Chugach Alaska Corporation Counters Senator McCaskill’s Attack by Highlighting Native 8(A) Program Shareholder Benefits

Monday, July 7, 2014

(Anchorage, Alaska) – “Faced with Congressionally-mandated changes to the Federal Acquisition Regulations that tilted the government’s contracting playing field against Native 8(a) companies, Chugach Alaska Corporation kept our commitment to our shareholders,” said Sheri Buretta, Chugach Alaska Corporation’s (Chugach) Chairman of the Board. “At the same time, we proudly continued to provide our government customers with the quality services for which Chugach is known and recognized.”

“I am shocked at the renewed assault by U.S. Senator Claire McCaskill targeting Alaska Native Corporations (ANCs) like Chugach and our participation in federal government 8(a) contracting.”

As Chair of the Senate Subcommittee on Financial & Contracting Oversight, Senator McCaskill “demanded answers from the Small Business Administration (SBA) about rules designed to improve oversight of Alaska Native Corporations” in a press release on July 2, 2014. Her letter focused on the regulations implemented in 2011 that she required regarding follow-on contracts, joint ventures and benefits that ANCs provide to their shareholders. Recent press releases by a united Native American Contractors Association (NACA), National Congress of American Indians (NCAI), and Alaska Senator Mark Begich in response to Senator McCaskill’s demand highlight what appears to be continuing misperceptions about the sovereign nature of how Native American Tribes, Alaska Natives, and Native Hawaiians participate in federal government 8(a) contracting under the SBA.

Like the majority of Native Corporations in government contracting, Chugach has experienced challenges in federal contract awards which, in turn, could potentially jeopardize the funds that have been returned to our shareholder programs that include dividends, elder benefits, employment, scholarships and other economic, social, and cultural development initiatives. These programs are an important focus of the business development model required by the Alaska Native Claims Settlement Act (ANCSA) originally enacted in 1971. In keeping with that focus, in 2013 Chugach returned $13.1 million in shareholder programs after earning $13 million in net income after taxes. The distributions included:
• $8.9 million in dividends and Elder distributions;
• $2 million as an initial contribution to long-term funding for the Chugach Heritage Foundation;
• $750,000 in scholarships; and
• $280,000 for intern and apprenticeship programs.

While Native 8(a) non-competitive awards are important to ANCs, in 2013 it represented only 0.3% of the total contract obligations by the Department of Defense (DOD). During that same year, non-competitive contract awards to large businesses represented 39.4% of DOD’s total obligations. Moreover, during the period 2010 through 2013, while DOD’s contract obligations decreased by 15.4%, non-competitive awards to ANC 8(a)s decreased by 35% while non-competitive awards to large businesses increased by 13.7%.

“Clearly, our customers’ use of non-competitive awards as a contracting tool to meet their needs has increased. But because of the roadblocks imposed by a clear bias in federal procurement policy and regulations, these contracts are not being awarded to qualified and capable Native 8(a) companies,” concluded Buretta.