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Alaska Native Corporations suffer devastating loss of billions in federal contracts

As I predicted in 2010, federal money to Alaska Native Corporations (ANC’s) has begun to dry up.  This year, the drop has been dramatic, falling from $4.4 billion in fiscal year 2011 to $1.8 billion for the first three quarters of 2012.

The gravy train for the ANC’s, sole source contracts over $20 million, took even a bigger hit.  These no bid contracts, illegal in the European Union and widely criticized in the US  due to suspicions that “illegal or immoral means [are used] to exclude competitors (usually by cronyism or bribery),” cratered from $2.5 billion in 2011 to $587 million in the first three quarters of 2012.

Why has this happened?  Because of limitations imposed after Senate investigations revealed that ANC’s “passed much of their work to large, non-Native companies, failed to employ Alaska Natives to work on the contracts and returned only minimal benefits from the businesses to Alaska Natives.” Sound familiar?

To make matters worse for Alaska’s native corporations in coming years, Senator Claire McCaskill, chairwoman of the contracting oversight subcommittee, is working to ensure that even fewer of these sole source contracts are awarded to the ANC’s in 2013.  Her objective is to “eliminate ANCs’ ability to receive sole-source contracts larger than what other companies get in the Small Business Administration’s 8(a) Business Development program.”

All of this has led to additional workloads for procurement officials as many contracts, formerly sole source, are now open to competition.  But it has also brought significant federal cost savings, the objective of the budget hawks who have pushed for the contracting reforms.

Given the impending loss of even more federal dollars and the fact that their current contracts “fail to employ Alaska Natives,” what should the ANC’s do?  My perspective is that ANC’s need to abandon crony capitalism and join forces with Constitutionalists who seek to regain state control over natural resources.  Removal of federal regulatory restraints on resource development within the State of Alaska would spur explosive economic growth.  The ANC’s could then leave the federal handouts behind and focus on creating real, productive jobs for shareholders and other Alaskans.

The true power of self determination that so many Alaska Natives fought for at ANCSA’s inception is getting back more control over our lands here in Alaska, so that all those who live here can chart their own course, together, as Alaskans.