"Tribal economies have already been affected by recent restrictions placed on sole-source federal contracts they obtain through the Small Business Administration’s 8(a) program, according to Lance Morgan, chairman of the board of the Native American Contractors Association and CEO of Ho-Chunk, Inc., a successful company owned by the Winnebago Tribe of Nebraska, of which Morgan is a member. “Contracts Ho-Chunk was negotiating are already in question,” he said.

The 8(a) contracts – for tribally-owned firms, Alaska Native Corporations and Native Hawaiian organizations – make up 1.3 percent of sole-source federal contracts, mostly originating from the Defense Department. Senate Armed Services Committee member Sen. Claire McCaskill, D-Mo., supported the initial set of restrictions, via soon-to-be-implemented Section 811 of a defense appropriations bill.

Now, McCaskill has introduced legislation that would further limit contracts for ANCs to the amounts handled by individual small businesses. Here’s what Morgan had to say:

Indian Country Today: The new bill was not as sweeping as feared.
Lance Morgan: Yes, by focusing on ANCs, she seeks to divide and conquer. She’ll eventually come after the rest of us, though.

ICT: How does a federal no-bid contract work?
LM: The term ‘no-bid’ does not occur in the federal lexicon. It’s pejorative, a code word if you will, used to make these legal agreements sound shady. The correct language is ‘sole source,’ and it involves a federal contracting official checking with the local SBA about the proposed contractor’s past performance, then negotiating the total cost and profit margin. An experienced contracting official knows what things cost. It’s not like a tribe says, ‘Give us a million dollars.’ There are no secrets in this process.

ICT: Why are some federal contracts structured this way?
LM: The government may need a company with special expertise or may need to move quickly. Bidding out a project can take a year; a large military contract may take several years. However, let’s say a natural disaster occurs, or water must be delivered to soldiers; in cases like these, the government looks to faster-moving sole-source contracting.

ICT: Some ANCs have been criticized for working with non-Native firms. Doesn’t that validate criticism that Native enterprises may be ‘pass-throughs’ to non-Native companies?
LM: That’s another code word. Partnering is the standard in federal contracting. Large contractors typically bring in small firms to make highly specialized contributions. Small contractors grow by developing relationships and collaborating, which helped us expand at Ho-Chunk, Inc. Native enterprises are being criticized for adhering to the industry standard. That said, whoever’s directing a project executes the bulk of it for regulatory and financial reasons: The SBA requires the prime contractor to do at least 50 percent of the work, and the narrow profit margin on federal sole-source contracts – just a few percent – means you can’t make money unless you do as much of the project as possible. There’s no incentive to give the work away."

Get the Story:
Changes to SBA’s 8(a) program: The view from the Lower 48 (Indian Country Today 12/7)

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GOP candidate supports reform of Native contracting programs (10/8)
Alaska Native firms propose government contracting reforms (10/4)
Alaska Native corporation drops bid to take over troubled firm (10/4)
WaPo: Alaska Native shareholders unhappy with corporate deal (10/1)
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