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The Daily Need

Fallout continues for Alaska native corporations

Photo: Nikki Kahn, Washington Post

This week, the federal government suspended two more companies as part of an ongoing investigation into alleged abuses of a federal contracting program. According to Robert O’Harrow Jr.’s story in the Washington Post today, “The action is part of an expanding investigation by the Small Business Administration into allegations that small companies are being used by large companies to obtain small-business set-aside contracts.”

These suspensions are just the latest enforcement action to follow in the wake of O’Harrow’s reporting about what are known as Alaska native corporations, or ANCs. Last month, Need to Know profiled Robert O’Harrow and his nine-month investigation into the workings of ANCs.

A bit of background: Alaska native corporations were created by Congress 40 years ago to help native Alaskan tribes rise above the poverty they’d suffered for decades. Thanks to some remarkable privileges granted to ANCs in the 1980s and 1990s, these companies have received $29 billion dollars in federal government contracts over the last decade.

Supporters of the ANC program argue that these companies provide a wealth of benefits to their native communities, but O’Harrow’s reporting raised serious questions about whether native Alaskans are, in fact, getting a fair deal. His series also featured allegations that non-native Alaskan companies had inappropriately piggybacked on ANCs to gain access to those lucrative federal contracts.

The day after O’Harrow’s series ran in the Washington Post, the Small Business Administration suspended one of the nation’s biggest federal contractors, a company called GTSI. The agency alleged that GTSI had improperly used other firms to land contracts, though it didn’t mention those other firms by name.

Today’s suspension involved two companies – EG Solutions and MultimaxArray – both of whom had formed partnerships with GTSI. EG Solutions is a subsidiary of an ANC called The Eyak Corporation, which was one of the ANCs covered extensively in O’Harrow’s series.

In another development this week, Sen. Claire McCaskill (D-Mo.) followed through on her promise to draft a bill that would strip Alaska native corporations of their unique contracting privileges. On Wednesday, she introduced legislation which would do just that. In a statement, McCaskill said: “We’ve seen that a very small portion of these companies’ profits are reaching native Alaskans, so it’s time to acknowledge the fact that this program is not effective for either native Alaskans or taxpayers.”

Both of Alaska’s senators – Democrat Mark Begich and recently re-elected Republican Lisa Murkowski are strongly opposed to McCaskill’s reforms.

“The participation by Alaska Native corporations in the … program creates hundreds of jobs for Alaskans and provides benefits to some of the most remote, high-cost communities in America,” said Senator Begich.

Related:

In Alaska, a promise unkept?

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