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53–113 PDF 2009

S. Hrg. 111–250 

CONTRACTING PREFERENCES FOR ALASKA NATIVE 

CORPORATIONS 

HEARING 

BEFORE THE

AD HOC SUBCOMMITTEE ON CONTRACTING 

OVERSIGHT 

OF THE

COMMITTEE ON 

HOMELAND SECURITY AND 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JULY 16, 2009 

Available via http://www.gpoaccess.gov/congress/index.html 

Printed for the use of the Committee on Homeland Security 

and Governmental Affairs 

( 

(II) 

COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS 

JOSEPH I. LIEBERMAN, Connecticut, Chairman 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

THOMAS R. CARPER, Delaware 

MARK PRYOR, Arkansas 

MARY L. LANDRIEU, Louisiana 

CLAIRE MCCASKILL, Missouri 

JON TESTER, Montana 

ROLAND W. BURRIS, Illinois 

MICHAEL F. BENNET, Colorado 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

GEORGE V. VOINOVICH, Ohio 

JOHN ENSIGN, Nevada 

LINDSEY GRAHAM, South Carolina 

MICHAEL L. ALEXANDER, Staff Director 

BRANDON L. MILHORN, Minority Staff Director and Chief Counsel 

TRINA DRIESSNACK TYRER, Chief Clerk 

AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT 

CLAIRE MCCASKILL, Chairman 

CARL LEVIN, Michigan 

THOMAS R. CARPER, Delaware 

MARK L. PRYOR, Arkansas 

JON TESTER, Montana 

MICHAEL F. BENNET, Colorado 

SUSAN M. COLLINS, Maine 

TOM COBURN, Oklahoma 

JOHN MCCAIN, Arizona 

LINDSEY GRAHAM, South Carolina 

MARGARET DAUM, Staff Director 

MOLLY WILKINSON, Minority Staff Director 

KELSEY STROUD, Chief Clerk 

(III) 

C O N T E N T S 

Opening statements: Page 

Senator McCaskill ............................................................................................ 1 

Senator Collins ................................................................................................. 2 

Senator Tester .................................................................................................. 4 

Senator Akaka .................................................................................................. 9 

WITNESSES 

THURSDAY, JULY 16, 2009 

Hon. Mark Begich, a U.S. Senator from the State of Alaska .............................. 5 

Hon. Lisa Murkowski, a U.S. Senator from the State of Alaska ......................... 6 

Debra Ritt, Assistant Inspector General, Auditing, Office of Inspector General, U.S. Small Business Administration ......................................................... 11 

Joseph Jordan, Associate Administrator, Government Contracting and Business Development, U.S. Small Business Administration ................................. 13 

Shay Assad, Acting Deputy Under Secretary of Defense, Acquisition and 

Technology, Director of Sefense Procurement, U.S. Department of Defense .. 14 

Sarah L. Lukin, Executive Director, Native American Contractors Association ........................................................................................................................ 24

Jacqueline Johnson-Pata, Executive Director, National Congress of American 

Indians .................................................................................................................. 26 

Julie Kitka, President, Alaska Federation of Natives .......................................... 28 

Mark Lumer, Senior Vice President, Federal Programs, Cirrus Technology, 

Inc. ......................................................................................................................... 31 

Christina Schneider, Chief Financial Officer, Purcell Construction Corporation ........................................................................................................................ 33

ALPHABETICAL LIST OF WITNESSES

Assad, Shay: 

Testimony .......................................................................................................... 14 

Prepared statement .......................................................................................... 62 

Begich, Hon. Mark: 

Testimony .......................................................................................................... 5 

Johnson-Pata, Jacqueline: 

Testimony .......................................................................................................... 26 

Prepared statement with an attachment ....................................................... 93 

Jordan, Joseph: 

Testimony .......................................................................................................... 13 

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

Kitka, Julie: 

Testimony .......................................................................................................... 28 

Prepared statement .......................................................................................... 110 

Lukin, Sarah L.: 

Testimony .......................................................................................................... 24 

Prepared statement .......................................................................................... 69 

Lumer, Mark: 

Testimony .......................................................................................................... 31 

Prepared statement .......................................................................................... 122 

Murkowski, Hon. Lisa: 

Testimony .......................................................................................................... 6 

Ritt, Debra: 

Testimony .......................................................................................................... 11 

Prepared statement with attachments ........................................................... 49 

Page

IV 

Schneider, Christina: 

Testimony .......................................................................................................... 33 

Prepared statement .......................................................................................... 124 

APPENDIX 

Hon. Don Young, a U.S. Congressman from the State of Alaska, prepared 

statement .............................................................................................................. 127 

Letter from Sarah Palin, Governor of Alaska, and Sean Parnell, Lt. Governor 

of Alaska, dated July 23, 2009 ............................................................................ 131 

Letter from Kirsten E. Gillibrand, a U.S. Representative from the State 

of New York, dated July 30, 2009 ....................................................................... 136 

‘‘New Information About Contracting Preferences for Alaska Native Corporations (Part I and II),’’ Majority Staff Analysis, prepared for Chairman 

Clare McCaskill .................................................................................................... 138 

Report submitted by Ms. Kitka, ‘‘Status of Alaska Natives 2004’’ ...................... 161 

Questions and responses submitted for the Record from: 

Ms. Ritt .............................................................................................................. 181 

Mr. Jordon ......................................................................................................... 183 

Mr. Assad .......................................................................................................... 191 

Ms. Lukin, with attachments .......................................................................... 195 

Ms. Johnson-Pata ............................................................................................. 213 

Ms. Kitka ........................................................................................................... 215 

Mr. Lumer ......................................................................................................... 219 

Ms. Schneider ................................................................................................... 223 

(1) 

1The information submitted by Senator McCaskill appears in the Appendix on page 138. 

CONTRACTING PREFERENCES FOR ALASKA 

NATIVE CORPORATIONS 

THURSDAY, JULY 16, 2009 

U.S. SENATE, AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT, OF THE COMMITTEE ON HOMELAND SECURITY

AND GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:30 p.m., in room 

SD–342, Dirksen Senate Office Building, Hon. Claire McCaskill, 

Chairman of the Subcommittee, presiding. 

Present: Senators McCaskill, Tester, Akaka, and Collins. 

Also Present: Senators Begich and Murkowski. 

OPENING STATEMENT OF SENATOR MCCASKILL 

Senator MCCASKILL. The hearing will come to order. Today’s 

hearing will examine the contracting preferences for Alaska Native 

Corporations. Federal contracting laws create a limited privilege 

for economically and socially disadvantaged small businesses. 

Under the Small Business Administration’s 8(a) program, these 

businesses can receive no-bid contracts for up to $3.5 million for 

services and $.5 million for manufacturing or goods. 

In the 1980s and the 1990s, Congress created special preferences 

for the Alaska Native Corporations that allow them to participate 

in the 8(a) program in a way that is not identical to other small 

businesses. But Congress has said that Alaska Native Corporations 

do not have to prove that they are socially or economically disadvantaged. They do not have to be small businesses, and they can 

receive no-bid contracts worth billions of dollars. 

No one begrudges giving small, disadvantaged businesses a 

chance to win Federal contracts. We have programs like 8(a), 

HUBZone, and the Service-Disabled Veteran-owned businesses because we want these small businesses to be able to get their foot 

in the door. But the Alaska Native Corporations have used their 

special preferences to bust the door down. 

To get to the real facts at issue in this hearing, I requested detailed information from 19 Alaska regional and village corporations. The Subcommittee staff has prepared an analysis of this information and a separate analysis of publicly-available contracting 

information. And without objection, I will enter both analyses into 

the hearing record.1

2 

The Subcommittee staff’s analysis shows that Alaska Native contract awards have skyrocketed since 2000. Alaska Native Corporations are now among the largest Federal contractors, with hundreds of millions in annual revenues and hundreds of subsidiaries 

and joint ventures. According to the information submitted by the 

19 ANCs, none of them would be classified as small businesses 

under SBA regulations. 

The Alaska Native Corporations may also be passing work 

through to their subcontractors. They employ relatively few of their 

shareholders and rely heavily on non-Native managers. 

We will hear today from representatives of the Alaskan Native 

people and the Alaskan Native contractors, who will tell us that 

sole-source contracting is needed to provide important benefits to 

impoverished people. But we must take a hard look at the numbers. Only about $615 a year in money, scholarships, and other 

benefits goes back to each member of the Alaskan Native community from this particular Federal contracting effort. 

The American people are looking to Congress to cut back wasteful spending and make sure that every single Federal dollar is 

spent wisely. And there must be a strong bias in favor of competitive contracts that only compelling rationale should ever overcome, 

and then in very limited circumstances. 

As we hold hearings in the Subcommittee on waste, fraud, and 

abuse in government contracts, we cannot give anyone a free pass. 

The Alaska Native Corporations have had, and I have seen firsthand over the last few weeks, a very vocal group of advocates. But 

our responsibility is to look out for the taxpayers, not these corporations and their profit margins, or any other Federal contractor, 

or any other special interests. From the taxpayer perspective, it is 

hard to see why the Alaska Native Corporations should be able to 

receive enormous contracts with no competition. 

When this Subcommittee was formed, we made a commitment to 

the taxpayer. Our priority would be promoting efficiency, transparency, and accountability. Our goal is to make sure that every 

taxpayer dollar is spent wisely in the contracting arena. By taking 

a hard look at contracting loopholes like those for the Alaska Native Corporations, we can take the first step towards ensuring that 

our contracting system provides the best possible value for the taxpayer. 

Eliminating waste, fraud, and abuse in government contracting 

is not a partisan issue. And on this Subcommittee, I am particularly grateful to have Senator Collins as a Ranking Member. Senator Collins has a long record of working in the contracting and 

procuring arena. She shares my commitment to promoting competition in contracting and ensuring the best value for the taxpayer. 

I yield to Senator Collins for her statement. 

OPENING STATEMENT OF SENATOR COLLINS 

Senator COLLINS. Thank you very much, Madam Chairman. I 

very much appreciate your kind comments and your hard work and 

leadership as the Chairman of this Subcommittee. 

Today, as the Chairman has indicated, the Subcommittee examines the benefits afforded Alaska Native Corporations (ANCs), in 

3 

the Small Business Contracting program for socially and economically disadvantaged small businesses, known as the ‘‘8(a) program.’’ 

The recent report of the SBA’s inspector general has raised several troubling issues concerning the ANC program, including 

whether other minority-owned small businesses are being treated 

fairly given the special benefits afforded ANCs. As we examine the 

ANC program, it is important that we recognize our commitment 

to the growth and prosperity of small businesses and to the wellbeing of our Native Americans, including Alaska Natives. In particular, we should consider how the 8(a) program has helped to 

support our Nation’s minority-owned small businesses by giving 

them the opportunity to participate in Federal contracts. 

In 1978, Congress first established the current 8(a) program. Beginning with protections for Black Americans, Hispanic Americans, 

Native Americans, and other minorities, Congress has revised and 

expanded the program over time, including in 1986 when Indian 

tribes and ANCs were added. 

Over the last half century, whether by Executive Order or by 

Legislative action, the government has acknowledged the value in 

encouraging the growth and expansion of small companies and promoting minority-owned small business participation in government 

contracting. 

In passing the Alaska Native Claims Settlement Act in 1971, 

Congress recognized Alaska Natives’ aboriginal land claims to large 

portions of Alaska, and in return, permitted Alaska Natives to establish unique corporate structures, the ANCs, to manage their affairs. ANCs were established to be stewards of the land and to help 

Native Alaskans. 

The ANCs, whether they are large regional entities or the smaller village corporations, help to provide leadership for developing 

the land’s natural resources, provide scholarships, and offer employment opportunities to the members of the Alaskan tribes and 

villages. ANCs are a way for many Natives to continue to live in 

Alaska. 

Today, however, the SBA’s IG has produced some disturbing statistics that raise difficult questions regarding the scope of the protections afforded ANCs. These issues the Chairman has outlined in 

her opening statement, but let me just touch on some of them. 

First, the IG noted that the total value of 8(a) ANC awards 

soared from $265 million in Fiscal Year 2000 to $3.9 billion in Fiscal Year 2008. Of additional concern, the IG found that 82 percent 

of these ANC contracts were awarded via sole-source procurements; 

that is, without competition. 

Second, the IG’s report shows that the dollar value of the ANC’s 

share of all 8(a) program dollars grew from 13 percent in 2004 to 

26 percent in 2008. Yet, ANCs account for only 2 percent of the 

9,500 businesses that participate in the 8(a) program. Third, the 

report reveals that 11 of the 20 largest ANCs receive approximately 50 percent of all the 8(a) funds that are awarded to all 

ANCs. 

These statistics show a growing domination by ANCs—particularly of a few large ANCs—of the 8(a) program market share at the 

potential expense and exclusion of other minority-owned contracVerDate Nov 24 2008 11:43 Jan 29, 2010 Jkt 053113 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 P:\DOCS\53113.TXT SAFFAIRS PsN: PAT
4 

tors and perhaps to the detriment of taxpayers given the lack of 

a cap on the dollar amount of the non-competitive contracts. 

While I do not question the fundamental proposition that ANCs 

provide critical services for an economically and socially disadvantaged group of Americans, we simply must consider whether the 

structure of the 8(a) program provides disproportionate benefits to 

one group. 

Congress must carefully consider the following key questions. 

First, do the statutory advantages of the ANC program need to be 

reexamined within the context of a more competitive, fair, and 

transparent overall 8(a) program? Second, should the ANCs continue to receive an exemption from the cap on awards of sole-source 

contracts to 8(a) program participants? Third, should ANCs continue to be exempt from the limitation on subsidiaries applicable 

to other 8(a) participants, which permits their indefinite participation in the program? 

I recall when I was the regional head of the Small Business Administration in New England that we would have graduation ceremonies for our 8(a) participants. If you can have an infinite number 

of subsidiaries, ad infinitum, that raises a real question about the 

purpose of the program. 

I look forward to hearing the testimony of the witnesses today. 

And as the Chairman said, the final question we need to look at 

is what the impact on the value received by the American taxpayer 

is for the services provided under this program. 

Thank you, Madam Chairman. 

Senator MCCASKILL. Thank you. 

I do not want anyone to think that I am skipping over our Senators from Alaska, but I am going to—just for the record, we have 

done something a little unusual today in that we have invited the 

two Senators from Alaska to attend the hearing to make opening 

remarks and even have gone so far as to allow them to ask questions of the witnesses, even though they are not Members of this 

Subcommittee. 

We are trying to bend over backwards to make sure that Alaska’s 

representatives in the Senate have an ample opportunity to ask 

questions about this important topic to their State, and I am cognizant of their need to do that. So that is why they are here, and 

that is why they are on the dais. And we welcome both of them to 

the Subcommittee. 

However, Senator Tester is a Member of the Subcommittee, and 

so he will be recognized for any opening comments he would like 

to make as a Member of the Subcommittee. 

OPENING STATEMENT OF SENATOR TESTER 

Senator TESTER. Thank you, Chairman McCaskill. I appreciate 

that. Sorry I missed your opening remarks. I am going to be very 

brief because I want to hear the testimony and get an opportunity 

to ask some questions. 

I think that we all want to get the maximum bang for the buck 

when it comes to taxpayer dollars and when it comes to contracting. I do not think there is any doubt about that. I think we 

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5 

ditions when possible. And I think that is what this discussion will 

be interesting about for me. 

I mean, I cannot speak to what goes on in Alaska as far as the 

unemployment rates. I can speak to the unemployment rate in Indian country in my State and the value of the 8(a) program itself 

in my State. When you have unemployment rates that rise well 

above 50 percent, in some cases 80 percent, as one person said, it 

would be nice to give those folks fishing poles so they can do a little 

fishing. And I think that is what that program is meant to do. 

Hopefully, that is the same way as it is in Alaska, and hopefully, 

we can get some of those questions answered as we move forth. 

I appreciate the opportunity. Thank you, Madam Chairman. 

Senator MCCASKILL. Thank you. And I would recognize—I believe Senator Begich was here first. We come in order of appearance here. So if you would take a couple of minutes, if you would 

like, to make a few comments and then we will recognize Senator 

Murkowski. 

TESTIMONY OF SENATOR MARK BEGICH, A U.S. SENATOR 

FROM THE STATE OF ALASKA 

Senator BEGICH. Thank you very much, Chairman McCaskill. 

Thank you, Ranking Member Collins for allowing Senator Murkowski and I to be here today to participate in the hearing. 

The issues we explore today are vitally important for my constituents and especially for the Native people of Alaska who comprise 20 percent of our State’s population. For me, the well-being 

of Alaskan Native people is personal for two reasons. First, my father’s greatest legacy in his short tenure here in Alaska as a lone 

congressman was to write the Alaska Native Land Claims bill. This 

landmark act, which has dramatically improved the status of Alaskan Natives passed Congress in 1971, just a year before he died. 

The second reason it is personal, is because I have personally 

witnessed the struggle against formidable odds and the enormous 

success of the Alaska Native people. I was born in Anchorage barely 3 years after Alaska became a State. At that time, Alaska Natives had developed a rich culture in some of the harshest conditions on the globe. By Western measures, their status was bleak. 

Census data for the post-statehood era is incomplete. But the 

data that is available tells a story of great need. In 1970, only 18 

percent of Alaska Natives had a high school diploma and less than 

1 percent had a college degree. Half lived below the poverty line. 

Fifty percent of Alaska Natives lived without indoor plumbing, collecting their waste in what we call the ‘‘honey bucket.’’ And nearly 

two-thirds lacked what we define today as a job. Most hunted, 

fished, and lived off the land and water. 

Today, thanks to the Settlement Act and congressional action to 

permit Alaska Native Corporations to participate in the SBA’s 8(a) 

program, the story of Alaskan Native people is one of unprecedented success. The numbers tell part of the story. Educational attainment has soared with about half of Alaskan Natives earning 

high school diplomas and nearly a third with at least some college. 

Less than 25 percent now live below the poverty line. Three-quarters live in homes with basic clean water and sewer facilities we 

all take for granted. 

6 

For those of us who believe in the free market system, as I do, 

the transition to the private sector is especially admirable. In 1970, 

about half of Alaskan Natives worked for the government. Today, 

that number is just 29 percent as more Natives work for their corporations and other Alaska companies. 

What is more impressive to me is the success of Alaska Native 

Corporations. After struggling in their early years, all 12 of Alaska’s in-state regional for-profit corporations are profitable, generating about $4 billion in revenues for the Native shareholders. 

ANCSA corporations are among the State’s top employers, providing jobs for more than 30,000 people. And I submit that these 

companies are among the most socially conscious in the world. 

Their chief mission is to provide benefits to the Native people they 

were created to serve. They work hard and contribute enormously 

for education scholarship, cultural preservation, elder services, 

community development, and support the subsistence lifestyle that 

is such a vital part of the culture. 

The participation of the ANCs through the 8(a) program is another great success story. These amendments to the Claims Act 

were 5 years in the making, thoroughly discussed within both the 

Native community and Congress before adoption. The SBA IG report that there are now about 203 ANCs that participate in the 

program. 

Through their work across the Nation, they are generating billions of dollars in benefit to the ANC shareholders. This continues 

to raise the standard of living for thousands of Alaskan Native people who live in 200 villages and communities across my State. 

There are scores of compelling stories we could document if time 

permitted. 

Madam Chairman, contrary to the spin generated off the various 

government reports, I believe Alaska Native participation in the 

8(a) program overall has been one of the most successful programs 

this government has done. Certainly, there may be a few bruised 

apples that require attention. I agree with many of the IG recommendations that the SBA needs to clarify its procedures and 

fully staff its oversight mission. 

Let us continue to be mindful of the continued needs among 

Alaskan Native people in my State and how ANCs working in part 

through their 8(a) subsidiaries are meeting those needs so that 

American taxpayers do not have to. 

Again, I look forward to working with the Subcommittee, hearing 

the testimony, and being able to ask questions regarding the reports given. 

Thank you, Madam Chairman. 

Senator MCCASKILL. Thank you, Senator Begich. Senator Murkowski. 

TESTIMONY OF SENATOR LISA MURKOWSKI, A U.S. SENATOR 

FROM THE STATE OF ALASKA 

Senator MURKOWSKI. Thank you, Madam Chairman, and thank 

you for the courtesy that you have extended Senator Begich and I 

to participate. And to Ranking Member Collins, I truly do appreciate this. 

7 

Today the Subcommittee takes testimony on the question of 

whether a law intended to provide Indian tribes, Native Hawaiians, and Alaska Native Corporations with the opportunity to establish viable business enterprises selling goods and services to the 

Federal Government, whether or not this has been a flawed concept. My views on this subject are informed certainly by the 6 years 

that I have served as a member of the Senate Committee on Indian 

Affairs, including a short stretch when I was vice chair of that committee. 

I believe that the Indian 8(a) preferences are achieving important 

economic development objectives and are well worth preserving as 

a matter of Federal Indian policy. Our Nation has a special relationship with its first peoples, which has been recognized since the 

founding of this country, and that special relationship is expressed 

in our Constitution. It is also well established that our great Nation has a long history of imposing ill conceived policies on Indian 

tribes and Native peoples, and the Senate acknowledged as much 

when it attached Senator Brownback’s apology resolution to the Indian Health Care Bill back in 2008. 

As Senator Begich has noted, our Native people live in some of 

the poorest, most geographically and most economically isolated 

places in the country, some in conditions that resemble Third 

World countries. Our Native people struggle to maintain their traditional cultures in an era in which subsistence hunting, fishing 

and gathering simply do not generate sufficient resources to keep 

one’s house warm in the winter. 

As we begin this inquiry, we must keep firmly in our mind that 

the preferences that we are discussing today are an exercise of Federal Indian policy to mitigate the impact of past ill conceived policies and to help our Native people maintain their unique cultures 

and identities and survive in the modern world. 

Although today’s hearing is labeled an inquiry into Alaska Native Corporation contracting, let me make clear that there is no 

such thing as an Alaska Native Corporation preference in government contracting. There is a preference for Indian tribes, which includes Alaska Native corporations as well as Native Hawaiian organizations. The opportunity was structured in a way that would 

be meaningful to the challenges of economic development in Indian 

country and provide financial benefits that could be shared among 

large numbers of tribal members. All of that is at risk today. While 

the hearing is labeled Alaska Native Corporations, nobody in Indian country believes that the consequences will not fall equally on 

all beneficiaries of the Indian 8(a) preferences. 

Now, there are some who say that this program really is not important to anyone other than Alaskan Natives. But we will hear 

much today about how some Alaska Native Corporations have done 

well, perhaps too well in pursuing these opportunities. But that 

does not mean that they are less important to other Native corporations or to Indian country as a whole. 

The history of economic development in Indian country suggests 

that Native leaders frequently look at which kinds of businesses 

are working in Indian country and adopt the successful business 

models of others, all in their own time. This has certainly been the 

8 

1The prepared statement of Mr. Young appears in the Appendix on page 127. 

case with Indian gaming, and all indications are that interest in 

government contracting among the tribes is rising. 

The sad truth is that there are very few business models that 

have provided any modicum for success in tribes and ANCs. From 

my conversation with Indian leaders, there seems to be unanimity 

that the 8(a) business opportunity holds great promise for Indian 

economic development and it is an opportunity worth saving. I expect that you will hear the same from the Native leaders that are 

testifying today. 

But this Senator does not believe that these contracting preferences undermine the integrity of all Federal contracting. While 

the dollar value of some individual contracts may be substantial, 

taken together, all of the contracting under this preference accounts something on the order of 1 percent of the total Federal contract pie. And I am deeply concerned by the suggestion that a victory for the Indians is a defeat for businesses enjoying preferences 

through other socioeconomic classifications. Surely, there must be 

a way to win for all. 

Let me be clear about the stakes here. Congress enacted a law 

giving Indian-owned and controlled entities an opportunity to build 

Federal contracting businesses. Many rose to the challenges and 

have fully committed their tribes and their business enterprises to 

these opportunities. Some of these businesses are maturing, and 

others are just starting. Our Native leaders have entered into contracts, they have hired people, they have created systems and focused all of their energies on learning the business. And now that 

same Federal Government threatens to pull the rug out from under 

them. 

I fear that we are moving down the road to breaking yet another 

promise to the Indians. If we are not careful, policy changes 

prompted by this Subcommittee’s inquiry will go down in history 

as another of the ill conceived policies that we, in the Congress, are 

later forced to apologize for. 

I do thank the Chairman for inviting me to participate. I look 

forward to the witnesses. And I ask, Madam Chairman, our Congressman, Don Young, Alaska’s only House member, had requested 

an opportunity to appear before the Subcommittee. And I understand that his request could not be accommodated. He has submitted written testimony in hope that it would be included within 

the record.1

Of course, since I am not a member of your Subcommittee, it is 

inappropriate for me to offer a unanimous consent request. But I 

would like to submit the Congressman’s testimony and would hope 

that this request could be accommodated, and would also ask that 

the Committee or the Subcommittee hold the record open to accommodate a statement from the Governor of Alaska as well as any 

Alaska Native Corporations that may wish to submit their views, 

if that is appropriate. 

Senator MCCASKILL. We certainly will take all of those statements, and as it relates to the congressman, certainly, and the govVerDate Nov 24 2008 11:43 Jan 29, 2010 Jkt 053113 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 P:\DOCS\53113.TXT SAFFAIRS PsN: PAT
9 

1The letters from Governor Palin and Representative Kirsten E. Gillibrand submitted for the 

Record appears in the Appendix on page 131 and 136 respectively. 

ernor, we will be happy to make a unanimous consent motion that 

their statements be included in the record.1

We have had so many requests for statements to be included. For 

all other statements, we will receive them in the Subcommittee and 

review them, and then be happy to get back with the people who 

submit the statements as to whether or not they will be made part 

of the record. 

Senator MURKOWSKI. But we can encourage them to submit 

them—— 

Senator MCCASKILL. Absolutely. 

Senator MURKOWSKI [continuing]. To the Subcommittee. 

Senator MCCASKILL. We will take all the information. We have 

received so many requests in the last 5 days, we want to make sure 

that we are not overwhelmed if somebody wanted to submit 600 

pages. We have a very small staff. 

Senator MURKOWSKI. I think everyone is anxious to tell their 

story. 

Senator MCCASKILL. I understand, Senator. Thank you very 

much. 

It is the custom of this Subcommittee that witnesses must be 

sworn in. Therefore, I would ask the first panel to rise, please. 

Do you swear that your testimony that you are about to give will 

be the truth, the whole truth, and nothing but the truth, so help 

you, God? 

Ms. RITT. I do. 

Mr. JORDAN. I do. 

Mr. ASSAD. I do. 

Senator MCCASKILL. Thank you very much. Senator Akaka has 

joined us. 

Senator, as a Member of the Subcommittee, would you like to 

make any opening comments? 

OPENING STATEMENT OF SENATOR AKAKA 

Senator AKAKA. Madam Chairman, I thank you so much for your 

work on contracting, which is something that we really need to 

work on in this new period. And if you do not mind, Madam Chairman, I would like to make just my statement. 

Senator MCCASKILL. Certainly. 

Senator AKAKA. Chairman McCaskill, thank you for conducting 

the hearing. I appreciate the opportunity. 

As Chairman of the Subcommittee on Oversight of Government 

Management, the Federal Workforce, and the District of Columbia, 

I recognize the need and importance of ensuring appropriate oversight measures are in place for Federal contracts. Failure to have 

skilled contract officers in place at Federal agencies can negatively 

impact the process and risk the loss of billions of taxpayer dollars 

due to inefficiencies and, in some cases, fraud. That is why I am 

pleased by your efforts to review Federal contracting practices. 

Today we are here to examine just one aspect of Federal contracting, Federal contracts with Alaska Native Corporations. In our 

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10 

lationship the United States has with Native Americans, including 

Alaska Natives. The U.S. Constitution under the Indian Commerce 

Clause, vests Congress with the ability to regulate commerce within Indian Tribes. Congress has utilized its well established authority to enact policies that address the unique circumstances and 

needs of Alaska Natives. 

For the past 19 years, I have worked with Senator McCain, Senator Murkowski, Senator Dorgan, and others as part of the Senate 

Indian Affairs Committee to protect and advance this unique trust 

relationship with our Nation’s first Americans. From experience, 

we know that successful Federal Indian policy enables American 

Indians and Alaska Natives to be a full partner with the Federal 

Government. We have seen more enduring and meaningful results 

when Native people are allowed to maintain their culture, commerce, and local political systems to adapt and address the impact 

of an America that has rapidly changed around them. 

As we review the experience of ANCs in the Small Business Administration 8(a) program, we must be mindful that Congress deliberately established this corporation structure to empower Alaska 

Natives to develop sustainable economies that benefit their communities. 

Under the Alaska Claims Settlement Act, Alaska Natives were 

required to establish corporate vehicles quite similar to tribal corporations with vital differences. To promote a more robust commerce, it provided control of a portion of their aboriginal lands at 

fee simple title, rather than the establishment of reservations, and 

required the engagement of commerce and enterprise to be separate for their tribal government. 

Congress established the SBA 8(a) business development program to connect the growth of American business enterprise directly to the needs for goods and services of our Federal Government. It has shown success and great promise for the growth of 

women-owned, veteran-owned, and minority-owned firms and has 

changed the socioeconomic standing of thousands of Americans. 

Recognizing the success achieved with individually-owned firms, 

in the 1980s, Congress established provisions within the 8(a) program to include the unique corporate vehicles of American Indian 

and Alaskan Native enterprises. And today, ANCs are responsible 

for providing more than just profits but are responsible for the welfare and long-term survival of their people and indigenous culture. 

As proposals may come forward to address oversight issues relating to ANCs, I am hopeful we will proceed honorably in a manner 

that respects and strengthens the government-to-government relationship between the United States and Alaska Natives. The 

United States and Alaska Natives are partners, and development 

of any policy should be a collaborative effort. 

Again, thank you, Chairman McCaskill for holding this hearing. 

I look forward to the hearing and the witnesses who will offer their 

expertise on this important matter. Thank you. 

Senator MCCASKILL. Thank you, Senator Akaka. 

Our first panel has three witness. Our first witness is Debra 

Ritt, and she is the Assistant Inspector General for Auditing at the 

Office of Inspector General for the Small Business Administration, 

and we welcome your testimony. 

11 

1The prepared statement of Ms. Ritt with attachments appears in the Appendix on page 49. 

Let me tell all the witnesses that we would like you to try to 

limit your statements to 5 minutes, but, please, we will put your 

entire statements in the record, so do not worry that we will not 

take all of the information. But if you can try to limit it to 5 minutes, we have five people on the second panel, and I have a feeling 

there will be a lot of questions. So if you could limit it to 5 minutes, 

that would helpful. Thank you very much. 

TESTIMONY OF DEBRA RITT,1 ASSISTANT INSPECTOR GENERAL, AUDITING, OFFICE OF INSPECTOR GENERAL, U.S. 

SMALL BUSINESS ADMINISTRATION 

Ms. RITT. Thank you. Chairman McCaskill, Ranking Member 

Collins, and Members of the Subcommittee, we appreciate the opportunity to testify on our recent audit. As requested, my statement today will focus on procurement advantages enjoyed by ANCs 

in the 8(a) program and the benefits derived from those advantages, the growth of ANC 8(a) activity and SBA’s oversight of ANC 

participants. 

ANC companies enjoy special procurement advantages beyond 

those afforded most other 8(a) businesses. The most significant is 

their exemption from statutory dollar limits on the amount of individual awards that may be sole sourced and the regulatory cap on 

sole source awards once $100 million in total 8(a) contracts has 

been received. This has allowed some ANC companies to receive 

8(a) sole source awards as large as a billion dollars and is the 

major reason for the explosive growth in ANC 8(a) activity. 

Further, unlike other 8(a) businesses, ANC companies are considered small even if they are affiliated with other large businesses. Consequently, ANC companies that are large through affiliation with their parent companies are allowed to compete for 8(a) 

awards against other small disadvantaged businesses. While Federal law permits these large businesses to participate in a small 

business program, it is an anomaly that impacts the small disadvantaged business community. 

Although ANC contracting advantages were intended to provide 

economic opportunities for impoverished Alaskan communities, 

ANC companies are not required to report to SBA how they use 

their 8(a) share of their profits. We have found that ANC profits 

are generally used to fund shareholder dividends, cultural programs, employment assistance, scholarships and numerous other 

services for their communities. 

ANC companies have unquestionably prospered under the 8(a) 

program. In Fiscal Year 2007, the 12 regional corporations had 

combined revenues of $5.8 billion and profits of $484 million, much 

of which was generated from the 8(a) program. Moreover, from Fiscal Years 2000 to 2008, obligations to ANC-owned participants increased by 1,386 percent and more than tripled in recent years 

from $1.1 billion in 2004 to $3.9 billion in 2008. While some of the 

increase was due to the growth in Federal contracting as a whole 

in 2008, ANC companies received 26 percent of total 8(a) obligations even though they constituted just 2 percent of the companies 

performing 8(a) contracts. 

12 

Also, 50 percent of the 8(a) dollars obligated to ANC companies 

in 2007 went to just 11 or 6 percent of the ANC participants. One 

company, which accounted for nearly 20 percent of these obligations, had only 750 shareholders or less than 1 percent of total 

ANC shareholders. 

Finally, sole source contracts continue to be the major contracting mechanism for obligating 8(a) funds to ANC businesses. In 

2007, the top 11 ANC companies received 82 percent of their 8(a) 

obligations through sole source awards. While such awards provide 

an expedient means of meeting Federal procurement goals, reports 

by IGs and GAO have shown that noncompetitive contracts have 

been misused and do not always provide the government with the 

best value. 

Despite these concerns, SBA has not evaluated the impact of 

ANC growth on other 8(a) participants or tailored its oversight 

practices to account for ANC’s unique status and growth in the program. SBA has also not fully addressed oversight weaknesses identified by prior GAO and IG audits. Specifically, SBA does not monitor whether ANC subsidiaries are obtaining their primary revenue 

from the same industry. The agency is developing a system to collect information on ANC companies, but this capability will not be 

developed until a later phase. 

Also, SBA has had difficulty monitoring ownership changes involving ANC companies to ensure that they remain majority owned 

by ANCs. While SBA plans to increase the size of its Alaska district office to address this issue, the office currently only has three 

employees to oversee the 200-plus ANC companies in the program. 

SBA does not determine whether ANC companies or their affiliates have a substantial unfair competitive advantage in determining size for 8(a) awards and has not clearly articulated in regulation how it will comply with existing law. Further, SBA cannot 

readily identify and is not monitoring partnerships between ANC 

companies and large businesses to ensure that such businesses are 

not exploiting ANCs for their 8(a) status. 

Finally, SBA is not adequately reviewing financial information 

reported annually by ANC companies to identify unreported management agreements related to their 8(a) contracts. 

In conclusion, while ANC participation in the 8(a) program has 

undeniably benefited Alaska Natives, ANC companies are receiving 

a disproportionate share of the 8(a) obligations. Also, the procurement advantages that they enjoy and their ability to access capital 

and credit through their parent companies may be working to disadvantage other 8(a) participants. 

Consequently, Congress may wish to consider whether ANC companies should continue to be exempt from statutory limits on sole 

source awards and whether procurement goals should be revised to 

account for the significant growth in ANC 8(a) activity. It may also 

wish to consider further clarifying SBA’s role in monitoring ANC 

8(a) activity and requiring ANCs to report how they are using their 

8(a) revenues. 

Madam Chairman, this concludes my prepared statement, and I 

would be happy to take questions at this time. 

Senator MCCASKILL. Thank you. 

13 

1The prepared statement of Mr. Jordan appears in the Appendix on page 58. 

Our next witness is Joseph Jordan. He is the Associate Administrator for Government Contracting and Business Development at 

the SBA. 

Welcome, Mr. Jordan. 

TESTIMONY OF JOSEPH JORDAN,1 ASSOCIATE ADMINISTRATOR, GOVERNMENT CONTRACTING AND BUSINESS DEVELOPMENT, U.S. SMALL BUSINESS ADMINISTRATION 

Mr. JORDAN. Thank you very much. Chairman McCaskill, Ranking Member Collins, and Members of the Subcommittee, thank you 

for inviting the SBA to testify regarding the participation of Alaska 

Native Corporations in the 8(a) business development program. My 

name is Joe Jordan, and I am the Associate Administrator for the 

SBA’s Office of Government Contracting and Business Development. 

The 8(a) program, authorized by Section 8(a) of the Small Business Act, seeks to remedy discrimination by helping eligible small 

businesses compete in the American economy through business development. Participation in the 8(a) program is generally restricted 

to businesses owned and controlled by socially and economically 

disadvantaged individuals. Individual applicants must demonstrate 

both social and economic disadvantage. 

Socially disadvantaged individuals have been subjected to racial 

or ethnic prejudice or cultural bias within American society. Economically disadvantaged individuals are socially disadvantaged individuals whose ability to compete in the free enterprise system 

has been impaired. 

In addition to management and technical assistance, the government is able to award contracts to participating 8(a) firms without 

competition below certain dollar thresholds. The government can 

also limit competition for Federal contracts to only 8(a) certified 

firms. 

Congress has enacted legislation that allows ANCs, Native Hawaiian organizations, community development corporations and 

tribally-owned firms to participate in the 8(a) business development program. The Alaskan Native Claims Settlement Act was enacted by Congress to settle claims to land and resources while also 

exploring an alternative to the reservation system. General goals 

included self determination and participation in a U.S. capitalist 

society. 

In 1988 and 1992, ANSCA was amended to remedy evidence that 

Alaska Natives were not receiving all the intended benefits. So 

Congress designated ANCs, where Natives hold majority ownership, to be minority businesses and economically disadvantaged. 

ANCs have twofold missions of being competitive businesses accountable to many thousands of shareholders as well as providing 

a mechanism for self sufficiency. Generally, they support cultural, 

societal and community activities on behalf of their people while 

providing economic benefit to shareholders and their families. 

The 8(a) BD program’s regulations anticipate that organizational-owned firms, including ANCs, use the 8(a) program to provide economic development to their communities even though all 

14 

1The prepared statement of Mr. Assad appears in the Appendix on page 62. 

other 8(a) participants use the program only for individual business 

development assistance. ANC-owned 8(a) firms, tribally-owned 

companies and program participants owned by Native Hawaiian organizations are not subject to the same rules as other individuallyowned companies participating in the program. 

First, subsidiaries can participate in the 8(a) program without 

being considered affiliated with one another. This allows several 

subsidiaries to participate in the program at the same time and for 

each to be considered a small business. Second, these firms are 

able to receive a Federal contract in any amount without competition. In 2003, Congress authorized Native Hawaiian organizations 

to receive 8(a) contracts in any amount for Department of Defense 

procurements. 

Last, these companies do not have a restriction on the participation by non-disadvantaged individuals. For traditional 8(a) firms, 

the individual claiming disadvantage must control the day-to-day 

operations of the company and traditionally must be the highest 

compensated. As it is currently operating, the 8(a) program is simultaneously providing business development opportunities to disadvantaged individuals and to firms owned by organizations, including ANCs. 

It is also important to recognize that as a business development 

program, sole source contract awards continue to have an important role in 8(a). However, competition also plays an important 

part and has been used effectively in the 8(a) program. 

The SBA has worked diligently to ensure that oversight of these 

programs is strong and that SBA programs are operating free of 

waste, fraud, and abuse. To this end, in the past 6 months the Administration has taken four main actions. 

First, we sent a team to review the Alaska district office which 

handles the interface and caseload of ANCs. Second, we have 

begun the hiring process for two additional staff devoted to the 8(a) 

business development program in the Alaska district office. Third, 

we have funded initiatives to better track ANC participation in the 

8(a) program. And fourth, we have submitted a package of regulatory changes to ensure more effective administration of the 8(a) 

program for all participants. These changes were driven by the 

SBA as well as concerns expressed in the GAO report from 2006. 

Thank you for allowing me to share the SBA’s view with you 

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

Senator MCCASKILL. Thank you, Mr. Jordan. 

Our next witness is Shay Assad. He is the Acting Deputy Under 

Secretary of Defense for Acquisition and Technology at the U.S. Department of Defense. 

Mr. Assad. 

TESTIMONY OF SHAY ASSAD,1 ACTING DEPUTY UNDER SECRETARY OF DEFENSE, ACQUISITION AND TECHNOLOGY, 

AND DIRECTOR OF DEFENSE PROCUREMENT, U.S. DEPARTMENT OF DEFENSE 

Mr. ASSAD. Thank you, Madam Chairman McCaskill, Ranking 

Member Collins, and Members of the Subcommittee. My name is 

15 

Shay Assad. I am the director of Defense Procurement. I am also 

presently serving as the Acting Deputy Under Secretary of Defense 

for Acquisition and Technology. I want to thank you for the opportunity to appear in front of you today to participate in today’s discussion. 

As you know, the Small Business Administration manages the 

8(a) program. ANC firms along with the tribally-owned firms participate in the 8(a) program, but like Indian tribes and Native Hawaiian organizations, they receive unique procurement advantages 

not available to individually-owned 8(a) firms. You have touched on 

several of these advantages already. 

You asked me to address the adequacy of the Department of Defense’s management and oversight of contracts with ANCs. Consistent with my recently expanded responsibilities following my appointment as the Acting Deputy Under Secretary and as part of a 

general review of contract oversight across the Department, I am 

currently attempting to determine the management and adequacy 

of our contracting oversight. I have asked my staff to work with the 

Defense Contract Audit Agency as well as the Defense Contract 

Management Agency to ascertain the extent to which ANCs receive 

the same audit and oversight as other DOD contracts. 

Further, I have directed my Deputy Director for Strategic 

Sourcing to initiate a detailed review of all of the Department’s 

awards to 8(a) ANC firms for Fiscal Years 2008 and 2009. Through 

this review, we will gain a detailed understanding of what we are 

buying and procuring from these firms, and in those instances 

where we are not competitively procuring, the rationale for that 

sole source approach. It will also give us an opportunity to further 

expand opportunities for ANC firms as we gain a better understanding of exactly what the capabilities and skills of those companies are collectively. 

My purpose here today is not to challenge the assistance provided to 8(a) participants or specifically to ANC businesses. Again, 

I reiterate my support for the 8(a) program. My concern is with 

competition in this particular context and the benefits of that to 

the American taxpayer. 

While we have authority to use sole source procedures with ANC 

contractors, we do, in fact, compete sometime. In 2008, it is approximately 35 to 40 percent of the time. That is well below our 

average for competition. We need to significantly improve that. On 

many occasions, I have stressed the importance of fair competition, 

which I believe is the cornerstone of our procurement system. It is 

important to obtain the best value for our warfighters and the best 

use of taxpayer dollars. GAO has repeatedly reported that some 

sole source procurements to ANCs have resulted in paying significantly more for services and products than were warranted. 

I respect the need to provide economic opportunities for 8(a) 

ANCs. However, based on the Department’s experience with the 

8(a) program, I think there may be ways to promote additional 

competition in appropriate circumstances. The Department has 

used competition successfully to achieve best value in the 8(a) program, and I would welcome the opportunity to work with SBA in 

exploring appropriate options for the application of competition for 

ANCs. 

16 

Taxpayers would benefit. All procurement agencies would benefit, as their prices they pay for their requirements would be competitively determined. Small business would benefit as well because of greater opportunities. In short, the appropriate use of competition could provide economic opportunities for 8(a) ANCs and 

further help agencies to obtain best value for the government and 

for the taxpayers. 

Finally, I would like to emphasize the important role that small 

business plays in the industrial base. Fostering an environment 

that is conducive to small business is critical in helping us maintain our competitive procurement system. A strong and vibrant 

small business program which includes ANCs is one that will allow 

its small businesses to not only provide goods and services that are 

essential to our national security but will also enable them to develop over time so that they can meet the future needs of our Nation’s warfighters in a competitive marketplace. Our warfighters 

deserve no less, and our taxpayers demand that we do so. 

Senator MCCASKILL. Thank you, Mr. Assad. 

Mr. Jordan, let me start the questioning. We will do 5-minute 

rounds, and we will go to the Subcommittee Members first and 

then allow our guests from Alaska to question some, also. 

I will be honest with you that your responses to the audit I found 

troubling and dismissive. I am a former auditor, and so I always 

go to the responses first because that is where you are going to determine if the audit is going to make a difference. And reading 

your responses, I was concerned that the audit was not going to 

make a difference. 

Let me start by stating for the record that this is confusing. The 

8(a) program is confusing, and you can get into the weeds because 

there are so many different requirements, rules, thresholds, and 

determinations. But I want to make very clear for the record one 

thing, and that is that there is a difference between Alaska Native 

Corporations and the rules for them and for any other Native corporation, Hawaiian and the lower 48. 

Would you explain that to the Subcommittee, Mr. Jordan, what 

the difference is between the rules for an Alaska Native Corporation versus a lower 48 Native corporation or a Hawaiian corporation? 

Mr. JORDAN. Yes, Madam Chairman, I will. 

So ANCs and Indian tribes both have statutory exception to affiliation. Native Hawaiian organizations also enjoy the exception to 

affiliation privilege; however, that is regulatory. Indian tribes and 

ANCs both have sole source authorized above the thresholds. They 

both have exception to the $100 million sole source cap, and they 

both have statutory authorization to own more than one company, 

8(a) company, at a time as long as no two companies are in the 

same primary NAICS code. 

Native Hawaiian organizations also enjoy the authority to own 

more than one company, but that is regulatory. They do not have 

the exception to the $100 million cap. And for the sole source above 

the thresholds for Native Hawaiian organizations, that only applies 

to the Department of Defense. 

The one area in which Alaska Native Corporations are different 

from Indian tribes is the presumption of economic disadvantage. 

17 

ANCs are presumed economically disadvantaged whereas tribes are 

not. However, to the best of my knowledge, there has not been a 

case where a tribe was rejected from the 8(a) program based on 

that. 

Senator MCCASKILL. But don’t you lose your status as economically disadvantaged once you get to a certain threshold, Mr. Jordan? 

Mr. JORDAN. You do. Senator McCaskill, as you said, there are 

differences between ANC’s tribes and Native Hawaiian organizations and the traditional 8(a) business development program participant. 

Senator MCCASKILL. Including the Indian tribes. 

Mr. JORDAN. Yes, but the larger difference is between ANC’s 

tribes, Native Hawaiian organizations and community development 

corporations and the individual socially and economically disadvantaged business owner. And so when you are looking at the net income, net asset threshold over which you become no longer presumed economically disadvantaged, the process by which Indian 

tribes are evaluated is obviously more complex than the process for 

evaluating one individual small business owner. 

Senator MCCASKILL. Well, but it is my understanding, Mr. Jordan, that the law carves out a permanent economic disadvantage 

status for ANCs. 

Mr. JORDAN. You are correct. 

Senator MCCASKILL. And it does not do that for Indian tribes. 

Mr. JORDAN. You are correct, yes. 

Senator MCCASKILL. OK. And that is a huge difference because if you get a $100 million contract for 4 years running, then you are 

no longer economically disadvantaged under the rules of SBA, correct? 

Mr. JORDAN. Correct. 

Senator MCCASKILL. Unless you are a ANC and you are permanently economically disadvantaged regardless of how big the contract is. 

Mr. JORDAN. That is not necessarily correct because it is not the 

size of—I will get back to you with the exact definition—but it is 

not the size of the contract that would necessarily—— 

Senator MCCASKILL. It is the revenues. 

Mr. JORDAN. Well, yes, it is the net income and the total assets 

and the revenues. But it depends what flows to the individual business owner, the socially and economically disadvantaged business 

owner. 

Senator MCCASKILL. Well, I am not talking about the socially— 

I am not talking about the business owner. I am talking about Indian tribes versus ANCs. 

Am I correct, Ms. Ritt, with what I am saying, that there is a 

special status for the ANCs that provide permanent economic disadvantage regardless of how big they get, regardless of how large 

the corporation is, regardless of how many subsidiaries they have, 

and that is simply not true for Indian tribes? 

Ms. RITT. You are absolutely correct. 

Senator MCCASKILL. Let me also talk about the audit in this context. There is an exception that allows the ANCs to create subsidiaries and there have been almost 250 subsidiaries created in the 

18 

last 9 years and still count as a small business along truly small 

businesses like a start-up disadvantaged business. And it says the 

SBA has the ability to count those subsidiaries if it determines it 

creates an unfair competitive advantage. 

In your audit, Ms. Ritt, you pointed out that both you and the 

GAO said that SBA is not really making that determination. They 

are making no effort to determine whether or not there is an unfair 

competitive advantage. 

Ms. RITT. Right. There is a statutory requirement that they 

make those determinations when considering size and they are not 

doing that. 

Senator MCCASKILL. And I want to make sure I get this correct. 

The SBA told GAO that the statute was confusing and you were 

not sure how to implement. 

Is that accurate, Mr. Jordan? 

Mr. JORDAN. I would have to look at our response. I was not with 

the agency at the time of the 2006 report. 

Senator MCCASKILL. Well, do you think that language, ‘‘unfair 

competitive advantage,’’ is confusing? 

Mr. JORDAN. I do not believe that I am in a position to declare 

it confusing one way or not confusing another way right now. 

But I do want to get back to you later on the tribes versus the 

ANCs. 

So under the regulations, tribes have a one-time determination 

of whether that tribe is economically disadvantaged. So this happens with the first 8(a) firm from that tribe. For every other 8(a) 

firm owned by the tribe, they do not have to establish that economic disadvantage. 

Senator MCCASKILL. The point is not establishing it, Mr. Jordan. 

The point is that they do not get to keep it forever. That is the 

point. The point is that Indian tribes, after they get to a certain 

size, no longer can participate on a sole source basis. That is simply not true for ANCs. 

Mr. JORDAN. Well, it would not be the tribe so much as the tribally-owned company that is a 8(a) participant. 

Senator MCCASKILL. Maybe I am not being clear. I thought that 

I was being very clear. There is a difference in the law as to how 

an Indian tribe is treated and an Alaska Native Corporation is 

treated as the determination of economic disadvantage is made. 

And one is permanent and one is not permanent; is that correct? 

Mr. JORDAN. There is a difference in the law. That is correct. In 

terms of how that difference plays out over time, I would have to 

get back to you. 

Senator MCCASKILL. OK. Thank you. Senator Collins. 

Senator COLLINS. Thank you. Mr. Jordan, to follow up on this 

line of questions, it is my understanding that other 8(a) firms have 

to every single year prove that they are still economically disadvantaged; is that correct? 

Mr. JORDAN. Yes, that is correct. 

Senator COLLINS. But with an ANC, no matter how big or how 

successful it becomes, it is presumed to be economically disadvantaged; is that accurate? 

Mr. JORDAN. That is accurate. Just like with the individual businesses being developed, there is no presumption of them giving a 

19 

community development or shareholder benefit, per se. So, again, 

I view them as separate contexts operating on the—— 

Senator COLLINS. I am just wanting to make sure we understand 

how the process works. 

Mr. JORDAN. Yes, ma’am. 

Senator COLLINS. Ms. Ritt, current law provides a 5 percent 

bonus if you subcontract with an ANC or an Indian organization 

or an Indian-owned economic enterprise. I was surprised to learn 

that this bonus applies even with an ANC that contracts with its 

own subsidiary. 

Is that your understanding? 

Ms. RITT. I am sorry, Senator Collins. I cannot answer that question. 

Senator COLLINS. Mr. Jordan, can you answer that question? Can 

an ANC get a 5 percent bonus for contracting with its own subsidiary? 

Mr. JORDAN. I do not know. I will have to get back with you. 

Senator COLLINS. Mr. Assad, do you know? 

Mr. ASSAD. I do not believe the law distinguishes amongst that 

and probably allows that to happen. 

Senator COLLINS. It is my understanding that the law does allow 

that to happen. 

Ms. Ritt, can you think of any rationale for giving a bonus to an 

ANC that subcontracts the work to its own subsidiary? 

Ms. RITT. No, I cannot. And my staff just confirmed that what 

you said was true, that they can get a 5 percent bonus. 

Senator COLLINS. Do you believe that incentive is needed to encourage ANCs to do business with the Federal Government or to 

help direct more work to ANCs? 

Ms. RITT. No, I do not. I think the exemption from the sole 

source caps is a huge incentive by itself. 

Senator COLLINS. Mr. Assad, do you think there should be an incentive where an ANC gets a 5 percent bonus if it contracts with 

one of its own subsidiaries? 

Mr. ASSAD. No, I do not. 

Senator COLLINS. Mr. Assad, you said in your opening comments 

that you were concerned about the lack of competition in the award 

of ANC contracts. A subsequent witness today is going to say that 

there is informal competition, that a contracting officer can informally call up other ANCs and see if they are interested and do an 

informal price competition. 

Do you view that as being equal to the requirement for full and 

open competition under the Competition and Contracting Act? 

Mr. ASSAD. No, I do not, Senator. I actually have some personal 

experience along these lines. 

Senator COLLINS. Could you share that with us? 

Mr. ASSAD. Yes, ma’am. When I was the director of contracting 

for the Marine Corps, we had a procurement come to me that, in 

fact, was determined on the basis of one of these informal determinations that a specific company should do the work. When that 

was presented to me, I just would not buy it because I had actually 

been contacted by a couple of other Alaska Native Corporations 

who said they could do the work. We went back to the SBA at that 

time and suggested that this should not be sole sourced to a parVerDate Nov 24 2008 11:43 Jan 29, 2010 Jkt 053113 PO 00000 Frm 00023 Fmt 6633 Sfmt 6633 P:\DOCS\53113.TXT SAFFAIRS PsN: PAT
20 

ticular company but, in fact, should be competed amongst the 

ANCs. 

Well, because the determination had already been made that this 

particular company was going to get the work, the SBA was reluctant to do that. So in order to deal with it, we actually canceled 

the procurement. We then reset the procurement. It was competed 

amongst three Alaska Native Corporations, and the best company 

won. And that is how I see things ought to be. 

Senator COLLINS. Thank you. Mr. Jordan, I mentioned in my 

opening comments that I remember when I was the regional head 

for New England of SBA that we would have actual graduation 

ceremonies when an 8(a) firm had been in the program perhaps for 

the limit of 9 years or because it had been successful and become 

prosperous, was graduating from the 8(a) program. 

Is 9 years the maximum limit for participation in the 8(a) program except for Native-owned corporations in Alaska, Native corporations? 

Mr. JORDAN. Yes, 9 years is the limit, but I believe tribal entities 

and Alaska Native Corporations, these 8(a) certified subsidiaries 

that are in the 8(a) program, are also held to that 9-year limit. It 

is the parent company itself that is not. 

Senator COLLINS. Correct. 

But, Ms. Ritt, isn’t there a provision in the law that allows the 

ANCs to keep adding subsidiaries so that the effect is that they can 

remain in the 8(a) program virtually forever rather than being subjected to the 9-year limit? 

Ms. RITT. Yes, Senator Collins, that is correct. They are not restricted in the number of subsidiaries that they can enter into the 

8(a) program. And as we have seen, as firms graduate, new ones 

get created. So it happens quite frequently. 

Senator COLLINS. Thank you. 

Senator MCCASKILL. Thank you, Senator Collins. 

We do not have any Subcommittee Members here. So, Mr. 

Begich, would you like to ask a few questions? 

Senator BEGICH. Absolutely. Thank you very much. 

Let me, Ms. Ritt, follow up on that. Do you, I am assuming you 

do, understand the difference between an 8(a) that is an individually-owned and an 8(a), an American Indian, Alaska Native and 

Hawaiian, which represents thousands of owners? 

Ms. RITT. Yes, I do. 

Senator BEGICH. Do you see any difference in the sense of what 

they should be able to do or not do? 

Ms. RITT. I do understand that the Alaska Native companies 

have multiple shareholders—— 

Senator BEGICH. And American Indian. 

Ms. RITT. And American Indians that benefit—— 

Senator BEGICH. And Hawaiian-owned. 

Ms. RITT. Multiple individuals benefit from their participation 

whereas other 8(a) companies just have a few owners. 

Senator BEGICH. Right. Do you see a difference there in the sense 

of how they generate contracts and value in the sense that an 8(a), 

that 9,000 or so that are individually-owned or a couple owners, 

are much different in that their profit motivation is obviously for 

their own personal wellbeing in the sense as individuals but the 

21 

Alaska Native Corporations, the Indian-owned, the American Indian-owned and the Hawaiian-owned, are for the betterment of 

their culture, their communities as well as profit to their shareholders? 

Ms. RITT. Certainly, I do. But I also understand that the small 

businesses are the backbone of this economy and part of the recovery plan. 

Senator BEGICH. I do not disagree. I have been in small business 

for 25 years. My wife owns four small businesses, so we have been 

in it; we understand it. But I thank you for that comment of your 

knowledge of it. 

Let me ask you, in your report, did you compare the growth of 

the women-owned businesses, the HUBZone firms, the veteranowned firms and their percentage of growth over time compared to? 

Ms. RITT. The scope of this audit was limited to ANCs based on 

concerns raised by GAO in its report. 

Senator BEGICH. But you used the phrase ‘‘explosive growth.’’ Let 

me give you one data point from testimony that was given on the 

House side in 2006. 

When I look at the women-owned business in 1 year alone, they 

grew almost double. HUBZones grew over 200 and some percent. 

If you did it over the same period, which you did it over 9 years, 

in some cases, it would be as much as 1,600 percent. So I guess 

when you say explosive, you are—— 

Ms. RITT. What I meant was—— 

Senator BEGICH. How are we comparing it? 

Ms. RITT [continuing]. The percentage of participation. When you 

have one group that is 2 percent of the participants getting contracts, getting 26 percent share of the 8(a) pie, to me, that is explosive. That is disproportionate. 

Senator BEGICH. But if I compared the ownership of, in the sense 

of Alaska Native Corporations, that are owned by thousands— 

thousands—there are more owners for those for sure than even the 

9,000 single owned or double owned, correct? 

Ms. RITT. There are more owners. I would agree. 

Senator BEGICH. So there is a different responsibility. 

Let me ask you another question. In your report, you talked 

about a lot of gross revenues, and you talked about the value of the 

dividends, and yet you kind of had some question in that arena. I 

forgot the exact number, but I want to say it was $1-point some 

billion dividend return for the $11 billion or so that you reviewed. 

And their contract total was $29 billion, if I remember this right, 

over the period of time that you did the analysis. 

So the question is, why didn’t you focus on the net revenues? Because that is what matters, is what flows to the owners. Because 

if you use the calculation that I am familiar with, they almost gave 

away 70 percent of their dividends to their shareholders. Why 

didn’t you use that number instead? 

Ms. RITT. Use their net revenues? 

Senator BEGICH. Yes. 

Ms. RITT. Because a lot of them do not make very large profits. 

Senator BEGICH. Right. 

Ms. RITT. They have very huge cost structures, as I am sure you 

know. Some of them have restructured after Chapter 11. 

22 

Senator BEGICH. Yes. And 8(a)s helped them move forward? 

Ms. RITT. But there they are getting billions of dollars in contracts with hundreds of millions of dollars in profits, I guess, from 

various sources. 

Senator BEGICH. Yes, but your analysis here kind of makes it 

sound like they have these huge contracts and they are making 

this huge amount of money. But really, it is about the net revenue 

just like the standard 8(a) is measured by. 

So let me ask you an additional question in regards to that, and 

that is you had a lot of commentary in here on SBA reforms necessary. Actually, I think your last report highlighted that a lot, 

which I agree with, and I think every SBA member agrees with 

that. Besides staffing and overview and monitoring, what else does 

SBA need in order to do the job? Because it sounds like, for example, the example that I just heard from Mr. Assad, the process he 

used stopped a contract they did not feel was adequate. So what 

more? 

Ms. RITT. Well, I do think that they need to collect data on ANC 

activity, and they need to be more engaged in overseeing joint ventures, mentor protege relationships, where there are opportunities 

for abuses. 

Senator BEGICH. OK. My time is pretty much up here. But in 

your report, you talked about the GAO in regards to sole source 

and the potential of costs to the taxpayers. 

How come you did not specify any specific issues where an ANC 

8(a) corporation has cost the taxpayers more than it should? 

Ms. RITT. Well, I think that there has been a lot of cases documented with other IG reports—— 

Senator BEGICH. Of ANC 8(a)s? 

Ms. RITT. Yes, of ANC 8(a)s. 

Senator BEGICH. But why didn’t you restate that, then, if that 

was such, as I saw, an important piece of the equation? Because 

that is part of the debate of sole source, of what is the value. Because, like today, for example, I receive a nice newsletter from the 

Air Force talking about $25 million they saved working with an 

ANC 8(a). 

Ms. RITT. Right. 

Senator BEGICH. So why didn’t you use those examples? 

Ms. RITT. Well, we felt that there was a sufficient body of work 

that other IGs had done that clearly demonstrated that sole source 

awards to ANCs had been abused. 

Senator BEGICH. More recently? 

Ms. RITT. Yes. There was a DOD IG report in 2007 regarding a 

contract for leased space, a $100 million, 10-year contract, sole 

sourced to an ANC who was not small, did not qualify under the 

size standards, they did not go through GSA, and GSA appraisers 

determined that it cost $2.7 million more a year for the life of that 

contract. 

Senator BEGICH. Well, I will stop because I want to ask you 

about the process of that. 

Senator MCCASKILL. Senator Murkowski. 

Senator MURKOWSKI. Ms. Ritt, let’s continue with you, if we may. 

Both in your oral statement and in your written testimony, you 

have suggested that the audit has confirmed—so this is not a sugVerDate Nov 24 2008 11:43 Jan 29, 2010 Jkt 053113 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 P:\DOCS\53113.TXT SAFFAIRS PsN: PAT
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gestion. The audit has confirmed the differences in the rules governing ANC participation has allowed ANCs who have access to the 

capital and credit of its parent to compete against truly small disadvantaged companies. So your suggestion in this language is very 

clear to me that somehow or other, the ANCs have broad access to 

credit and certainly to the capital markets. And I am just not clear 

how you support your conclusion. 

You realize, of course, that ANC stock is not traded. It is not on 

the stock exchange. Its subsidiaries are not public companies. So 

I guess I am not sure what capital markets you are suggesting. 

And in terms of the capital markets that might be available to the 

ANCs themselves, the suggestion that they might have to pledge 

their land is wholly inappropriate. 

Where do you believe that this comes from? 

Ms. RITT. It is a very good question. We met with the parent 

companies of the 11 ANC 8(a) participants that were getting most 

of the money under the program who confirmed to us that they are 

heavily involved in managing those companies, that they have extended capital and credit to them and other services, management 

expertise, legal advice. They have a central treasury, many of 

them, where they sweep in all of the 8(a) contract revenue on a 

daily basis. They make the decisions on how that money is going 

to be spent. And that is where they are getting their access to capital and credit of the parent corporation and the bonding capability 

of the parent corporation. 

Senator MURKOWSKI. Well, your suggestion, though, is somehow 

or other that they could go out to the capital markets and 

again—— 

Ms. RITT. No, that was not our suggestion at all. It was that they 

are truly large companies through affiliation with their parent corporations who have access to capital and credit. 

Senator MURKOWSKI. You have looked at just 11 of the ANCs in 

this request in response to the Chairman of the Subcommittee 

here. Some of these that you have reviewed were early entrants 

into the 8(a) program. Others are relatively recent participants into 

the program, very different status, most clearly, very different status. 

Is it reasonable to suggest that we would basically pull up the 

ladder at this point and either deny entry to futures or to cut off 

those that are relatively new entrants into the programs and exclude them from future opportunity? 

Ms. RITT. No, our office is not advocating in any way that ANCs 

should not be allowed to participate in the 8(a) program. We are 

concerned as an IG with the unlimited sole source awards that do 

not provide the government the best value. There is opportunity in 

the 8(a) program to get large competed contracts, and ANCs can 

compete for those. 

Senator MURKOWSKI. Mr. Jordan, because it has been suggested 

here, through the report and Ms. Ritt has stated again, that somehow or other we are not getting good value out of the 8(a) ANCs. 

Can you speak to that? 

Mr. JORDAN. I can. First of all, it is also a bit of a misnomer to 

say there is no competition when it comes to 8(a) ANCs. In 2008, 

of the figures stated in terms of 8(a) contracts, over $650 million 

24 

1The prepared statement of Ms. Lukin appears in the Appendix on page 69. 

was through 8(a) competition. In terms of sole source authority not 

providing the best value, I do somewhat reject that on its premise. 

I believe that competition is good. I believe that promoting competition is good. I believe that general principle. The President has 

talked about competition, transparency, accountability. 

However, in every contract, and this also applies to all sole 

source contracts, the contracting officer must certify that the government got fair and reasonable value and it must monitor performance of that contract and can terminate it if the contracting 

officer sees fit. So to say that the government did not get the best 

value because it was sole sourced is, or should be, inaccurate. 

Senator MURKOWSKI. Well, I appreciate the clarification on that. 

My time has expired, but I do have another series of questions 

if we are going to do a second round. 

Senator MCCASKILL. I do not think that we are. I do not think 

that the Ranking Member and I have additional questions for this 

panel, so we are going to move on to the second panel. 

Thank you all very much. 

Mr. JORDAN. Thank you. 

[Pause.] 

Senator MCCASKILL. We will move on to our second panel, and 

our first witness on our second panel is Sarah Lukin. She is the 

Executive Director of the Native—oh, excuse me. I forgot to swear 

you in. I need you to stand, please. 

Do you state that the testimony you are about to give is the 

truth, the whole truth, and nothing but the truth, so help you, 

God? 

Ms. LUKIN. I do. 

Ms. PATA. I do. 

Ms. KITKA. I do. 

Mr. LUMER. I do. 

Ms. SCHNEIDER. I do. 

Senator MCCASKILL. Thank you very much. 

Ms. Lukin is the Executive Director of the Native American Contractors Association. Prior to joining the Native American Contractors Association, Ms. Lukin served as Vice President of External 

Relations for Afognak and their wholly-owned government contracting subsidiary, Alutiiq. 

Thank you, Ms. Lukin, and we welcome your testimony. 

TESTIMONY OF SARAH L. LUKIN,1 EXECUTIVE DIRECTOR, 

NATIVE AMERICAN CONTRACTORS ASSOCIATION 

Ms. LUKIN. Quyanaa. Thank you. 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 just started as the Executive Director for the Native American Contractors Association (NACA). 

I firmly believe the 8(a) program is critical to the future of our 

disadvantaged Native communities. It has made a dramatic difference in my quality of life, my family’s, and my community. And 

I am here today to ensure other disadvantaged Native Americans 

and Alaska Natives have the same opportunities to improve their 

lives. 

25 

So when I see, as I did recently, an official press release describing Tribal, Alaska Native, and Native Hawaiian participation in 

the 8(a) program as a ‘‘loophole,’’ it disturbs and disheartens me. 

That term ignores the reality of our severe socio-economic disadvantages. The fact that Native enterprises are owned by Native 

communities that are destitute and geographically isolated, decimated by centuries of failed Federal policies, yet are still responsible for the health and welfare of thousands of their people, their 

descendants and dependents, that is real. 

When poverty in our Native communities exceeds all other race 

categories, and is twice the national average, that is real. The fact 

that Members of Congress have tried to keep the promises made 

by their predecessors in the Constitution, countless treaties, and 

land settlements when taking hundreds of millions of acres of Native lands, that is real. And it is real, too, that Native women have 

earned an education because of Native 8(a) benefits, and that our 

Native children can now speak their traditional language that was 

lost for generations, and that Native elders now receive benefits to 

offset their very limited income. 

Here is a Federal program that the government actually got 

right for Native people. The program is making a difference and we 

can tell you that—one Alaska Native story by one Alaska Native 

story. 

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 my family had ever earned a college degree, but scholarships from my Native corporations enabled me to earn a bachelors and a masters degree, empowering me to overcome enormous odds and experience 

my own American dream. And I am one of many Alaska Natives 

that 8(a) has helped. 

The Native 8(a) benefits protect our land, our language, our culture, our elders, our children, and our future. They help America 

keep its word. They build business capacity and work ethic, educating teachers, accountants, and IT specialists, hope and opportunity. The hand up is replacing the handout. We need more benefits for our people. And more Native employment, more work in our 

Native communities, and more Native executives. To cut the program that got us this far is absolutely wrong. 

Native American peoples represent 4 percent of America, but Native enterprises still represent less than 1.3 percent of the Federal 

contracting pie. Native 8(a)s strive to increase business opportunities for all other small businesses and 8(a)s, and we offer real competition to the large contractors and real value to the taxpayer. 

There have been difficulties. The SBA is under-staffed and underfunded. Its enforcement, assistance, guidance, and training have 

suffered. There are some very real problems. We strongly believe 

everyone must play by the rules, and those who do not should be 

held accountable. Fortunately, those rules and enforcement mechanisms already exist. Unfortunately, the SBA lacks the resources it 

needs for these important oversight tasks. 

The problems with government contracting are universal. The 

search for solutions should be comprehensive, and not disproporVerDate Nov 24 2008 11:43 Jan 29, 2010 Jkt 053113 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 P:\DOCS\53113.TXT SAFFAIRS PsN: PAT
26 

1The prepared statement of Ms. Johnson-Pata with an attachment appears in the Appendix 

on page 93. 

tionately focused on Native American 8(a)s. America needs the 

Federal procurement system to work, so do Native Americans. That 

is why the National Congress of American Indians, the National 

Center for American Indian Enterprise Development, and NACA 

have been very active for over 3 years in pushing, pulling, and 

prodding for the GAO recommendations, regulatory reforms, and 

more resources for the SBA. 

We have worked so hard on these issues because Native 8(a) represents success, hope and self-determination for our Native communities. Now is not the time for Congress to go back on its commitment to Native people. 

Quaynaasinaq. Thank you very much for allowing me to discuss 

a very important program in my life, my children’s lives, and the 

lives of my people. 

Senator MCCASKILL. Thank you, Ms. Lukin. Our next witness is 

Jacqueline Johnson-Pata. She is the Executive Director of the National Congress of American Indians. Mrs. Pata is also a Member 

of the Board of Directors of Sealaska Corporation, one of the ANCs. 

Welcome. 

TESTIMONY OF JACQUELINE JOHNSON-PATA,1 EXECUTIVE 

DIRECTOR, NATIONAL CONGRESS OF AMERICAN INDIANS 

Ms. PATA. Thank you. Gunalcheesh. Good afternoon. My name is 

Jacqueline Johnson-Pata, and I am the Executive Director of the 

National Congress of American Indians, the largest and oldest Native organization representing American Indians and Alaska Native tribal governments. 

The U.S. Constitution and many statutes establish the unique 

American Indian and Alaska Native trust relationship with the 

Federal Government. Native peoples ceded over 500 million acres 

of land, and the United States entered into a trust relationship 

with the American Indians and the Alaska Natives. Congress was 

very specific when articulating the Federal Government’s relationship with the Alaska Natives in the Alaska Natives Claims Settlement Act, and this law required Federal compensation to settle Native land claims. And Congress mandated that Native-controlled 

corporations be created. Furthermore, in the Settlement Act, Congress confirmed that Alaska Native Corporations are eligible for 

Federal procurement programs. 

The Federal Government has enacted numerous policies aimed at 

reducing poverty and creating economic opportunity for tribes. Specifically, the 8(a) help tribal communities to overcome economic and 

social barriers and create new business opportunities for Native 

and surrounding rural communities that are far removed from 

major markets. 

Intergenerational poverty remains a serious challenge. American 

Indians and Alaska Natives are amongst the most economically 

distressed populations in the United States with a poverty rate of 

25.7 percent. This far exceeds the poverty rate for any other group 

as more than double the national average. Per capita income of InVerDate Nov 24 2008 11:43 Jan 29, 2010 Jkt 053113 PO 00000 Frm 00030 Fmt 6633 Sfmt 6633 P:\DOCS\53113.TXT SAFFAIRS PsN: PAT
27 

dians living on reservations is still less than half the national average, and unemployment is twice that of the national average. 

Many tribal governments lack the ability to provide the basic infrastructure that most U.S. citizens take for granted such as water, 

sewage, roads, affordable housing, plumbing, electricity, and telephone service. These substandard economic and quality of life indicators have a social toll. Health disparities are prevalent and suicide rates, a symptom of lack of opportunity, are high. Over 60 percent more American Indians and Alaska Natives experience suicide 

than the national average. Alcoholism and diseases like tuberculosis are over 500 percent higher in American Indians and Alaska Natives. 

Despite these great needs, tribal governments have fewer resources than State and local governments to fulfill their governmental responsibilities to their citizens, making economic development even more important. The longstanding Federal policy of self 

determination is hollow with adequate resources or economic development to carry it out. 

The 8(a) program is an effective vehicle to realize Native self determination. Business, educational and leadership skills are being 

developed, and the results are impacting the economic and social 

conditions in Native and rural communities. For example, thousands of scholarships have been awarded to Native people. Hundreds of internships have given valuable work experience to our future workforce. Employment and, more importantly, career opportunities are available where none existed earlier. 

Business skills learned through government contracting, like 

strategic planning and management, are taking root in our communities, and leaderships skills are being developed in councils and on 

boards. Leaders are now being empowered to make choices about 

how best to sustain their economic enterprise, their culture, and 

their future generations. 

NCAI has taken seriously the recommendations from the GAO 

report and the prior SBA Inspector General reports. Since these reports were issued, we formed a joint working group with NACA, 

and with the National Center for American Indian Enterprise Development. And in 2007, we hosted a series of government-to-government consultations with the SBA administrator to discuss the 

GAO and the SBA IG report recommendations and to identify solutions to address these concerns. 

Through this process, we developed comprehensive recommendations to improve the program oversight. Consistent with the 2006 

GAO report, these recommendations we proposed were administrative rather than legislative. Our recommendations included developing effective data collection mechanisms, enhancing oversight 

through Web-based reporting, setting milestones for mentor protege and joint ventures, and increased transparency of ownership 

agreements. Additionally, we have urged that Congress increase 

funding to the SBA and charge the agency with reengineering the 

Native 8(a) program. 

We feel it is important for this Subcommittee and for Congress 

to know that tools, such as 8(a) business development created to 

promote economic self sufficiency, are working in our Native communities. The criticism about the success of tribal and ANCs’ conVerDate Nov 24 2008 11:43 Jan 29, 2010 Jkt 053113 PO 00000 Frm 00031 Fmt 6633 Sfmt 6633 P:\DOCS\53113.TXT SAFFAIRS PsN: PAT
28 

1The prepared statement of Ms. Kitka appears in the Appendix on page 110. 

tracting is misplaced. More importantly, pitting a disadvantaged 

group against another only distracts from the many issues all small 

and disadvantaged contractors have in common. 

The Federal procurement market is enormous and growing. 

There is plenty of room for tribal, ANC and other minority businesses to participate. We have proposed increasing SBA contracting 

goals and size standards, as well as increasing the thresholds for 

individually-owned 8(a) companies. 

Limiting access to the Federal marketplace will have devastating 

effects on our Native and rural communities. With conditions in 

Native communities comparable to those of developing nations, we 

should all be working together to improve programs like 8(a) business development programs and create the opportunity that is 

needed in Indian country. Thank you. 

Senator MCCASKILL. Thank you, Ms. Pata. 

Julie Kitka is here. She is the President of the Alaska Federation 

of Natives. She is also a Member of the Board of Directors of Chugach Alaska Native Corporation. 

And I do want to say for the record that you owe thanks to your 

Senators for your testimony here today. Your request to testify 

came in after we finished the witness list, but because Senator 

Begich and Senator Murkowski came to the Subcommittee and 

made a specific request for you to testify, we made an exception to 

the normal rule that we do not allow more witnesses after the witness list has been finished. So I do not know if you want to say 

no thanks to them when this is over or thanks to them, but you 

are here at their behest and we welcome you and look forward to 

your testimony. 

TESTIMONY OF JULIE KITKA,1 PRESIDENT, ALASKA 

FEDERATION OF NATIVES 

Ms. KITKA. Well, thank you, Madam Chairman, Ranking Member, members of our delegation, and other Members of the Subcommittee and staff. I truly appreciate the opportunity to present 

testimony on behalf of the Alaska Federation of Natives regarding 

our Native corporations, their contracting opportunities, and their 

status under the Small Business Administration 8(a) program, and 

request that my written testimony be included into the record. 

Before I actually get into some of the oral comments that I wanted to do, I wanted to place a couple things into the record to give 

you a background of when, for example, we are talking about scholarships that are going to our young people or this or that, it is not 

like scholarships like everybody just imagines that you just give 

out to kids. 

I want to put one thing formally into the record and would like 

to provide the backup for that, is we are still not on a level playing 

field as far as education in Alaska. There is a class action lawsuit 

pending in the courts right now in Alaska asserting that there is 

a $200 million a year shortfall deficit spending on the rural village 

schools, and this has been going on for decades. We have just had 

a class action lawsuit on law enforcement and the deficit spending 

29 

and the lack of law enforcement opportunities to deal with alcohol 

and other things. 

We are not yet at a level playing field. And so for example, the 

scholarships that come in from this 8(a) contracting to our young 

people are essential because we are trying to catch up generations 

of young people. And our corporations that are providing these 

scholarships, they are for all ages. It is for adults. It is for young 

people. It is for their descendants on that. But we are never going 

to catch up and get parity with everybody else in education if we 

lose these opportunities for these contracts. 

So I just wanted to say for the record, the value of these scholarships means so much more to us because we have got these hurdles 

to overcome still and we are not getting the funding for our basic 

first grade through high school education that other people across 

the United States take for granted, or their State government 

works really closely with them and accomplishes. 

We are still in the State under the Voting Rights Protection Act, 

the only other State along with Mississippi, that people have to 

look out to make sure our voting rights are protected. We were the 

last Americans to get the right to vote in 1924, and in 1971, the 

year our land claims was formed, they had to amend the State constitution to take out the requirement that you had to write and 

speak English in order for our elders, our Native people, could even 

vote in our State. We have still got a lot of catching up to do, and 

the circumstances we are dealing with as a people have to be understood by this Congress when you are making policies. 

As I put in my written comments, we are honored to submit this 

testimony. I have worked with an incredible number of Native 

leaders in public policy, public officials for many years, trying to 

create these opportunities. And we have had great success. We 

have had many accomplishments. 

I cite in my testimony a 30-year trend analysis that we commissioned from the University of Alaska in 2004 in which we looked 

at all the social, health and economic indicators of our whole populations over three decades. And the thumbnail sketch of that analysis is tremendous difference that this Congress, the State of Alaska, and the Native people have made in people’s lives. People are 

living longer. Infant mortality is being decreased, health indicators. 

Lots of progress is being made. So we do not have a hopeless situation, but we still have a thread of disparity in every single indicator, including poverty, including infant mortality, that needs targeted attention on that. And we still are not at a parity with other 

Alaskans, let alone with other Americans. And I really commend 

that report to you as you are taking a look at when we are talking 

about socially disadvantaged people on that, that report over 30 

years will see the progress of work has been done, but it will point 

to you every single indicator where the disparity continues. 

That is real. That is documented. It was not done for the purposes of justifying contracting but was done because our own leadership wants to pay attention to these indicators. And we also were 

aware that we are in the midst of a baby boom with a lot of growth 

in our population, and we knew that there would be tremendous 

needs in health and education to grow up this next generation of 

30 

1The report titled ‘‘Status of Alaska Natives 2004,’’ submitted by Ms. Kitka appears in the 

Appendix on page 161. 

young people. And I commend that report and would like to submit 

that for the record.1

I want to go on record on behalf of AFN fully supporting the 8(a) 

program and assuring this Subcommittee that our people are getting solid benefits from that program. As I mentioned, the scholarships, the internship opportunities, AND the work opportunities 

are real. 

Are there improvements that can be done? Of course there are 

improvements that can be done. But there are many other factors 

that need to be in place to help our Native population to grow our 

workforce in these contracting opportunities and in other sectors. 

I also want to extend on behalf of our board of directors and our 

people up there an invitation to this Subcommittee, the Chairman, 

and your staff to come up to Alaska and meet our people and see 

firsthand some of the contracting that is going on, some of our corporations, our people, and our aspirations. And I might suggest a 

time frame in which you might do that. 

On August 12, we have a very historic visit in our State by five 

members of the cabinet of President Obama—five cabinet secretaries are all going to be in Bethel, Alaska on August 12. Unprecedented in our history to have five cabinet officials, and they are 

also planning visits and sending staff out to the Wade Hampton 

district, which is among the top 10 poorest counties in the whole 

United States. 

And we welcome the attention and the effort and the partnership 

that is being offered to address and raise up the living conditions 

for our people. And if there is an opportunity for this Subcommittee—if, Madam Chairman, you cannot make it, please send 

your staff up. I mean join us in this because we are going to have 

quite a bit of open discussion and dialogue. And we are going to 

be looking at solutions and things that can go forward. But it is 

very historic. We have never seen that before. 

I know I am using quite a bit of time on that, but I want to try 

to get as much into the record. As I said, the basis for our Native 

corporations is our land claims settlement, and it is vitally important to the Native people of Alaska that our corporations are strong 

and healthy. They hold our settlement lands in them, our cultural 

lands, our historic and sacred lands. If they go down, the danger 

of losing our land and our future is very real. 

So we are committed to do everything that we can to help our 

leadership that is trying to make these corporations work and are 

being very diligent and successful to create as many opportunities 

as possible. 

I might want to cite one item. When I think about the IG report 

and the data and the period of time in which they collected data, 

I think that is kind of an incomplete time frame and it is probably 

nobody’s fault. But after the time frame on that, I mean we have 

had the worst economic crisis in my lifetime in this country, and 

how people are faring and how government contracting is doing. I 

mean we have to take into account we are still in this crisis and 

it has not bottomed out. 

31 

1The prepared statement of Mr. Lumar appears in the Appendix on page 122. 

So I would just like to suggest that the collecting of information 

and the monitoring and the status needs to continue on. And we 

need to pay attention to how everybody is faring in this economic 

crisis and how people are positioning their companies to be able to 

contribute to this country. We are very much committed to do everything in our power for the economic recovery of this country because we are affected by that in Alaska as well as we know every 

American is, and we want to be partners in trying to contribute to 

that as well. 

Senator MCCASKILL. Ms. Kitka, you are several minutes over 

your testimony. And I know you have come a long way. I do want 

to assure you that every word you want to go into the record will 

go into the record. But we want to make sure since we have five 

members of the panel that we have enough time for questions. 

If there is anything else you want to close with in just a few seconds, you are welcome to do so. 

Ms. KITKA. Well, in closing, I just want to reiterate our strong 

support of the 8(a) program and that it makes a difference, and we 

are pleased to provide additional information if the Subcommittee 

has questions for us or wants additional reports or information. 

We are honored to be allowed to testify, and we are just very 

proud to be contributing to building the country. I have stated in 

the testimony that we feel the No. 1 benefit to the Native people 

from these contractings is the capacity building and the whole Nation building experience. And we think as we get past this economic crisis, that whole capacity that we have built in our corporations and that Nation building experiences can be put to use not 

only throughout the rest of the United States but in other parts of 

the world. 

Senator MCCASKILL. Thank you so much. Thank you. 

Our next witness is Mark Lumer. He is the Senior Vice President 

for Federal Programs at Cirrus Technology, a service disabled veteran-owned small business based in Alabama. Before joining Cirrus, Mr. Lumer was the principal assistant responsible for contracting for the U.S. Army Space and Missile Defense Command, 

a member of the Senior Executive Service in Army Acquisition 

Corps with Level 3 certifications in both contracting and program 

management. He is an expert and author in the field of government contracting and has received many awards. Between November 2003 and July 2004, Mr. Lumer served as the Assistant Deputy 

Assistant Secretary of the Army for Policy and Procurement in 

Iraq. 

Welcome, Mr. Lumer. 

TESTIMONY OF MARK LUMER,1 SENIOR VICE PRESIDENT, 

FEDERAL PROGRAMS, CIRRUS TECHNOLOGY, INC 

Mr. LUMER. Madam Chairman McCaskill, Ranking Member Collins, Members of the Subcommittee, and the Alaska delegation, I 

am Mark Lumer. I am here representing Cirrus Technology, a 

small business located in Huntsville, Alabama. Cirrus Technology 

is a HUBZone and service disabled veteran-owned small business 

and a recent graduate of the 8(a) program. 

32 

Before I went into private industry, I did serve as a contracting 

official with the Department of the Army for almost 33 years. My 

last assignment was as the contracting executive for the Army 

Space and Missile Defense Command, a SES position and a post 

I was in for almost 13 years. Prior to that, I was on the Army staff 

at the Pentagon where I helped write the FAR and DFARS for 4 

years. So in a sense, this is all my fault. Part 19 of the FAR, in 

fact, and part 219 of the DFARS were two areas of my personal responsibility. 

I have been told I am the most decorated civilian contracting official in the history of the U.S. Army. However, there was a fire in 

St. Louis about 35 years ago and destroyed thousands of records, 

so that statement cannot be accurately verified. [Laughter.] 

The first observation I do want to make is that as a contracting 

officer for 25 years, the unlimited sole source authority that ANCs 

have was a very useful tool to me in issuing contracts pursuant to 

the Competition and Contracting Act quickly. I authorized the use 

myself about six times in those 13 years at SMDC for hundreds of 

millions of dollars. I received exceptional performance from the 

ANCs. The prices proposed were audited, they were negotiated and 

ultimately determined to be fair and reasonable by the contracting 

officers. I am really not in favor of having that tool completely 

eliminated. 

Serving now as a small business employee, which was an 8(a) 

and is currently a HUBZone and service disabled veteran-owned 

small business, I have to state it is incredibly difficult to compete 

with ANCs under the current rules. Cirrus has lost contracts that 

were bundled and awarded to ANCs. Cirrus has lost opportunities 

to compete where contracts were assigned to ANCs noncompetitively. 

As a general rule, Cirrus Technology will not compete for any 

procurements if there is a history of ANC involvement or where 

there is a likelihood that an ANC will go after the opportunity directly. I cannot provide you with any concrete evidence, but 

anecdotally, I firmly believe that many small businesses will routinely bypass procurements where ANCs are involved because the 

chances of winning are so small even if they are allowed to compete 

in the first place. 

It is my firm belief that the extraordinary growth in sole source 

awards to ANCs is a direct byproduct of the extreme shortage of 

government contracting officers and procurement contract specialists, a situation that, frankly, will only get worse with the addition 

of billions of dollars in stimulus money. I have seen and heard estimates that most government contracting offices are short-staffed by 

an average of 35 percent. I believe that figure to be low, personally. 

Procurement officials are in the constant process of performing 

what I call contracting triage. They are looking to see what requirements can be legally awarded in the shortest amount of time 

using the least amount of resources. And that inevitably leads 

them to using ANCs because of the unique unlimited sole source 

authority that exists, the fact that they get small business credit 

for those awards, and the guarantee that there will be no protests 

sustained by the GAO. There are several areas where the playing 

field is currently uneven. We have talked about the sole source 

33 

1The prepared statement of Ms. Schneider appears in the Appendix on page 124. 

thresholds for HUBZones, non-ANC 8(a)s; service disabled is three 

and a half and five and a half versus unlimited. The size standards 

for most small businesses are determined by employees, typically 

500, 1,000, or 1,500 depending upon the NAICS code or sometimes 

by income as opposed to no employee limits for the ANCs. That can 

create an extreme disparity in the ability to compete. 

ANCs may have multiple 8(a)s, as has been identified previously, 

while other firms are typically limited to one each. That ANC’s 

unique authority gives them an extraordinary advantage to adjust 

overhead rates and general administrative costs, thereby giving 

them a cost advantage that other firms do not have. The inability 

of companies to protest a contracting officer’s decision to award a 

procurement to an ANC, especially when there are bundling issues, 

that is a problem. 

To obtain a HUBZone designation from the SBA, one requirement is that 35 percent of the employees in the company live in 

any designated HUBZone track, yet there are no minimum requirements for ANCs to employ tribal members or Alaskans. In fact, 

there is no requirement that they even have offices, in Alaska, 

though almost all of them do. Even the subcontracting arena, there 

is special incentives, the 5 percent bonus that was talked about. 

There are no incentives for subcontracts to HUBZones, womenowned, or service disabled veteran-owned small businesses. 

Having said all that, I truly believe there are many legitimate 

reasons to provide procurement assistance to ANCs. I do not believe many companies would even object to allowing ANCs to have 

some type of procurement preference in competing for government 

contracts. However, the current situation is out of balance and it 

may be time to start to swing the pendulum back the other way. 

I look forward to answering any questions the Subcommittee 

may have. 

Senator MCCASKILL. Thank you, Mr. Lumer. 

Our next witness is Christina Schneider. She is the Chief Financial Officer for the Purcell Construction Corporation, a HUBZone 

contractor based in the State of New York. Welcome, and we look 

forward to your testimony. 

TESTIMONY OF CHRISTINA SCHNEIDER,1 CHIEF FINANCIAL 

OFFICER, PURCELL CONSTRUCTION CORPORATION 

Ms. SCHNEIDER. Thank you. Good afternoon. My name is Christina Schneider, and I am the Chief Financial Officer of Purcell 

Construction Corp. I also serve as the Director on the New York 

State Associated General Contractors (AGC), a statewide trade organization of over 600 construction contractors. We are also a 

member of AGC of America with over 33,000 members nationwide. 

One of the founding principles of AGC is to promote fair and open 

competition within the marketplace. 

I commend the Senators today for calling today’s hearing and am 

honored to present testimony on this subject. Specifically, my remarks will focus on the effect that sole source awards to Alaska 

Native Corporations has had on Purcell Construction and other 

local general contractors. 

34 

We are a second generation mid-size general contractor based in 

Watertown, New York. Watertown is a small community in rural, 

economically depressed northern New York where much of the 

economy is dependent upon Fort Drum, home of the Army’s 10th 

Mountain Division. From 2002 to 2007, our company was one of 

two local contractors who held a term contract at Fort Drum. We 

completed over 96 different task orders under a contract valued at 

$57.5 million. Both firms involved in this contract received multiple 

commendations for the work that we did, and by all accounts performance exceeded contract expectations. 

In 2004, the government anticipated exceeding our contract value 

limits, so they began preparing for the solicitation of a follow-on 

contract, which we assumed would be through competitive bidding. 

We were shocked to learn that the government decided to award 

the contracts to two Alaska Native Corporations, Chugach and 

Alutiiq, on a sole source no-bid basis. Our firm and several other 

general contractors in northern New York were totally shut out 

from competing for this contract. 

We were given various reasons for this decision, ranging from 

there not being enough time to procure this contract using traditional methods to the unbelievable argument that this sole source 

contract would lead to the most potential for involvement by local 

companies. 

In addition to being excluded from bidding, we had no opportunity to protest the decision. Federal regulations dictate that only 

a competing bidder has legal standing to protest. With no competitors, there is no mechanism for us to protest. This was particularly 

frustrating because we believe Chugach was ineligible to receive 

sole source awards because of their multiple large affiliates operating in the same industry classification. We provided the SBA in 

Washington with documentation to support our claim but have no 

evidence that this information was ever considered. 

Even though this particular sole source contract was awarded in 

2004, local contractors are still suffering from the impact of its 10- 

year, $400-million obligation. We have learned over the past month 

that most of the current construction projects being procured by the 

Fort Drum directorate of contracting, including the bulk of the 

stimulus funds allocated to Fort Drum, are going through these 

two ANC contracts. Local contractors are not competing for the 

stimulus funds. 

While it is true that ANCs employ local labor and subcontractors, 

this contracting preference has eliminated opportunities for general 

contractors like us. Our firm is a prime contractor, and ANCs have 

replaced us in performing that function. It has negatively impacted 

our firm and others like us who no longer compete for this work. 

As you know, the foundation of the small business legislation is 

to temporarily provide assistance to fledgling firms. There are also 

dollar volume thresholds that apply to the 8(a) program. And as we 

have heard today, ANCs are exempt from all of that. 

If you refer to a website called Government Contracts Won, the 

two companies that were awarded the Fort Drum contracts, Alutiiq 

and Chugach, have amassed in excess of $2.6 billion and $3.8 billion in government contracts respectively over the past 9 years. According to the Inspector General’s report issued last week, these 

35 

two ANCs represent a total of approximately 2,300 individuals. 

This equates to $2.7 million in contract dollars per person. To us, 

these figures alone are staggering. But we also know that Alutiiq 

and Chugach are only two out of scores of ANCs being awarded 

Federal contracts. 

In the construction industry, as with most businesses, when competition is removed, prices soar. The costs of this arrangement to 

the Federal Government is astronomical. Another side effect of 

these preferences is the impact on truly small businesses. We suspect many contracting officials use this as a way to meet their 

small business contracting goals. The award of a large contract to 

an ANC surely comes at an expense of legitimate small businesses. 

We think the solution to this is straightforward. The unfair advantages enjoyed by the large Alaska Native Corporations must be 

closely examined. Their immunity to affiliation rules and size 

standards and the lack of dollar limits on sole source contracts 

should be eliminated. Tribal firms that legitimately meet the small 

business standards would still be entitled to all of the benefits offered by the 8(a) legislation. 

Thank you for this opportunity to present our concerns. 

Senator MCCASKILL. Thank you, Ms. Schneider. 

Let me start with going through some of the numbers with the 

representatives here from some of the ANCs. Let me go through 

the three corporations that you represent. 

In 2008, Afognak had 728 shareholders, and you had $763 million in contract revenue and you employed 6,400 people. Less than 

1 percent of your employees were shareholders of your Alaska Native Corporation. 

Ms. Kitka, your corporation, Chugach, your total revenue for 

2008 was $952 million; 62 percent of that revenue was from Federal contracting. The revenue from the contracts represented $595 

million. You had 6,587 employees; 2.2 percent of your employees 

were shareholders, 147 people. 

Ms. Pata, the Sealaska Corporation, your total revenues for 2008 

were $126 million. Your revenue from contracts was only $8.4 million. In fact, only 6 percent of the revenue of your corporation came 

from contracting. You had 1,069 employees, and the largest percentage of shareholders employed, you had a 136 shareholders employed or 12.7 percent. 

If I add those together, we have less than—in revenues of hundreds and hundreds and hundreds of millions of dollars, in fact, 

well over billions of dollars. We have literally less than 300 people 

that live in Alaska that are employed or that are members of your 

corporations. 

Ms. Kita, as you talk about capacity building, how is it capacity 

building if less than 1 percent of the employees of the company are 

members of the corporation? 

Ms. KITKA. Well, first off, Madam Chairman and Members of the 

Subcommittee, I came here to testify in my role as President of the 

Alaska Federation of Natives, not in my role or spokesman for 

Chugach Alaska Corporation. I would be happy to convey any questions back to that corporation. 

36 

The Alaska Federation of Natives is a completely different entity 

than Chugach. It is an umbrella organization, and that is the role 

that I came here prepared to testify to try to give you—— 

Senator MCCASKILL. OK. That is fair enough. Let me ask the 

other two—— 

Ms. KITKA. But I would be glad to get questions or information 

back. 

Senator MCCASKILL. That would be terrific. 

I am trying to get at whether or not this is a capacity building, 

which traditionally is what the 8(a) program was designed to be. 

It was designed to allow small businesses to grow and get their foot 

in the door for Federal contracting, to build capacity. And then 

once the capacity is built, to graduate from the program and go 

into the world of competing. And, in fact, there are some Alaska 

Native Corporations that are, in fact, not really participating in the 

sole source. They are out there competing. 

With such a low number of Alaskans—45,000 people are employed by ANCs and only 5 percent of them are members of the 

corporations; 95 percent of the employees have nothing to do with 

the corporations. 

Ms. KITKA. Madam Chairman, on the capacity, since I put quite 

a bit in my written testimony about capacity and Nation building, 

I would be pleased to spend more time and focus a little bit more 

on the capacity building in a written response back to you. 

Senator MCCASKILL. That would be terrific. 

Ms. KITKA. Because I absolutely know that the capacity building, 

in my judgment, based on my years of experience, that is one of 

the strongest benefits of this program statewide and—— 

Senator MCCASKILL. OK. We would welcome that testimony. 

Ms. PATA. Madam Chairman, I would actually like to answer this 

question. I am very proud of Sealaska Corporation and the work 

that we have done, particularly around shareholder hire. If you 

look at the numbers that you talked about, 12.7 is the shareholder 

hire rate, if you take out the U.S. employees versus our offshores 

out of the U.S. jurisdiction employees, which is about 455 of them 

are Mexican employees, we get to a 21.4 percent shareholder hire 

ratio. 

But if you look at the way that we do our business, our business 

in Alaska and our corporate headquarters, we have 80 percent 

shareholder hire in our corporate headquarters, which I think is an 

outstanding ratio considering that in the 40 years that we have 

been in business, the first 20 years of business development for all 

the Alaska Native Corporations was very challenged with trying to 

develop folks—our shareholder base that had gone to school and 

had been able to get the education necessary and the skills in businesses outside. 

One of the things that Sealaska does that I am so proud about 

is our scholarship program and our internship program. And you 

have the numbers in the materials that we submitted to you. But 

in our scholarship program, we do not just give our scholarship, we 

actually continue to track our scholarship. And so that as we are 

recruiting for any opportunities in the corporation, we recruit to 

that scholarship base. We also are very proud of our internship 

program. And you can also see in the materials that we submitted 

37 

to you that we give you a number of stories of how our Sealaska 

core management team really started from either the scholarship 

program or the internship program or both. The majority of our 

vice presidents and core management team is shareholders. 

When we are looking at the capacity of the corporations—and I 

cannot speak for the other corporations because I only represent 

Sealaska Corporation as the board of directors. But I do know that 

we are looking for models and sharing models, not only amongst 

us in Alaska but in the lower 48 States, and that these models of 

how do we use scholarship programs, as the tribes are looking 

across the country to implement scholarship programs, are looking 

at best practices and what works. 

I think some of the things Sealaska has done through experience, 

we have learned tracking makes a difference in being able to recruit back home to our own community that those have left our 

community and to get them back. And so I think one of the things 

about this government contracting program, 8(a) program, in this 

business development, and one of the recommendations that we 

made, is that we really look towards taking those best practices 

and using them to be able to implement better practices. And some 

of the things that Native American Contracting Association, NCAI, 

and NCAIED, have done in trainings with lower 48 tribes is really 

sharing some of those best practices. 

Senator MCCASKILL. Ms. Lukin, did you want to address the less 

than 1 percent of your employees being shareholders? 

Ms. LUKIN. Senator, I came here today to speak on behalf of the 

Native American Contractors Association. As such, I cannot speak 

to the direct operations or businesses relating to another organization. Certainly, I am sure that I can find the proper person to answer that particular question regarding Afognak Native Corporation. But I would like to speak in general terms about shareholder 

hire and employment of Alaska Native people. 

As you know, I hope, that the goal of every Alaska Native Corporation is to hire as many qualified shareholders and their family 

members as possible. In fact, we have in place Public Law 93–638, 

which allows us to provide a preference for qualified shareholders, 

Alaska Natives, and American Indians. 

In addition to that, we are really focused on mentoring, growing 

our Alaska Native students to be at a point where they can earn 

management level positions within our Alaska Native Corporations. Remember that we are really talking about first generation 

college graduates, such as myself, as a great example of somebody 

who came from a family that did not have a college education. So 

really, I am the first generation that is qualified to earn those 

management level positions. 

I would also like to note that a lot or most of the Alaska Native 

Corporations have shareholder development departments focused 

specifically on helping to train, mentor, and grow our shareholders 

to earn those positions. They do everything from helping shareholders build life skills, to resume writing, and training. They help 

them with mock interviews and then help walk them through the 

hire process. So I wanted to just focus on that in general terms. 

Senator MCCASKILL. Yes, and I am going to go ahead and give 

my colleagues from Alaska an opportunity to question now since I 

38 

am over my time. I have a number of questions that I want to ask, 

and so hopefully, this will not take too long. 

Senator Begich. 

Senator BEGICH. Thank you very much, and this line of questioning, I am going to follow up on it, also, actually. 

I think there is an ongoing misunderstanding how the corporations operate. Not only do you have the for-profit arms, you have 

the non-profit arms, which are a significant portion of the business 

that goes on, which has a huge percentage of Alaska hire, Alaska 

Native hire. But, also, they are providing the health care. They are 

providing the major part of the social network. 

So tell me if this is a fair statement, that individuals that may 

work for a time being—or like, for example, I met four interns from 

NANA Corporation that were working for some of the subsidiaries 

here throughout the country and came by here a couple weeks ago. 

They may or may not stay in those corporations. They may go to 

one of the sister corporations, for example, the health care. They 

may be an administrator. They may be a practitioner. 

Is that a fair statement? That if you take a very narrow look at 

8(a)s by themselves, you can argue the percentage all kinds of ways 

because that is what numbers do. But if you look at the big picture, 

what ANCs were set up for, is that cross sharing not only for 

American Indian tribes but also for within the corporations within 

Alaska—and, really, the village corporations have kind of grown in 

the last few years versus the regionals. 

Ms. KITKA. Well, Senator, I would like to address that. And it 

was kind of going to be my follow-up to the Chairman. And I will 

use my daughter as an example. My daughter is a graduate of the 

University of Alaska nurses program with honors last August. She 

was supported by scholarships from her native corporation. There 

is a critical nurse shortage in our State, in our villages and communities, and she graduated with honors, and now she is working for 

the Center for Disease Control on influenza things. 

If you took a look at the growth of teachers in our village schools 

and in our hubs, in our communities, you will see the incredible 

growth of Native teachers. I bet if you looked at every single one 

of them, virtually 100 percent of those teachers would have been 

funded from their village or their regional corporation’s scholarship 

programs. 

As far as I know on any of the scholarship programs, nobody is 

just trying to only put money into law or business management. 

They are trying to create opportunities for our young people in 

whatever areas that they want to go to, and some gravitate towards working with the corporation and we really encourage them. 

But like I said, like my daughter, she is in the health field in a 

critical area of need, and there are so many Native teachers that 

are there as well. 

Senator BEGICH. Thank you. 

Ms. PATA. I would like to follow up on the rippling effect of what 

I see as today’s investments. I know as a corporation we are taking—and in my testimony, I talk about the longer term. We, as Native peoples across this country, are always concerned with the seventh generation to come. And so as I look at that, these investments we see today have rippling effects. It is that student, that 

39 

person who got that first time scholarship, who went to college, and 

who then now maybe more in that family will go to college. It is 

how they invest in their communities. 

But it is the way we do our business, too. It is our corporate business philosophy. The way that we stay connected to our non-profit 

values as far as cultural and community values that are very important in what we do. We have not only the tribal organizations, 

we have the non-profit associations that function. And we very 

much have the same people. So no matter what hat we are wearing, we are all the same Alaska Natives concerned about the subsistence and the other political issues that affect our communities. 

And so, we have to invest in those, too. 

Senator BEGICH. Let me ask one other question—and I have got 

about a minute left here. 

The analysis, which, again, I have a lot of questions—there is a 

committee report that came out late last night that I have had a 

chance very briefly to review. But when they talk about shareholders within the corporation, it is not uncommon to have other 

Native corporation shareholders that are not of the corporation 

that runs the corporation. 

Is that a fair statement? 

Ms. PATA. That is a fair statement. When the shareholders were 

divided, when—— 

Senator BEGICH. The regions. 

Ms. PATA [continuing]. The regions were divided, they kind of 

drew lines around the map where you were living at the time. 

Senator BEGICH. Right. 

Ms. PATA. Not unlike some places in the lower 48 when we are 

dealing with those issues and so—— 

Senator BEGICH. So we have to be careful when we talk about 

the numbers of shareholders of your corporations working for the 

corporations. The real question is Alaska Native hire within the 

corporate structures that exist. And one of the biggest strengths 

you have is the issue of in-state and how much you have been 

doing there. 

For example, one of the interns I met, it was the first time he 

was ever out of his village. And people have to have that perspective when they deal with what we are doing in Alaska, that it is 

a very unique situation where a young person may not have ever 

left the village and this is a new experience. But when you think 

of shareholders, I think of it from a broader perspective, and that 

is a fair statement, I think. Thank you. 

Senator MCCASKILL. Thank you, Senator Begich. Senator Murkowski. 

Senator MURKOWSKI. Thank you, Madam Chairman. 

I think we all recognize that there is nothing in the Federal Government requirements when we are talking about government contracting here, that in order to get a contract here in Virginia, you 

have to be a Virginia-based company. And so, there seems to be 

some suggestion, both in the report that we have seen and from 

some of the testimony that we have heard today, that, well, the 

criticism is, is that we are not seeing enough local hire, enough 

shareholder hire. Also in the report, there was some criticism diVerDate Nov 24 2008 11:43 Jan 29, 2010 Jkt 053113 PO 00000 Frm 00043 Fmt 6633 Sfmt 6633 P:\DOCS\53113.TXT SAFFAIRS PsN: PAT
40 

rected that we are not seeing a substantial number of Alaska Natives that are part of the executive structure. 

I will ask you, Ms. Lukin, you come from Port Lions. Now, tell 

me—and I am not asking you to wear your other hat here, but as 

a resident of Port Lions, what kind of economic development can 

we really see within a tiny community like this? 

But, Ms. Pata, you come from southeast Alaska, where I was 

born down there. We were born in a national forest. This is land 

that is not available for development. We are working with 

Sealaska to try to allow for some of that. We have got the CEO of 

NANA Corporation, 60 percent of NANA’s lands are locked up as 

Federal lands. And when we are talking about the ability to hire 

your people locally, the reality is, if you are going to have a government contract, more likely than not, it is going to be out of the 

State, and more likely than not, how easy is it to get an individual, 

a young person, whether they are from Port Lions or Angoon or 

from Kiana, to come here to Virginia? 

Can you just speak to that? Because, Ms. Lukin, you have obviously got some very present experience as a young Alaska Native 

who has left the village and come out into this world. 

Ms. LUKIN. Yes. Quyanaa. Thank you for the question. 

My village, like so many in rural Alaska, is not connected to any 

other communities by road. It is only accessible by small plane or 

a seasonal ferry from the mainland or boats. 

Senator MURKOWSKI. How much does it cost to get from your village to Anchorage? 

Ms. LUKIN. If I were to fly from my village to Anchorage, it 

would be several hundred dollars. To take my family, it is over 

$1,000 to leave the village. And we are probably less expensive 

than many in, say, the Bethel region or the Aleut region or other 

areas in the State. 

There are no economic opportunities in my community. We had 

one single store, which I think would be comparable to what you 

might have here is like, what, a 7-Eleven? But it closed because it 

could not sustain itself in our village. We have minor commercial 

fishing, but the prices for fish have been drastically declining over 

the years. And we used to have timber development, but again, the 

prices for timber dramatically went down in the mid-1990s. 

The likelihood that an Alaska Native Corporation is going to be 

pursuing contracts out of the State is very high because there are 

contract opportunities in the State of Alaska but there are only so 

many opportunities, and there are 200 Alaska Native Corporations. 

How likely is it somebody will move? Very unlikely. I just moved 

myself, and it is hot here. But we are very connected to our culture 

and to our community, to our family and to our traditional ways 

of life. So to uproot your people and move them to somewhere outside of your community, it is very difficult to do. 

Senator MURKOWSKI. But let me ask about that because what we 

are attempting to do through the use of the educational scholarships, primarily, is to provide for that level of educational opportunity so that there can be a level of exposure to how we can make 

business opportunities and translate them back to the village. 

Sometimes it is going to work; other times it is not going to work. 

But as you point out, we are really just in that first generation of 

41 

educating young Alaska Natives and now being successful in bringing them back home; is that correct? 

Ms. LUKIN. Yes, that is correct. And I would also point out that 

through the scholarships and small business programs available 

to—and by the ANCs to their shareholders, there are some in my 

dad’s age bracket who at the age of 53 decided to start his own 

small business, sports fishing charter business in our village. And 

he is still going strong today, used his dividends to help purchase 

a small boat and got scholarships to help him get the Coast 

Guard’s trainings and the certifications that were necessary to operate his small business in our village. So there are opportunities 

like that that are growing in rural Alaska because of the 8(a) program. 

Senator MURKOWSKI. Thank you. 

Senator MCCASKILL. Thank you, Senator Murkowski. 

Would the three of you have any problem with competing with 

other ANCs? 

Ms. PATA. No, I think we actually do compete with other ANCs 

on various contracts. 

Senator MCCASKILL. I mean, actually taking away the ability of 

you to get a sole source contract if, in fact, the other companies 

that you were going to compete against were all ANCs, so that it 

would actually be a competitive bidding process but all of the bidders would be ANCs. 

Do you have any problem with that? 

Ms. PATA. I am not here to speak about that at this point. Obviously, we would have to have a consultation on that issue. It just 

brings to light two issues for me. One is sole sourcing—the issues 

around sole source contracting and whether or not it is a good Federal value is not only an issue of 8(a) contracting, certainly not an 

ANC only issue or a tribal issue because tribal governments have 

the same ability to sole source as ANCs. And I think that the separation of those poses an issue for me. 

I think, though, once again, we look towards recommendations 

for improving the program. We would be more than glad to sit 

down with you and your staff and the Subcommittee and have consultation with tribes across the country as well as the ANCs to 

come up with some recommendations that could address some of 

the concerns. 

Senator MCCASKILL. Do not need to explain to me that we have 

a problem with noncompetitive contracts? How I found out about 

you guys was that I was looking in to all the noncompetitive contracts that were let in Iraq. And as I started pulling the thread, 

I started finding all of these noncompetitive contracts across our 

government. 

This is by no means an effort to say that the ANCs are the only 

problem we have in the Federal Government as it relates to sole 

source contracting. We have lots of problems surrounding sole 

source contracting, especially at DOD and Homeland Security. And 

that is why the President issued an Executive Order in March directing his Executive Branch to prefer competitive bidding because 

we have gotten into this incredible explosive growth, not just in the 

ANC area, not just in the 8(a) program, but an explosive growth 

42 

in contracting across the board. And that is why this Subcommittee 

was created, is we need to look at all of the contracting issues. 

If you might be willing to compete with other ANCs and if we 

put that out there on the table, what about accepting the exact 

same rules as the Indian tribes? Would you have any problem with 

having the same rules for contracting as it relates to a status of 

economically disadvantaged? 

I also served on the Indian Affairs Committee briefly and I also 

have been informed and briefed—although not firsthand knowledge, because we do not have significant tribes in Missouri—of the 

incredible dysfunction of our government in terms of making sure 

that we have opportunity and economic opportunity for Indian 

tribes. 

So I think all the things you have talked about in terms of scholarships and empowerment and all of those would equally apply to 

the Indian tribes. 

Would you have any problem with accepting the exact same rules 

as the Indian tribes have? 

Ms. PATA. I guess, once again, I would have to say that we obviously are not here to be decisionmakers for the body of people who 

sit behind us or that we represent here today without having those 

conversations. 

I do want to clarify, though. I think there was some concern 

about the differences between tribes and ANCs. The differences between tribes and ANCs are really the issue of proving that you are 

disadvantaged. And tribes one time prove that they are socially disadvantaged, and then they are able to continue to operate multiple 

8(a) contracts, very similar to ANCs. 

The only other difference that is out there is in the management 

responsibility, and even at that, tribes are allowed to be able to put 

forward management plans to show that they can—that they would 

have a non-Native manager as long as they had a mentoring program in place. 

As far as equitably being able to compete on sole source contracts 

and those elements, we are the same. So I am trying to discern 

from you exactly what are you—are those the only two issues that 

you were concerned about? 

Senator MCCASKILL. Well, the main issue is that regardless of 

how large an ANC gets, it is still economically disadvantaged. It 

does not matter how big it is. Whereas with Indian tribes, at a certain point in time, they lose their status as economically disadvantaged if they get to a certain size. 

Ms. PATA. No. I am trying not to disagree with you, but it is my 

understanding that tribes prove they are socially disadvantaged 

the first time, the one time. 

Senator MCCASKILL. Socially and economically disadvantaged. 

Ms. PATA. Disadvantaged the one time, and they graduate out of 

the program just like ANCs graduate out of the program. So ANCs 

subsidiaries are—ANCs 8(a) programs graduate out of the programs. Tribes graduate out of the program, too. That is also the 

same. 

The difference, the tribes no longer, according to SBA regulations, have to prove themselves, continually prove themselves that 

they are socially and economically disadvantaged. They do that one 

43 

time, whereas the ANCs have been given by congressional support 

the recognition that they have already proved they are socially and 

economically disadvantaged because they are addressing a community of socially disadvantaged folks. 

I think if you look at the history of the program, part of that was 

at the time when ANCs were being included, tribes were just getting this new gaming opportunity and many Members of Congress 

were not quite sure whether or not how that would be. And so that 

is why the ANCs have this congressional recognition but the tribes 

have to prove that they are still socially and economically disadvantaged. But they do not have to repeatedly have to prove it to 

themselves. 

Senator MCCASKILL. I think we have got something on the table 

here. 

Ms. PATA. Yes. 

Senator MCCASKILL. If there is no difference, then I would hope 

that you would be willing to accept and support a change in the 

law that would make sure that you are on completely equal footing 

as it relates to socially disadvantaged and economically disadvantaged, because, certainly, some of your corporations are much larger than many Native American corporations. 

I do not think any of you would argue about that, would you? 

Ms. LUKIN. Ms. Chairman, as Ms. Pata indicated earlier, we are 

not in a position today through our organizations to negotiate on 

behalf of our people. We need to go through an extensive tribal consultation process to ensure that the government-to-government relationship between Native peoples and the United States is maintained and we have the opportunity to hear everyone’s voice. So we 

would be happy to have that discussion. 

Senator MCCASKILL. OK. 

Ms. LUKIN. But we would like to go through the proper process. 

Senator MCCASKILL. Oh, I understand. I just wanted to put it out 

there, that would seem to me—— 

Ms. LUKIN. And I would also clarify—— 

Senator MCCASKILL [continuing]. The starting point of just some 

discussions. 

Ms. LUKIN. Absolutely. And the only other point I would clarify 

for Ms. Pata is it is proving economic disadvantage. In fact, tribes 

and Alaska Natives are automatically socially disadvantaged. 

Thank you. 

Senator MCCASKILL. Right. It is the economic disadvantage 

where the difference is, not the socially disadvantaged. 

Ms. LUKIN. Thank you. 

Senator MCCASKILL. Mr. Lumer and Ms. Schneider, can you explain—especially you, Mr. Lumer, with your background in contracting—what would be in your mind a rationale for allowing a 

corporation a 5 percent bonus for subcontracting with one of their 

affiliates of taxpayer money? 

Mr. LUMER. Madam Chairman, I was here for the earlier discussion. I frankly do not agree that is allowable. 

Senator MCCASKILL. You do not? 

Mr. LUMER. I do not. 

Senator MCCASKILL. OK. Well, I believe we have people that are 

allowing it, so we need to get you back in government. 

44 

Mr. LUMER. That is another whole discussion, ma’am. [Laughter.] 

Senator MCCASKILL. Well, that would—because it is our understanding, based on the information that we have gathered at the 

Subcommittee, that, in fact, a 5 percent bonus is being paid. 

Mr. LUMER. I believe it is allowed by law, but I believe by regulatory process, it is not allowable. 

Senator MCCASKILL. OK. Do you think there is any limit that 

would be appropriate, Ms. Lukin or Pata? I mean, would there be 

a point that if an Alaska Native Corporation was netting profits of 

$10 billion a year, $20 billion a year, would there ever be a point 

in time that you would be willing to say that you ought to have 

to compete with everyone else for contracts? 

Ms. LUKIN. Again, Senator, actually there are a couple of points 

I would like to make here. One, I think it is important that we remember that Native participation in the 8(a) program honors the 

government’s commitment to Native peoples. 

In addition to that, I think that I would reiterate my earlier 

point on a tribal consultation process, and I would also—I forgot 

to mention earlier—encourage us to also remember other committees of joint jurisdiction on this, including the Indian Affairs and 

Small Business. So again, we would be happy to work with you in 

a positive, joint effort with our people. 

Senator MCCASKILL. I am painfully aware that this is not my decision. I understand other committees have jurisdiction. 

I do want to point out for the record that I think there has been 

a little bit of a blurring because the legislation that you proudly 

spoke of, Senator Begich, was passed in 1971. The first contracting 

preference came about in the 1980s. And, in fact, even in the 

1990s, there was additional contract preferences put in. So the idea 

that this was envisioned back in 1971, that we would fast forward 

to 2008, I am not sure that necessarily follows because one came 

almost 30 years after the other. 

Ms. PATA. And if you inferred that from my abbreviated oral 

statement, I apologize because what I was basically saying was 

that Congress enacted ANSCA and Congress also enacted the procurement preferences. 

If you studied the ANSCA history, as probably all of us have, the 

first 20 years are pretty grueling for our corporations and very difficult as we dealt with the challenges of building capacity. And that 

is one of the reasons why in those years when we were looking at 

amendments to ANSCA that we were also looking for ways of really trying to make the corporation model work. It was a model that 

Congress invested in because they did not want to deal with the 

economic conditions that were present in the reservations during 

the 1970s when this was all being debated. So I think we have 

tried—this corporate model worked to the extent that it threw us 

into an environment that we had to understand corporations and 

shareholder value but still never left our cultural and our personal 

values. 

Senator MCCASKILL. I also wanted to point out that there are 

subcontracting going on with major multinational corporations that 

are big players in government contracting, such as Wackenhut. I 

believe your former corporation, Ms. Lukin, had a major subcontract with Wackenhut. And Blackwater has been a subconVerDate Nov 24 2008 11:43 Jan 29, 2010 Jkt 053113 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 P:\DOCS\53113.TXT SAFFAIRS PsN: PAT
45 

tractor. Korvis has been a subcontractor. So it is not uncommon for 

an Alaska Native Corporation to, in fact, subcontract with a company that is much larger than the ANC; is that correct? 

Ms. LUKIN. Ms. Chairman, yes, Alaska Native Corporations, 

tribes and Native Hawaiian organizations, like all other Federal 

contractors, can enter into joint venture agreements and subcontract arrangements under the FAR and the SBA regulations. 

Senator MCCASKILL. OK. I am curious. I have had a penchant, 

a bug that is bugging me about line standing. And I found out 

today for the first time—I was conducting a hearing where there 

was line standing, and I am curious how many of the people in the 

audience hired someone to stand in line for them for this hearing, 

if you would raise your hands, if you are willing to. 

Only one, two brave souls? OK. All right. I was just curious. 

Senator BEGICH. Our Alaskan people understanding waiting and 

being patient. [Laughter.] 

Senator MCCASKILL. I have a feeling there might be more people 

in the room that did not want to raise their hands, but congratulations to the two of you who were willing to raise your hands. 

I think we are going to conclude the hearing there, unless the 

two of you have something that you are anxious to ask. I am feeling a little uncomfortable since I am the only Member of the Subcommittee left here, and it does not quite seem fair, you guys. 

[Laughter.] 

Senator MURKOWSKI. Madam Chairman, if I just may add my 

thanks. We have a large contingent of Alaskans that have come 

back for this hearing. I think it is fair to say that when you sent 

out your letter some 6 weeks ago, there was a great deal of angst 

about this hearing, the direction that you were taking with it, and 

a real concern that a program that has really yielded benefits for 

so many in Alaska, from the furthest point north to the smallest 

communities south, there was a concern about this. 

But I have seen interviews, talked with some of the CEOs of our 

ANCs, talked with people who are back here representing their native corporations, and they feel very strongly that they have a story 

to tell. And I think I can speak—I will speak for them in saying 

they want that opportunity to present not only where they have 

come from but where they feel they are capable of going given some 

opportunities. 

I do not think any of them are afraid to present the facts. They 

are willing to work certainly with you and this Subcommittee. And 

I hope that some of the suggestions—I know NCAI has been working on this since the hearing back in, what, it was 2006, and looking at proposals. I know that NAC has been looking and assessing. 

We want to make sure that it works not only for Alaska Natives 

but when they assume these government contracts, whether they 

be in Fort Drum, New York or wherever, and are able to employ 

thousands of people helping the economic recovery of this country, 

that it works on all sides. 

So we want to work with you on this, but I do think that the 

message from Alaskans is we have a success story here, we are 

proud of it, and we are pleased to be able to speak to it. So thank 

you for giving this opportunity today. 

46 

Senator BEGICH. Madam Chairman, I just want to say thank you 

very much for the opportunity. Thank you for allowing both Senator Murkowski and I to be here and to outnumber you on the 

backend here. I appreciate that. 

But it was, I think, especially toward the end here, a very positive opportunity to figure out what is the right thing to do for the 

long-term benefit of not only Alaskan Natives but American Indians and Hawaiians and all of us together. So thank you very much 

for the opportunity. 

Senator MCCASKILL. Let me close with a couple of comments. 

First, the record will stay open for 15 days for anyone who wants 

to submit information for the record. We will consider any information that is submitted for the record. 

I also want to make sure that there is no misunderstanding 

about this. This has absolutely nothing to do with whether or not 

the Native people of Alaska have had struggles and challenges that 

are unique to the Native people of Alaska. And one of the reasons 

I was concerned about line standers is I know how many Alaskans 

traveled here and they deserve a seat at this hearing. And sometimes the folks that just are regular citizens get squeezed out at 

the door because of people who have been standing in line. That 

is why I was curious about it. And I am glad we had people standing during this hearing. And I hope none of them came all the way 

from Alaska because they did not have enough room because of line 

standers. 

But more importantly, what I want to make sure everyone understands, that this is about whether or not we have created preferences in the law that are capable of being outgrown, and whether 

or not the preferences that we have created in the law are something that should be permanent, and whether or not the preferences we have created in the law are providing good value to taxpayers. 

I hope Alaska Native Corporations soar, and I think they have 

the capability, many of them, in fact, the largest ones, to do very 

well without sole source contracting. In fact, many of them are. 

And a lot of the income for these corporations, based on our analysis, is not even from Federal contracting. In fact, the majority of 

the income from all the Alaska Native Corporations are not from 

Federal contracting. When we are going to say to the government 

you do not have to worry about whether or not you can get the 

same goods or services for cheaper, are we going to continue to 

have a compelling rationale to carve out this kind of exception for 

companies that have grown as big and as powerful in the contracting field as some of the ANCs have? And that is really what 

this is about. 

I hope that the people of Alaska continue, and the shareholders 

of these corporations continue to receive scholarship and cultural 

benefits for decades in the future. The question is how long will we 

continue to have a preference in the law that squeezes out good 

companies like Christina Schneider’s and lots of companies in 

many States in this country that have the willingness to work for 

the government for less to provide the same service. And that is 

really what this is about. 

47 

I think we have gotten mixed up with whether or not Alaska Natives are entitled to something from the Federal Government and 

whether this is the best mechanism to deliver it. And that is what 

this discussion is about. If there is an entitlement program that is 

deserving of the people of Alaska, perhaps it needs to be through 

another way and not in a way that is driving the competitive process the wrong direction. 

As I say, you are one small piece of this problem. You are not 

the major problem on competitiveness. There are many other problems on competitiveness. But we thought it was important enough 

to take a look at. I certainly appreciate all of the witnesses. I appreciate the fact that the two Senators from Alaska were able to 

be here. And to all of you who traveled from Alaska, thank you for 

coming and we respect and honor your traditions and we are glad 

you were here. Thank you, and this hearing is adjourned. 

[Whereupon, at 5:06 p.m., the Subcommittee was adjourned.] 

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