters. CNI is committed to working directly with the SBA to ensure that the goals and prerogatives 

of the 8(a) program receive compliance and are honored. 

In addition to providing perspectives and recommendations on the important 8(a) 

program, I want to highlight another important piece of proposed legislation that 

would support the diversification efforts of Tribes. 

H.R. 1954 was introduced earlier this year in this Committee and is designed to 

allow Tribal governments to transfer the credit for electricity produced from renewable resources to their development partners. This ability would seize upon the significant developments in Public Law 109-58, the 2005 Energy Policy Act, and especially Title V of that act, entitled Indian Energy. The 2005 Energy Policy Act shifted 

the paradigm of Indian energy from that of royalties to ownership and operation. 

Currently, because of the tax exempt status of Tribal governments, if a Tribal entity 

seeks to enter into an outside partnership on any renewable energy project occurring on Tribal lands the effort cannot benefit from the production tax credit for renewable resources as a private landowner would. The Tribe also cannot transfer its 

portion of the credit to its taxable partners. A disincentive to locate such projects 

on Tribal lands thereby results, as a non-Tribal partner may receive half of the 

credit it would receive if locating on private lands. 

H.R. 1954 would simply amend the Internal Revenue Code of 1986 to allow Tribal 

governments and their subdivisions to transfer their share of the production tax 

115

credit to their taxable partners in joint venture, renewable energy projects on tribal 

lands. This would be a significant opportunity for Tribal economic enterprise, and 

the sharing of knowledge and strategic growth between Tribal and private sector entities. While the Chickasaw Nation is not a significant energy resource Tribe, it does 

have significant corporate capabilities that could bring strategic value to many parts 

of the chain of operations and services required for successful renewable energy 

projects. Like so many other Tribes and Tribal businesses nationwide, CNI has considered many renewable energy projects that have varying degrees of potential success, but all share one common challenge: funding. The ability to transfer tax credits 

could significantly increase the value proposition for many of these opportunities for 

Tribes on a national scale. As concerns for the environment and the need for fossil 

fuel alternatives mount, the importance of such renewable energy projects continues 

to increase nationwide. Congress and this Committee should recognize that Indian 

Energy can play a prominent role in this process, and that passage of H.R. 1954 

would also support the continued diversification of Tribal economies. 

In closing, Chairman Rahall, Ranking Member Young and Members of the Committee, I want to reiterate that as this Committee moves forward to further 

strengthen opportunities for economic development in Indian County and stimulate 

the diversification of Tribal economies, it should focus on the programs and conditions that create an entire environment of entrepreneurialism and opportunity in 

Native communities, rather than simply what elements can make a single success 

or provide for a particular motivation. While Tribal jobs and increased opportunity 

for advancement are valuable and important goals, and indeed exist among the core 

missions of Tribes, they should be viewed as a beneficial byproduct of healthy commerce and part of a overall sustainable Tribal economic system. Certain federal programs, such as the 8(a) program, are stalwart programs in this effort, assisting 

Tribal businesses in achieving actual capabilities and contract performance experience. This program must be honored and refined. 

As the Chickasaw Nation continues to work towards an ever more robust economy 

it is motivated by the need to move forward on several different fronts at once. Caring for its citizens, providing a future for its youth, working with the small businesses of its people and those of similarly disadvantage communities, and endeavoring to ensure that national policies keep its important capabilities and opportunities 

strong and viable—these will continue to be the motivations of the Chickasaw 

Nation. 

Thank you. 

[NOTE: Attachments to Mr. McCaleb’s statement have been retained in the 

Committee’s official files.] 

The CHAIRMAN. Thank you. Mr. Taylor. 

STATEMENT OF JONATHAN TAYLOR, RESEARCH ASSOCIATE, 

THE HARVARD PROJECT ON AMERICAN INDIAN ECONOMIC 

DEVELOPMENT, HARVARD UNIVERSITY; AND SENIOR 

POLICY ASSOCIATE, NATIVE NATIONS INSTITUTE, 

UNIVERSITY OF ARIZONA 

Mr. TAYLOR. Thank you, Mr. Chairman and Ranking Member 

Young. It is my privilege to speak to you today about diversifying 

American Indian economies and Alaska Native economies. 

As you mentioned in the introduction, I wear several different 

hats, and your staff has asked me to appear here to deliver testimony as an economic researcher working for the Native American 

Contractors Association, and also as a researcher with The Harvard Project on American Indian Economic Development, and with 

the Native Nations Institute. Those are two distinct roles, and I 

need to keep them distinct, and I have submitted to separate pieces 

of testimony. 

One thing I cannot do is try and squeeze both of those into five 

minutes. I am not an auctioneer and I cannot talk as fast as an 

auctioneer. So let me begin, and if we run out of time, we will go 

to questions about either piece of testimony. 

116

I think it is important to recognize that the outset that there are 

distinguishing features of Tribal and 8[a] companies that distinguish them from the other 8[a] companies. 

First of all, their ownership structure is unique. They are owned 

by whole communities. All Alaska Natives of a certain age in 1971 

participate in Alaska Native Corporations and Tribal enterprises. 

In order to qualify for the exemptions under the 8[a] program, they 

have to be owned by the Tribe. It cannot be owned by an individual 

entrepreneur in the Tribe. 

These entities, the ANCs and the Tribal corporations face unique 

social and structural burdens. First, the social burdens. 

Next slide, please. 

In Figure 3 of my report, which you can find on page 11, I give 

you the Census data that you are familiar with showing that 

Native Americans as a group in the U.S. Census are the poorest 

identifiable group, and that the poverty rates that Native Americans experience are twice the U.S. average, on the reservation they 

are more than three times the U.S., and in Alaska they are twice 

the Alaska State poverty rate. 

These enterprises also face unique structural burdens. The corporate governance of tribally owned enterprises is complicated. We 

all know that corporate governance is complicated, just as the 

shareholders of Enron or the people coping with Sarbanes-Oxley. It 

is even more complicated when a government owns the business. 

And the arrangement under the Alaska Claims Settlement Act is 

a shareholder arrangement, but it is not exactly the same as the 

corporate governance of publicly traded or even privately held 

shareholder corporations. 

There are structural impediments to performance in those companies as well, and Congress has seen fit to make corresponding 

exemptions, exemptions from the affiliation and from the sole 

source requirements because of these unique social burdens and 

structural burdens. 

Next slide, please. 

We have talked a lot about the size of this program. The $1.9 billion in Tribal and ANC 8[a] contracting is a half a percent of all 

procurement. It is 1.3 percent of all sole source contracting. It is 

2.9 percent of all small business contracting, and it is 17 percent 

of all Section 8[a] contracting. 

Next slide, please. 

We have also heard a lot about the trend, and here we have all 

American Indian and Alaska Native contracts, that is, 8[a] and 

non-8[a] contracts to all Native entities over the Fiscal Years 2000 

to 2005, and you can see this expansion that the GAO witness 

talked about. Notice though that the proportions of business available for competition and not available for competition have not 

changed. 

Next slide, please. 

Those dollars, all of them together, all of those different colors 

represented as a red region on this graph are a small fraction of 

the total. Procurement generally has been growing rapidly. 

Next slide, please. 

And when we put 8[a] contracting in context with all small business, woman-owned business, small disadvantaged business, disVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00120 Fmt 6633 Sfmt 6602 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
117

abled veteran, and all [a] business, we can see that it is a relatively 

small piece of the pie. 

Now, let me stop here and say there is one thing that is not on 

this graph, and that is the gap between what I understand to be 

the legally required amount of small business procurement, that is, 

23 percent of the total $378 billion, that would imply that this 

small business bar should be an additional $21.8 billion higher. If 

my understanding is right, that is 34 percent more procurement 

should be going to small business than already does. There, it 

seems to me, is the opportunity for greater small business development. 

Next slide, please. 

Regionally, the 8[a] business concentrates—excuse me—all 

Native procurement concentrates in Alaska, it also concentrates in 

Virginia and Maryland as you would expect, but it also concentrates in states like Oklahoma, New Mexico, and Washington 

where there are large numbers of Tribes and large number of 

Indians proportionally. 

Sarah Lukin has done a very eloquent job of demonstrating what 

this means to Native communities. This is evidence of irreversible 

change in Indian Country, and I won’t belabor the point because 

she has made it so eloquently, but this happens many times over, 

thousands upon thousands of Indians are owners as shareholders 

or owners as citizens of Tribes, millions of dollars go to payroll, to 

shareholder distributions, to social and cultural and economic investment. 

I would conclude my remarks with a quick observation that this 

program is exemplary in my mind in traveling around Indian 

Country for the way it rapidly defuses the techniques and the professional skills of running businesses. 

So Mr. DuMontier, when they were getting going, it learned a 

great deal from Arctic Slope Regional Corporation. He went on to 

teach corporations in North Dakota how he had been successful, 

and that is in my mind exemplary for Federal programs. There is 

a long litany of Federal programs that have not worked. 

Thank you. I will entertain any more questions. 

[The prepared statement of Mr. Taylor follows:]

Statement of Jonathan B. Taylor, Research Associate, Harvard Project on 

American Indian Economic Development, Harvard University, and Senior 

Policy Associate, Native Nations Institute, University of Arizona 

Thank you, Chairman Rahall and Ranking Member Young, for the invitation to 

appear before you. My name is Jonathan Taylor and I am a Research Associate of 

The Harvard Project on American Indian Economic Development and a Senior Policy Associate with the Native Nations Institute for Leadership, Management and 

Policy, part of the Morris K. Udall Center for Studies in Public Policy at the University of Arizona. 

The Challenge 

As you are aware, American Indian and Alaska Native economic fortunes have 

lagged substantially behind those of other Americans. On reservations and in remote rural Alaska, especially, unemployment is high, poverty is high and incomes 

are low. Declining federal funding, remote markets, challenges attracting educated 

members, barriers to capital investment, and a host of other problems frustrate 

Native economic growth. 

Nonetheless, bright spots are visible in and around Indian Country. There are 

places where natural resource companies support education programs. There are 

places where tourism attracts customers to on- and off-reservation businesses. There 

118

are places where tribes manage, regulate, and adjudicate commerce on-reservation 

better than other governments do. Such was the case before the advent of widespread casino development at the Colorado River Indian Tribes’ Farms, at White 

Mountain Apache’s Sunrise Ski Resort, at NANA’s Red Dog Mine, and at Mississippi Choctaw’s Chahta Enterprise. Such has also been the case after casinos 

gave tribes additional sources of funds and lowered their costs of capital. 

By tribal design, these economic endeavors aim to loose the bonds of federal 

spending on reservation economies. In the 1970s federal Indian spending rose with 

the Great Society and other programs, and in the 1980s it fell with the Reagan 

budget cuts (dotted red line in Error! Reference source not found.). At the time, 

much of reservation economic life depended upon federal grants and contracts, and 

in synch, Indian incomes rose by 49% in the 1970s, but then dropped by 8% as federal funds retreated in the 1980s (shaded bars in Error! Reference source not 

found.). In the 1990s, by contrast, federal Indian spending stagnated and fell behind 

U.S. spending per capita (solid line in Error! Reference source not found.), yet 

Indian incomes grew by a third—three times faster than the U.S. income growth 

rate. Interestingly, Indian incomes grew on reservations that did and did not witness the development of casino gambling.

As welcome as these gains were for Indian Country, Indians on reservations still 

faced a very large income gap. The gray bars of Error! Reference source not found. 

juxtaposed in Error! Reference source not found. against U.S. averages show Indian 

incomes barely reached past one-third the national average in 1999. Even at the 

hopeful pace of growth witnessed in the 1990s, it would take fifty-five years for the 

gap to close, and sustaining that relatively rapid rate of growth for the next half 

century will be a challenge.

Indians confront these income gaps with weak federal support. Notwithstanding 

federal treaty obligations and trust responsibilities to advance tribal well-being, the 

U.S. Commission on Civil Rights finds federal funding to be inadequate and below 

what is available to non-Indians. 1 The Commission examines a range of domains 

of Indian life including education, crime, and health, among other things, and finds 

funding gaps across the range. A particularly stark comparison of health care exVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00122 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY

37848.011.eps 37848.012.eps
119

1This section draws heavily from work that Kenneth Grant and I wrote in (Grant & Taylor, 

2007). 

penditures is reproduced in Figure 1 and shows Indian Health Service medical funding to be about half of what federal prisoners receive. Given that in Indian Country 

many social and economic problems have accumulated over time and reinforced each 

other, one might reasonably expect that reaching social and economic parity with 

the rest of the U.S. would require greater than average federal funding, not less.

Thus, the steep challenge ahead for reservation economies entails accelerating the 

pace of growth so that the income gap closes in fewer than fifty-five years, all while 

contending with lower-than-average federal support. The task will require spreading 

the nascent economic success in Indian Country across industries and across geography. To drive growth, Native economies have relied upon natural resource endowments, upon powers of regulation and taxation, and recently, upon procurement advantages. There is still some room for growth under each of these strategies, but 

in many reservations, there is not enough to accommodate the number of highschool age workers entering the work force each year. Further growth will have to 

come from competing head-to-head in value-adding industries and from freeing private sector initiative, especially on large reservations. Success will need to spread 

geographically, too. Just as mineral resource wealth is concentrated at Crow or in 

the NANA region of Alaska, so too is success in gaming, gasoline retailing, and cigarette manufacturing concentrated at Ft. McDowell, Winnebago, and Seneca. Economic growth needs to spread over the map as well as through industry sectors. 

So how do we deepen and extend the economic success that has been achieved? 

My colleagues and I at the Harvard Project on American Indian Economic Development and the Native Nations Institute have been learning from Indian Country that 

there are three essential keys that distinguish tribes in takeoff from tribes that 

struggle with economic development. First, successful tribes assert, defend, and use 

their sovereignty. If tribes make the key decisions about development, those decisions tend to better reflect local conditions, preferences, and opportunities; consequently, those decisions yield better tangible results. Second, successful tribes 

have strong institutions that: a) resolve disputes fairly; b) manage the boundary between business and politics effectively, and c) administer the day-to-day life of the 

tribal government efficiently. Without working institutions, economic development 

can only last a cycle or two of investment, at which point the costs of doing business 

on the reservation exceed the value and capital flees elsewhere. Third, these institutions of governance must match local norms of what is and is not appropriate government. Without a match between indigenous culture and institutions, the life of 

government becomes riven with questions of legitimacy and progress halts. Successful Indian nations have in common that they turned away from federally sanctioned, 

project-based, and grant-funded approaches and instead built governing systems 

that foster development. I will not belabor the full spectrum of these points because 

my colleagues have covered them in detail before Congress. 2 Instead, I want to narrow the focus to one issue in particular: managing the boundary between business 

and politics. 

Managing Business & Politics 1

Imagine the government owns a business that provides politically popular services 

that don’t make money. Or imagine the government owns a business where a powerVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00123 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY

37848.013.eps
120

2While the trappings of the foregoing questions are those of tribal councils and tribal housing 

programs, the underlying dynamic is not Indian per se. The imaginings that opened this section 

apply equally well to tribal enterprises as to AMTRAK, or British Airways before Margaret 

Thatcher privatized it. 

ful constituency uses the levers of political representation to strengthen its hand 

against management in a labor dispute. Or imagine the government owns a business that makes money, but a dispute erupts about whether the profits should be 

reinvested in the business, used to subsidize popular services, turned over to the 

government treasury, or issued as dividends to citizens. Such questions pitting corporate success against community values are not idle speculation to the owners and 

managers of AMTRAK, I’m sure. Likewise, these questions feature prominently in 

the daily lives of myriad tribally owned corporations. Worse, the political bouts that 

arise from these questions degrade corporate performance if they are not properly 

addressed. 3

Why not privatize? Countries around the world are driving down the governmentowned proportion of GDP to around 5%. When they do so, they reap higher profits, 

lower prices, better service, and better returns on investment. As appealing as these 

gains might be, tribal governments nonetheless cannot nor, in many instances, 

should not privatize their tribal enterprises. U.S. tax, procurement, and regulatory 

policy encourage and even mandate tribal ownership of enterprise. Section 17 of the 

Indian Reorganization Act of 1934 encourages economic development via federal 

charters for nation-owned enterprises. 4 IRS rules shield nation-owned enterprise 

profits from federal corporate income tax. 5 Section 8(a) of the Small Business Act 

offers advantages to tribally owned corporations. 6 The Indian Gaming Regulatory 

Act mandates tribal ownership in all but the rarest cases. 7

Even in the absence of these federal inducements and requirements, government 

ownership of enterprises would be a sound choice for Native nations to make. Tribal 

enterprises often depend upon an Indian nation’s patrimony—a forest, lake, river, 

or plain—whose development must take place within tribal cultural and environmental constraints. Private development of such resources often fails utterly, if only 

because of the outcry against inappropriate development institutions. In addition, 

trust land title, Native concerns about property alienation, geographic isolation, relative economies of scale, and a host of other market idiosyncrasies may favor tribal 

over individual ownership. And finally, it is often the case that the economic unit 

is and ought to be the whole community. This is particularly evident in shareholder 

tribes such as under the Osage headright system (or analogously the Alaska Native 

corporations), but it can also hold true for whole tribes owning all of a fishery, irrigation system, or hotel. Thus, while private enterprise takes hold on many Indian 

reservations and deserves more support and encouragement, especially considering 

the large income gap that remains to be closed, 8 government ownership of enterprise is properly a feature of Indian economic development and will be for some 

time. The question is: How can tribes create value as efficiently as the private sector 

while operating within the constraints of government ownership. 

The answer hinges on getting corporate governance right. Enron and the Sarbanes-Oxley response illustrate the challenges of corporate governance without government ownership. Corporate governance under Indian nation ownership requires 

another level of care entirely. The problem arises because two competing sets of relationships become mixed and generate role confusion. On the one hand, we generally like our constituents and representatives to be closely connected through elections, correspondence, constituent service, and the like. On the other hand, we like 

it when the people we put in charge of our hard-earned assets tighten the ship if 

standards of customer service are slipping or margins are lagging the industry. 

When constituents are employees and representatives are directors, all in the 

same institution—the tribal corporation—roles and relationships become unclear. 

Say I’m fired from the tribal company and I have a powerful uncle on the tribal 

council. Should I play ‘‘employee’’ and go through the due process of the corporate 

personnel grievance system or should I play ‘‘constituent’’ and go through my uncle? 

Or say I’m a council representative with many constituents on the tribal housing 

waiting list and the corporation announces a new investment initiative. Should I to 

play ‘‘representative’’ and expand the housing budget at the expense of the investment or act as ‘‘director,’’ focusing on the long-term prospects of the business? Tribal 

leaders around Indian Country have encountered problems like these in tribal enterprises repeatedly. The questions do not get resolved easily, and if they fester, profitability decays and even collapses. 2

Successful tribal governments formally divide business affairs from elected leadership, usually via a chartered board of directors, but it does not simply serve to adopt 

a charter. I have seen one tribe copy the charter of a very successful company for 

121

its own company only to witness utter collapse. Tribal corporate governance requires: a) a firm governing foundation in the constitution of the tribe and related 

practice; b) a charter and corporate purpose that represent the Indian nation’s priorities and commitments; and c) ongoing reinforcement of a new organizational culture supporting the elements of corporate governance. 

Stable Civic Governance 

Without robust tribal governing institutions, a tribal charter may be a moot point. 

If, for example, corporate contracts are adjudicated by the tribal council, the enterprise may never attract investors. Or if the tribal council turns over every couple 

years, the corporate governance system will be perennially at risk of manipulation, 

if not dismantlement. Corporate governance systems benefit from a civic governance 

system that provides: • Staggered council terms or other mechanisms of stability that permit the 

system of corporate governance to become enshrined in political institutional 

memory; • Independent dispute resolution mechanisms that operate fairly and expeditiously to adjudicate contracts, personnel disputes, property rights, and disputes 

over the corporate charter; • Well-defined checks and balances so that policy debates come to an end, reflecting accommodation across the branches of government; • Clear and predictable rules that do not change with the whims of newly elected 

leaders or narrow majorities; and • Civil service professionalism that helps create supportive economic policies such 

as uniform commercial codes or zoning codes and helps guide infrastructure 

development. 

Corporate Charter and Purpose 

To have worth beyond the paper on which it is printed, a corporate charter must 

make clear the overarching purpose of the corporation and faithfully represent community compromises regarding the distribution of authority between the corporation 

and the government. All organizations benefit from clear purposes, of course, but 

tribal experience demonstrates that when tribal corporations exist to advance a 

deeply held or widely held community aim (aside from profitability, which is understood), their chances of success improve because constituents, representatives, directors, and employees do not choose roles as opportunistically. The charter must also 

pre-allocate decision-making authorities in a manner supportable by the citizens of 

the nation. Generally speaking, the more powers that can be allocated to the board 

of directors, the better; however, the allocation of authority also entails political 

questions whose answers are shades of gray rather than black and white. At a minimum, the charter must specify who will perform the following tasks: • Recruit, nominate, hire, pay, and remove directors of the board; • Set dividends and retained earnings; 

• Set, apply, and adjudicate corporate personnel policy; 

• Approve limited corporate waivers of sovereign immunity; 

• Develop and use trust lands; 

• Approve or reject investment decisions; and 

• Reports corporate performance data. 

The Practice of Corporate Governance 

And of course, paper documents do not necessarily govern behavior. For it to 

work, the charter must become a new way of ordering relationships. That takes 

leadership, behavioral change, and organizational culture. Once the charter is written, tribal political and corporate leaders need to alter the incentives actors face 

within the corporate governance system. If not, the centripetal forces confounding 

government ownership will work to drag performance down. Among other things, 

successful tribal enterprises: 

• Maintain the engagement of their directors; 

• Provide regular reporting from the corporation to the owners; 

• Enforce conflict of interest rules; 

• Limit the day-to-day interference of elected leaders in corporate decisions; 

• Train newly elected leaders and newly appointed directors in the system of corporate governance; and 

• Evaluate performance throughout the corporate governance system regularly. 

Conclusion 

Closing the income gap in Indian Country and diversifying Native economies will 

entail tribes working on a variety of strategies simultaneously, including private 

sector development, individual financial literacy, social program support for workVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00125 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
122

ers, and more. Troubleshooting existing systems of corporate governance and developing new ones for tribally owned enterprises will be critical to the portfolio of strategies. Tribal ownership of business shows no signs of waning, yet it poses inherent 

challenges that must be faced. 

The characteristics listed above are shared by the Winnebago Tribe’s Ho Chunk, 

Inc., the Louden Tribal Council’s Yukaana Development Corporation, and other successful tribal companies around Indian Country. Adopting these characteristics does 

not guarantee the success these companies have had. Business is risky. One does 

not automatically arrive at good corporate governance via a lock-step process, nor 

is balancing political prerogatives against corporate requirements orderly. Nonetheless the challenges of tribally-owned corporate governance should not lead to despair. Tribes have succeeded precisely because they faced the challenges posed by 

government ownership directly. They took steps to reduce uncertainty and ambiguity in tribal business by managing the boundaries between government and business well. Continuing to diversify and expand Native economies will hinge on more 

tribes doing so. 

[NOTE: ‘‘Native American Contracting Under Section 8(a) of the Small Business 

Act: Economic, Social and Cultural Impacts’’ submitted for the record by Mr. Taylor 

has been retained in the Committee’s official files.]


37848.014.eps
123

The CHAIRMAN. Thank you. The Chair will yield to the Ranking 

Member, Mr. Young. 

Mr. YOUNG. Good testimony. Sarah did a great job. I really don’t 

want to ask anymore questions other than the fact that, Mr. Taylor, I had the privilege of reading your report before you put it up 

there. That is good information, and it is simple, and believe me, 

we need simple information in Congress before we digest it. 

[Laughter.] 

Mr. YOUNG. And if we can, Mr. Chairman, I am going to suggest 

as time goes by, if there is someone that raises their heads in another committee about changing this program, that that information is available for them, everything we are doing here, and I 

think the suggestion of Tex of a report from this committee is very 

well taken. 

So good job, appreciate it, and it has been a long day. I just 

thank you. Thank you. 

The CHAIRMAN. Gentleman from Oklahoma, Mr. Cole. 

Mr. COLE. Thank you, Mr. Chairman. I don’t know if we are in 

a committee meeting or a revival meeting because I feel like saying 

Amen so much. 

[Laughter.] 

Mr. COLE. But I have enjoyed this, and I want to begin by just 

frankly thanking you and thanking the staff. I think it has been 

excellent presentations and an excellent group here. I do have a 

couple of points I want to make and then a couple quick questions, 

and they will be quick. 

But as I listened to all three panels, it is just so abundantly clear 

that we actually have a program that works, that actually did what 

it was designed to do, much like IGRA worked, and every time we 

see this I think in Indian Country when we have something that 

works people get worried about it. You know, they get jealous, I 

guess. I think gaming is what oil was to the Osages a century ago. 

I guess all of them are rich and they don’t need any help, or any 

opportunities, but these program, and particularly this, as Mr. 

McCaleb eloquently pointed out, give Tribes that don’t have an opportunity to game real ability to go into the marketplace and compete, and to develop the skills that they need to be successful, and 

as all these panelists have pointed out, or several of them, this is 

money that is made privately in a sense, but it flows into public 

purposes. I see it in my district all over where I see health care 

clinics, and I see senior citizen centers, and I see job opportunities, 

and I see kids with scholarships and an opportunity to get an education that their parents and grandparents never had. 

So why in the world we would worry about changing a program 

that does that, and leaves lasting skills and infrastructure for business success in place, I will never ever know. 

But just let me ask you if I may, Neal. You made the point in 

your testimony very eloquently, or your written testimony, that no 

Indian Nation could be truly sovereign if it wasn’t truly independent economically, and you have watched this for a long time 

and a lot of different ways, and I would like you to just expound 

on that theme a little bit if you would. 

Mr. MCCALEB. Well, I think it is patently clear that if you are 

financially independent on someone else or another government, 

124

you don’t have any true sovereignty, and to acquire that sovereignty, you have to develop an economic base. To acquire individual independent, you have to develop an economic base. You 

have to have a marketable skill or something, and that is what the 

SBA program is inculcating in the Tribes that are using it. 

The Chickasaw Nation has seen really meteoric growth economically over the last 20 years of Governor Anoatubby’s leadership, 

and it is because he has been focused on economic sovereignty as 

well as political sovereignty that that has been so successful. 

Mr. COLE. I always like to point out, Mr. Chairman, that is a corporate headquarters from our standpoint that never goes to Dallas, 

and jobs that never go to China, and we have a very vested interest 

as a state in Tribes being successful. Goodness knows, and when 

I talk to Tribes I make this point all the time, we of all people 

ought to know don’t trust the Federal government to keep their 

commitments. So you better get in a position where you can take 

care of yourself, and policies, and this is one of them that pushes 

in that direction are the things that we ought to be worried about. 

I am as fierce as anybody in making sure the Federal government 

keeps its obligations and its commitments, and does the things it 

says it is going to do financially, but again, 200 years plus of American history would tell you it doesn’t do that very well. At the end 

of the day you have to depend on yourself more than anything else, 

and we have a unique opportunity to do that. 

This program has helped us, and I just again really want to 

thank you personally and professionally and politically for holding 

this and giving us an opportunity because there are other people 

in Congress that clearly need to be informed about this, and hopefully with the best of intentions are trying to do the wrong thing, 

but I think you have laid out a very convincing case at this hearing 

as to why it would be an enormous mistake as well as an injustice 

to lose the ability to do what we have been able to accomplish 

through Section 8[a] contract, and I appreciate it very much. 

Thank you. 

Mr. MCCALEB. Thank you, Tom. Let me just ask, if I might, ask 

you, sir, one of the criticisms—following up on the gentleman from 

Oklahoma’s suggestions of others in Congress having the wrong 

perceptions—some have criticized the Alaska Native participation 

in the 8[a] programs because of the high amounts of executive compensation. They argue that this causes an unfair advantage over 

the individually owned 8[a]s because they must manage their companies and show economic disadvantage. 

Why do you believe this is not an unfair disadvantage? 

Ms. LUKIN. Thank you, Mr. Chairman. 

A couple of things. One, all ANCs are run and managed by a 

Native Board of Directors that is elected by the Native shareholders, and they, of course, in turn higher the most talented CEOs 

to operate our companies to the highest degree to provide benefits 

back to all of our shareholders. 

So do I think the CEOs are overcompensated? Absolutely not. 

Our boards are sophisticated. They go through extensive review 

processes of what other corporations and companies across the 

United States are paying to make sure that we are paying fair 

125

market value for the talent that we need to operate our companies 

appropriately. 

The CHAIRMAN. So you don’t advocate any caps on executive compensation? 

Ms. LUKIN. No, I do not. 

The CHAIRMAN. Mr. Secretary, let me ask you, Tribal and Alaska 

Native Corporation 8[a] companies operate under similar yet different rules as you are acutely aware. Should Congress require 

that the same rules apply to both tribally owned and ANC corporations? 

Mr. MCCALEB. Well, that is the way the program is operated, 

largely as it relates to graduation from the program and caps on 

the program which are essential for the continuity, and that needs 

to be preserved. The differences that exist currently in the operation of the program between Tribes and Tribal governments and 

ANCs I think are fairly small differences in comparison to this idea 

that there is not any caps on the contract, and that they can have 

long-term continuity. 

The CHAIRMAN. OK. Mr. Taylor, your report shows that Native 

8[a] companies represent only a small share of the procurement 

dollars, yet other minority contractors claim this is unfair. What is 

your response to those who make this claim? 

Mr. TAYLOR. Well, I think that it goes back to the point I made 

earlier about there being a correspondence between the exemptions 

that exist for Tribal and ANC 8[a]s and the circumstances that 

have been set up by Federal Indian law, the Alaska Native Claim 

Settlement Act, and the Indian Reorganization Act and so on to set 

up these corporations as community-owned entities; that the benefits are flowing not to a family of shareholders, not to an entrepreneur, but really to an entire community, and I think that is the 

distinction that needs to be focused on, if you will. That is the distinction that makes the difference between the treatment under the 

Section 8[a] rules. 

I would comment to Mrs. Lukin’s excellent remarks about directors and compensation of executives. It is a very difficult decision 

to choose how much an executive should be compensated and 

whether or not that executive should be Native or non-Native, and 

there is nobody better situated to make the decision and bear the 

consequences than a Native director. 

In countless cases around Indian Country, both corporate cases 

but also in the administration of government programs, our research finds that when outsiders make the decisions they don’t 

make them nearly as well as when the Native people who bear the 

consequences directly make them themselves. 

The CHAIRMAN. Very good point. 

Gentlemen, lady, thank you very much for your testimony and 

the time and travel you have taken to be with us today. We appreciate it. And was suggested earlier, this will be a good report that 

our committee will make to ensure that those who perhaps question some of these programs will have fully at their disposal. 

Thank you. 

No further business, the Committee stands adjourned. 

[Whereupon, at 1:45 p.m., the Committee was adjourned.]

126

[Additional material submitted for the record follows:]

[A statement submitted for the record by Beasley Denson, Tribal 

Miko (Chief), Mississippi Band of Choctaw Indians, follows:]

Statement of Beasley Denson, Tribal Miko (Chief),

Mississippi Band of Choctaw Indians 

On behalf of the approximately 9600 enrolled members of the Mississippi Band 

of Choctaw Indians, I would like to thank and commend Chairman Rahall, Ranking 

Member Young and the Members of the House Committee on Natural Resources for 

holding this hearing on Diversifying Native Economies. My name is Beasley Denson, 

and I am Miko (Chief in our Choctaw language) of the Mississippi Band of Choctaw 

Indians. 

Mr. Chairman, I hope my testimony, in addition to those provided by many other 

Tribal leaders throughout Indian Country, will help you and your colleagues in Congress understand why economic development initiatives such as the 8(a) program 

are so important to every Tribe’s goal of self-determination and self-sufficiency, and 

why Congress should not adopt misguided proposals that would endanger the proven success and positive results of these programs. 

For decades, the Mississippi Choctaw have taken an innovative and forwardthinking approach to business. From wire harness production and assembly, to entrepreneurial business ventures, the Tribe’s business model has proven to be successful. However, the realities of the global marketplace forced us, just like many 

other entities throughout the United States, to change with the times. With the implementation of the North American Free Trade Agreement (NAFTA) and the loss 

of hundreds of manufacturing jobs to Mexico, the Tribe recognized that that we had 

to embark upon a path of economic diversification through the creation of other employment opportunities on the reservation 

The new economic mix includes gaming, hospitality, and entertainment resulting 

in a major family destination resort that attracts visitors from throughout the 

Southeastern United States and beyond. We are fortunate to have two casino properties that anchor our economic development plans. However, Mr. Chairman, I agree 

with you that Tribes also need to explore various, innovative non-gaming economic 

development opportunities, which is why it is so important that you are holding this 

hearing. It’s even more important given that some Members of Congress have unfortunately proposed placing new restrictions and/or limits on the very same federal 

programs that have allowed Tribes like ours to pursue such non-gaming economic 

development initiatives. 

Our Tribe’s new approach to industry involves the creation of partnerships that 

will lead the Mississippi Band of Choctaw Indians into the next generation of employment opportunities. Over six years ago, the Tribe made its move away from traditional manufacturing into more advanced, technical, and highly sophisticated 

work with the founding of Applied Geo Technologies, Inc. (AGT). AGT is a 100% 

Tribally-owned, 8(a), chartered corporation of the Mississippi Choctaws. We are very 

proud AGT has become one of the premier, Tribally-owned providers of advanced 

manufacturing and operational services solutions in the nation. 

Mr. Chairman, here a few examples of why we feel that way: 

• In 2001, Lockheed Martin, the world’s largest defense contractor, agreed to provide resources to augment AGT’s management, technical, and new business development capabilities to stimulate its growth in the federal contracting market. 

At Lockheed Martin’s Kelly Aviation Center in San Antonio, Texas, AGT supports the calibration and repair of assembly equipment for the U.S. Air Force’s 

TF39, T56, F110, F118, and CF6-50 jet engines. 

• At the John C. Stennis Space Center in Southern Mississippi, AGT provides 

precise calibration, metrology, and environmental laboratory services in support 

of the space shuttle’s main engine, among other rocket engine testing services. 

• In 2004, AGT entered into a mentor-prote ́ge ́ relationship with AgustaWestland, 

one of the world’s leading helicopter manufacturers. This association has already landed AGT a seat on TEAM US101, which will manufacture the next 

fleet of helicopters for the President of the United States. AGT is planning to 

manufacture a majority of the wiring harnesses for the US101 in the Choctaw 

Tech Parc. 

• Also in 2004, AGT entered into an agreement with AAI Corporation to jointly 

build advanced hydraulic, pneumatic, and mechanical test equipment in the 

Choctaw Tech Parc. This program is currently serving our military forces with 

leading-edge manufacturing and engineering solutions to produce equipment 

that meets the needs of our troops. 

127

• In 2006, the U.S. Army looked to AGT for Operational Services support of the 

Mississippi Army Ammunition Plant. Under this contract, AGT is responsible 

for the maintenance and management of industrial property, safety and quality, 

and environmental regulations. 

• In 2007, AGT was awarded its largest contract to date, a 5-year Indefinite Delivery Indefinite Quantity contract with a ceiling price of $69.9 million to support the U.S. Army’s Program Executive Office for Simulation, Training and Instrumentation (PEO STRI) Project Manager for Instrumentation, Targets, and 

Threat Simulators (PM ITTS), Targets Management Office (TMO). Work to be 

performed by AGT will include field engineering, research and development, 

light manufacturing, and operational support of applicable target systems. 

With the changing manufacturing environment on the reservation, AGT has retained and created many new high-tech employment positions from former Tribal 

enterprises which resulted in an average wage increase of 16% for the transferred 

employees. AGT now has 11 locations in five states and employs over 275 professionals. In a short time period, AGT has grown from revenues of $600,000 in its 

first year to an anticipated $46,500,000 in its sixth year. With growth comes the 

opportunity to reinvest in the local community—both on and off the reservation—

in order to prepare a workforce that can deliver the quality products that are demanded by AGT’s high-profile aerospace and defense clientele. 

Through a partnership with East Central Community College, AGT can now offer 

customized training programs through Mississippi’s workforce development initiative, thus creating a strong, skilled Mississippi workforce allowing high-tech industries such as AGT ample opportunities for growth. AGT also offers 100% tuition reimbursement for our employees. 

As countless witnesses before this Committee have attested to, economic development, including our Tribe’s vision of high-tech industry, reaches beyond job creation. 

It strengthens an entire economy, encompassing all aspects of our quality of life in 

Choctaw and in Mississippi. Successful economic development projects allow the 

Tribe to provide those essential government services that any city or State government provides to its citizens. The Tribe’s ability to provide affordable housing, 

health care, law enforcement, education and so many other basic services is greatly 

enhanced by a strong, diversified economy. 

Every time one of our Choctaw youth see pictures of the Space Shuttle heading 

upwards away from the Earth, or when we see the President arrive at, or depart 

from, the South Lawn of the White House on the Marine One helicopter, he or she 

will know that the Mississippi Band of Choctaw Indians played an integral part in 

allowing these feats of American technological prowess to occur. And maybe, some 

of them will aspire to one day do the same. Because of companies like AGT, not 

only will they have that opportunity, but it will be right there on our reservation 

in east central Mississippi. 

When I learned that the Committee would be holding this hearing, I spoke with 

several employees who work at AGT and IKBI, Inc., Mississippi Choctaw’s other 

100% Tribally-owned 8(a) company, in order to get their perspective on what economic diversification has meant to them. Allow me to share the story of Ms. Sylvia 

Graves. Sylvia is an enrolled member of the Tribe who is the Human Resource Manager at AGT. Before AGT, Sylvia worked for an off-reservation out-of-state corporation with operations in the nearby city of Philadelphia, Mississippi. Sylvia told me 

that her insurance costs kept increasing while her benefits decreased. She said that 

she was unhappy because morale was low and her fellow employees were unhappy 

as well. According to Sylvia, AGT changed all of that for her. She says that she enjoys the atmosphere and knows that the benefits she currently receives are very 

good compared to other manufacturing companies in the area. Since she arrived at 

AGT, she has seen employment increase by more than 150 workers, the majority 

of whom work on the reservation in Choctaw. She also told me about some of the 

employees of a manufacturing company in Carthage, Mississippi that AGT recently 

acquired. Workers there hadn’t received a raise in more than five years and, as you 

can imagine, morale was low and turnover was high. When AGT took over, a sense 

of tribal pride was restored as wages and benefits have increased by approximately 

16%. 

I know this is a simple account from one of our many tribal members, but it is 

a genuine testimonial of someone who is happy, and enjoys a dramatically improved 

quality of life, because of the opportunities that AGT and IKBI have created. 

Mr. Chairman, I sincerely hope that I do not have to tell our employees, including 

enrolled Members such as Sylvia, and the thousands of non-Tribal employees that 

make us the third largest employer in the State of Mississippi, that Congress has 

enacted proposals that would make it more difficult for, or even prevent, Native 

128

businesses like AGT and IKBI to create these much-needed economic development 

opportunities. 

Again, on behalf of the Mississippi Band of Choctaw Indians, I thank you for the 

opportunity to share our views on the importance of diversifying native economies, 

and we look forward to working with you and your colleagues in Congress to 

strengthen—not weaken—the various federal initiatives such as the 8(a) program 

that have done so much to benefit Native Americans throughout the United States. 

[The Native American Contractors Association Joint Legislative 

Proposal on Small Business Contracting submitted for the record 

follows:]

JOINT LEGISLATIVE PROPOSAL

ON SMALL BUSINESS CONTRACTING

SEPTEMBER 25, 2007

Expand Small Business Contracting Opportunities 

In reauthorizing the Small Business Act’s contracting programs, Congress must 

include stronger provisions to ensure small businesses actually receive the federal 

contract support required by law for decades. While the federal contracting market 

has doubled in size since 2000, small businesses’ percentage share of that market 

has declined significantly due to: • Bundling/consolidation of contracts into sizes beyond most small contractors’ capabilities; • Huge growth in emergency/overseas contracts not subject to small business contracting requirements or goals; • Barriers to growth that make it difficult for small contractors to compete for 

larger contracts; • Lax compliance with subcontracting plan requirements and limited enforcement; and 

• Downsizing of the federal procurement workforce, compounding the above problems, as overworked contracting personnel must deal with higher volumes of 

contracting actions, pressures to meet deadlines and small business goals, and 

little or no time to monitor compliance with existing rules designed to prevent/

reduce contract bundling/consolidation, enforce subcontracting plan requirements and other limits on subcontracting. 

To enable small businesses, particularly 8(a) firms, to compete for a larger share 

of government contracts, the federal government must take immediate actions to reverse these trends, including enhancing incentives for contracting officers to increase awards to 8(a) and other small businesses. In considering small business contracting legislation, Congress should adopt provisions to: 

1. 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 ‘‘Native enterprises’’ small business concerns certified 

by SBA as owned by Indian Tribes, Alaska Native regional or village corporations, or Native Hawaiian Organizations that help support their Native communities by developing more self-sufficient Native economies; 

2. Support provisions that tighten 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 enterprises and other small 

businesses to pursue larger contracts. Require contracting agencies to issue 

a Request For Information (RFI) to small businesses so they have a chance 

to form teams to pursue these larger contracting opportunities (sections 1001 

and 1002 of S. 3778 of the 109th Congress proposed such teaming approaches); 

3. Increase the Government-wide contracting goals for awards to small business 

(along the lines of section 201 of H.R. 1873) of not less than 30% of total contract awards to small business, and not less than 8% of total contract and 

subcontract awards to small disadvantaged business concerns; 

4. Include overseas contracts within the Government-wide contracting goals (like 

section 202 of H.R. 1873), and require reporting of awards to small businesses as prime or subcontractors performing contracts overseas (as proposed 

in section 1306 of S. 3778); 

5. Enhance the ability of individuals to qualify for certification as 8(a) program 

participants and to pursue larger contracts on a competitive or non-competitive basis (as proposed in sections 202 of H.R. 2532); 

129

6. Increase the net worth thresholds, including annual inflationary adjustments, 

for individuals seeking to qualify and retain eligibility for certification as 8(a) 

program participants (along the lines of section 1242 of S. 3778, or section 

202 of H.R. 2532); 

7. Double each competitive thresholds specified in 15 U.S.C. 637(d)(1)(D)(ii), (as 

proposed in section 202 of H.R. 2532); 

8. 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; 

9. Revisit size standards (as both the Senate and House Small Business Committees have proposed), but leave in place the new requirements for small 

business recertification that just became applicable on June 30, 2007; and 

10. Support legislative or administrative directives for SBA to accept certifications by other federal, state and local governments, under such criteria as 

SBA may prescribe by regulation or order, in certifying small disadvantaged 

businesses, and other subcategories of small businesses for which certifications are required (sections 1221, 1232 and 1241 of S. 3778). 

[A statement submitted for the record by the National Center for 

American Indian Enterprise Development follows:]

Statement of the National Center for

American Indian Enterprise Development 

Chairman Rahall and Ranking Member Young, the National Center for American 

Indian Enterprise Development (NCAIED) commends the House Committee on Natural Resources for convening this oversight hearing on ‘‘Diversifying Native Economies’’ as a key goal. The NCAIED presents this testimony on the roles that Native 

business development and government contracting activities play in both diversifying and strengthening our Native economies. 

The National Center or NCAIED is the longest serving Native business development assistance provider in the United States. Our mission is to develop the American Indian private sector as a means to help our Native communities become selfsufficient. Formed in 1969 as the non-profit Urban Indian Development Association, 

we have evolved over the last 38 years from one office with an urban Indian focus 

into a national organization with supporting non-profit centers across the country. 

We provide technical assistance and business development and management consulting services nationwide to Indian tribes, Alaska regional and village corporations (‘‘ANCs’’), Native Hawaiian Organizations, and businesses owned by tribes, 

ANCs, and individual Native Americans, Alaska Natives, and Native Hawaiians. 

The NCAIED headquarters and supporting centers are staffed primarily by 

Native American business and procurement consultants with experience in dealing 

with such issues as tribal sovereign immunity, tribal trust lands and restricted allotments that are inalienable and therefore cannot be used as collateral for business 

loans, remoteness and lack of physical and technological infrastructure to support 

business development. The Minority Business Development Agency (MBDA) of the 

Department of Commerce began supporting our program many years ago because, 

unlike other small business service centers, NCAIED designs its centers and trains 

our staff to devote extra time and attention to help individual entrepreneurs and 

Indian tribes learn how to conduct business feasibility studies, develop business 

plans, establish banking relationships and lines of credit, begin marketing, expand 

operations, and even enter the challenging federal procurement market. 

The NCAIED’s leaders have always played pivotal roles in spurring small business startups in the commercial and government marketplaces, and in breaking 

down barriers that impede economic development and diversification activities in 

our Native communities across the United States. We offer the following comments 

on such barriers, and also make several recommendations for future action. 

Earlier Oversight Hearings on Indian Business Development 

In 1987, our then President, Steven Stallings, testified at the first of several important hearings of the Senate Indian Affairs Committee on Indian economic development. At the time, we operated five offices in the West assisting almost 600 companies, most owned by individual Native Americans and some by tribes. Mr. Stallings recommended expansion of the Buy Indian Act’s application to more federal 

agencies, and adoption of a Buy Indian Act certification that could be accepted by 

130

1The 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. 

all federal contracting agencies, and satisfy eligibility for the Small Business Administration (SBA) contracting programs. He urged that more contracts be issued 

as Buy Indian because what he called ‘‘unchecked discretionary authority’’ of the 

Bureau of Indian Affairs (BIA) was resulting in many valuable procurement opportunities being lost. Unfortunately, lack of Buy Indian Act usage and enforcement 

persist to this day. 

Mr. Stallings reported that Indian-owned firms were encountering great difficulty 

in getting certified in the SBA’s section 8(a) Business Development Program. Of the 

few who achieved certification, most of them received no 8(a) contracts. The two 

largest contracts (representing the majority of 8(a) award dollars to Indian-owned 

companies) had been awarded to tribal-owned companies on the Devil’s Lake Sioux 

and Fort Peck Reservations under special arrangements. 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 MOU committed SBA to ‘‘receive’’ 150 fully completed applications for 8(a) status and ‘‘target’’ 75 of them for 

certification. Mr. Stallings testified that while SBA did its part, DOD had not provided the contract support it had promised. He recommended improvements to the 

Buy Indian Act, the 8(a) program, and establishment of a National Center for Economic Development to provide assistance to Indian-owned businesses and tribal governments in Indian economic development, assessing needs for training, creating effective training models, implementing training programs, and operating technical 

assistance centers and a clearing house. 

When the Senate Committee held a later oversight hearing in 1988 on ‘‘Barriers 

to Indian Participation in Government Procurement Contracting,’’ Mr. Stallings 

again testified in support of reform of the 8(a) program, especially for tribal-owned 

companies. He reported that the growth of contracting companies owned by Tribes 

and American Indian and Alaska Native individuals lagged far behind that of other 

groups (only 14,843 and generating gross receipts of just $646.7 million). See Oversight Hearing on ‘‘Barriers to Indian Participation in Government Procurement Contracting,’’ Senate Select Committee on Indian Affairs, 100th Cong. 2d Sess. 80 

(1988). These numbers represented only 1.8% of the total number of small businesses, and with a mere l.4% in gross receipts of all minority-owned businesses, 

combined. Comparative figures showed: 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. Id. To reach parity with 

these other groups on a per capita basis, he estimated that a 4,000% increase in 

Native business ownership would be needed. Id. 

Ronald Solimon, now Chairman of NCAIED’s Board of Directors, also testified at 

the 1988 hearing as then CEO of Laguna Industries, Inc. He explained 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 U.S. 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.’’ Id. at 2. 1 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.’’ Id. 

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 provisions in Section 8(a) now 

applicable to companies owned by tribes and ANCs. Congress included these special 

131

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. Many of these AIPTACs now operate within 

the network of the NCAIED’s 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. 

NCAIED and Indian Business Development Today 

For over 38 years, the NCAIED has been assisting tribes and individual Native 

American entrepreneurs seeking to form, or expand existing, business ventures. 

Under the leadership of current President/CEO Kenneth Robbins, the NCAIED has 

expanded AIPTAC services funded by the DOD’s Defense Logistics Agency and expanded Native American Business Enterprise Center (NABEC) services funded by 

the MBDA. These centers operate in the following locations: Mesa, Arizona, and El 

Monte and El Segundo, California, serving the West and Southwest; Seattle and 

Lynwood, Washington assisting the Pacific Northwest area and part of Alaska; 

Polson, Montana, and a satellite office in Bismarck, North Dakota, serving the 

Northern Plains area; Denver, Colorado, serving states south of the Plains area; and 

serving the East Coast and parts of the Midwest are three centers, in Marietta, 

Georgia, Reston, Virginia and a new center in Pembroke, North Carolina. 

These centers help the DOD, MBDA, SBA, the General Services Administration, 

and other federal agencies in implementing many programs, including the Mentor 

Prote ́ge ́ programs, the HUB Zone Program, Electronic Commerce/Electronic Data 

Interchange, subcontract plan fulfillment and myriad other defense requirements. 

The centers also provide training on how to register electronically with the Federal 

Government, how to identify marketing opportunities and market goods and services, and how to navigate various procurement requirements (including the acquisition of commercial products). More general business services include helping companies develop business plans, secure financing, find business partners, learn the federal procurement ropes, apply for SBA program certifications, market their capabilities, identify contracting opportunities, prepare proposals, and win contracts. 

In addition to their existing responsibilities, the NCAIED’s centers are implementing new procurement assistance projects. The most exciting is our new Native 

American Indian Business Development web portal called NativeEDGE 

(www.nativeedge.org), with a call center to be implemented, a publications clearinghouse of federal and private sector information on economic development and procurement opportunities and a wealth of other important and helpful information for 

tribes, ANCs, and individuals who are American Indians, Alaska Natives, and 

Native Hawaiians. The procurement information on NativeEDGE will make more 

accessible the contract opportunities available in the defense, homeland security and 

other federal sectors. To meet the corresponding increase in demands for procurement technical assistance from AIPTACs, the NCAIED and its supporting centers 

are playing vital roles in promoting greater use of contracting companies owned by 

tribes, ANCs, and other Native entities and entrepreneurs. 

As the above-mentioned cooperative agreements each require the federal dollars 

to be matched by a significant amount (as high as 25 percent) of private funding, 

the NCAIED generally raises more than 50 percent of its own funds. In addition 

to client work under these cooperative agreements, the NCAIED produces various 

events that train, promote and market Indian enterprises to the public and private 

sectors. One such event is the phenomenally successful Reservation Economic Summit & American Indian Business Trade Fair. At RES 2007, over 3,000 individuals 

and 300 exhibitors attended, including tribes, ANCs, federal and other government 

procurement officials, and corporate and Native business representatives. 

The NCAIED estimates that its operations have assisted approximately 80% of 

the tribes in the lower 48 states and more than 25,000 Native enterprises, and have 

trained over 10,000 tribal members trained. Furthermore, due to its centers’ bid 

matching and other business assistance efforts, as well as the networking opportunities produced at the RES and other similar conferences, NCAIED clients have received well over $3 billion in contract awards (translating to over 60,000 jobs) in 

the last 4 years alone. 

The results of all these efforts demonstrate real progress. The U.S. Census Bureau reported in 1997 that its data (thought incomplete) showed 197,300 Native 

American-owned businesses in the United States, up 84% from 1992, employing 

298,700 people and generating $34.3 billion in revenues. See 1997 Economic Census: 

132

Survey of Minority Owned Business Enterprises: Company Statistics Series (2001). 

By 2002, Census estimates were 206,125 Native-owned firms, up 4% from the 1997, 

but total revenues down 23% to $26.3 billion. See 2002 Survey of Business Owners, 

U.S. Census Bureau. 

Of the roughly 360 tribes in the lower 48 states, about several dozen have 

launched government contracting operations and applied for 8(a) program certification. Some are very successful, while others are still struggling to break into the 

difficult federal market. The SBA’s list of the top 8(a) firms include many owned 

by ANCs and Tribes, and many have 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). 

In short, after years of being encouraged by Congress to do so, and after seeing 

the success of other Native contractors, more tribes as well as ANCs are pursuing 

government sector opportunities. 

Reports Confirm Native Business Successes 

Numerous reports, including the studies discussed in this Committee’s hearing, 

confirm that the above-recited Congressional initiatives to spur Native economic development have been remarkably successful. One such report was issued in April 

2006 by the Government Accountability Office entitled ‘‘Increased Use of Alaska 

Native Corporations’ Special 8(a) Provisions Calls for Tailored Oversight’’ (GAO-06-

399) (the ‘‘GAO Report’’). This GAO report provided helpful, balanced information 

on ANC 8(a) contracting as activities undertaken in response to the Alaska Native 

Claims Settlement Act that directed Alaska Native regional and village corporations 

to pursue economic development for the benefit of 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. 

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 NCAIED’s network of 

centers has learned anecdotally from working with Native-owned businesses across 

the country. That is: the special 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 various federal agencies (e.g., SBA, DOD) also have helped in strengthening tribal- and ANC-owned 

companies. 

The NCAIED is proud of the role it has played in fostering informal types of mentoring and partnering by helping tribes and ANCs find teaming partners and subcontractors. A good example is the support that the NANA Development Corporation and its subsidiaries have provided to several of our centers in fulfilling contract 

requirements by subcontracting with a variety of client firms. To help expand such 

partnering, not only among Native contractors but also with other small business 

partners, the NCAIED has been conducting special 8(a) panel discussions at the various Indian business development and procurement technical assistance conferences 

hosted or co-hosted by its centers over the last two years. These sessions have focused on the special 8(a) provisions, their history, purpose, and results. The CEOs 

of many 8(a) companies owned by tribes or ANCs have described their 8(a) experiences as part of procurement training workshops. And, to memorialize the importance of partnering results, the NCAIED negotiated and executed a Memorandum 

of Understanding (MOU) with the Native American Contractors Association (NACA) 

last year, and just renewed the MOU for another year. This joint effort has 

launched a partnering and subcontracting demonstration program to encourage 

greater collaboration among Native and other contractors in bid matching, joint venturing, teaming and performing federal contracts. 

The NCAIED has been working with NACA and the National Congress of the 

American Indians (NCAI) to develop joint statements, and to reach out to other organizations representing 8(a) and other small contractors to find common ground. 

We believe it is imperative to discuss, work together and agree on joint efforts that 

will succeed in persuading the federal agencies to meet (and possibly even exceed) 

their 23% small business contracting goals. 

Recommendations for Additional Improvements 

The NCAIED recommends appropriate corrective actions by SBA and federal procurement agencies to strengthen their oversight of contracting activities under the 

133

8(a) program as well as SBA’s other small business programs. All of the recommended actions will require more Native American and other personnel to determine, for example, how to collect better, more complete data on 8(a) companies’ 

revenues in their primary and secondary industry codes, or how to monitor compliance with subcontracting limitations, and so on. The NCAIED, NACA, NCAI and 

other organizations representing small business contractors can and should work 

with SBA to improve oversight. 

Below are NCAIED’s specific recommendations: 

1. Create an SBA Office of Native American Affairs: 

The NCAIED recommends the creation of an SBA Office of Native American Affairs. Of the legislative proposals offered, the NCAIED supports the approach in 

S. 1671, the Entrepreneurship Development Act of 2007. This bill, ordered reported 

to the Senate in late July, contains Senator Tim Johnson’s proposal to create an Office of Native American Affairs and new Native American Business Centers. This 

Office would provide the additional administrative and procurement support and 

oversight that are becoming increasingly important as contracting companies owned 

by tribes, ANCs and other Native entities expand in number. The Office would enable the SBA to implement the GAO’s recommendation that SBA tailor its policies 

and practices to deal more effectively with the complexities of ANCs’ and tribes’ 

business structures, joint ventures and other partnering arrangements. This Office 

also could coordinate the provision of business development assistance to Native entities. The NCAIED recommends involvement of tribes, ANCs, AIPTACs, NABECs, 

SBDCs, Native Community Development Financial Institutions (NCDFI’s) and tribal colleges to expand the delivery of business development services to Native communities most efficiently, and without duplication of efforts and costs. NCAIED is 

already contributing its experience with its network of AIPTACs and NABECs in 

joint working group discussions with NCAI, NACA and the SBA to develop better 

ways to assist small businesses of all types enhance data collection, and improve 

oversight of small business contracting. 

2. Improve Implementation of the 8(a) Program: 

The NCAIED recommends, and is partnering with NCAI and NACA, in working 

group discussions with SBA on better implementation of the special 8(a), SDB and 

other small business contracting issues by: 

a) advising on needed improvements to the 8(a) certification process for Tribes, 

ANCs and other eligible applicants; and 

b) increasing and improving data collection for better monitoring of contracting 

activities by 8(a) firms within their primary and secondary industry categories 

and in their mix of federal contracting versus commercial business activities. 

3. Ensure that Government Agencies Meet (or Exceed) Small Business 

Contracting Goals: 

Tribes, ANCs, NCAI, NCAIED, NACA and the other national organizations representing 8(a) and other contractors must rally together to focus much more attention on the question of what can be done effectively 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 good excuse for the continual decline in the percentage of contract 

awards to small businesses. The NCAIED recommends that all the key players in 

the small business community come together, meet, discuss openly their different 

perspectives, and reach a consensus on how best to ensure that all the federal procurement agencies develop, publish and implement more aggressive policies and 

procedures to meet, and possibly even exceed, their goals for contract awards to 

small and minority businesses. The NCAIED, NACA and NCAI have developed the 

following joint policy positions that we are still vetting but wish to share with the 

House Resources Committee: • 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; 

• Increase the Government-wide contracting goals for awards to small business 

(to not less than 30% of total contract awards to small business, and not less 

than 8% of total contract and subcontract awards to small disadvantaged busiVerDate 0ct 09 2002 13:57 Mar 11, 2008 Jkt 098700 PO 00000 Frm 00137 Fmt 6633 Sfmt 6621 L:\DOCS\37848.TXT Hresour1 PsN: KATHY
134

ness and 8(a) concerns), and strengthen SBA’s authority to negotiate with individual contracting agencies to establish goals higher than their current levels, 

and to require the agencies to be more accountable for their past performance 

and future plans for making more small business awards in each subcategory 

of small business contracting; 

• Increase the net worth thresholds above $250,000 for individuals seeking to 

qualify for 8(a) certification, and above $750,000 for continued eligibility for the 

8(a) and SDB programs, and include annual inflationary adjustments to any 

new thresholds established; 

• Increase the competitive thresholds to enable individual owned 8(a) companies 

to pursue larger contracts; 

• 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; 

• Increase size standards with adjustments at least for inflation, if not also to 

take into account the capital requirements for each industry; 

• Establish a reporting and monitoring mechanism for compliance with the prime 

contractor performance requirements, for all direct award 8(a) contracts and for 

task order and delivery order contracts. 

• Establish milestones and reporting for all direct award joint venture contracts 

approved by SBA; and 

• Strengthen the mentor-prote ́ge ́ program requirements so that more emphasis is 

placed on mentoring and providing benefits to prote ́ge ́s other than just contract 

support. 

4. Actions by the House Resources Committee: 

The NCAIED commends the Committee for holding this important hearing on the 

importance of helping tribes and ANCs diversify their native economies. In addition 

to making the hearing record available to the Congress and the public, we urge the 

Committee members to share what they have learned with their colleagues on other 

committees. Committee members should explain why Congress enacted the special 

economic incentive and contracting provisions for enterprises owned by tribes and 

ANCs, and how these programs are fulfilling their purpose, and the federal government’s trust responsibility. 

This Committee also can play a major role in urging the SBA and other departments and agencies to increase contracting opportunities for Native and other small 

businesses, and continue to work collaboratively with NCAIED, NACA and NCAI 

to develop more effective reporting and monitoring mechanisms. The Committee certainly should urge the various federal contracting agencies over which it has direct 

jurisdiction (e.g., the Departments of the Interior, Energy, etc.) 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 the 1987 and 1988 hearings witnesses 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. 

The NCAIED thanks the House Resources Committee for the opportunity to 

present these remarks and recommendations.

Headquarters: 

953 East Juanita Avenue—Mesa, AZ 85204—800-4NCAIED—www.ncaied.org 

Regional Offices: 

Atlanta, GA—Los Angeles, CA—Polson, MT—Seattle, WA—Washington, DC

Æ