MELISSA BLOCK, Host:
This is All Things Considered from NPR News. I'm Melissa Block.
MICHELE NORRIS, Host:
And I'm Michele Norris. Each year, the federal government gives hundreds of millions of dollars' worth of contracts to companies owned by native Alaskans. These Alaskan-native corporations receive special preferences when they bid on those contracts. And that's thanks primarily to Alaska's Ted Stevens, the former senator. After more than 40 years in the Senate, Stevens lost his race last year. Now, there is talk on Capitol Hill of reconsidering some of those programs. As NPR's Jeff Brady reports, the companies could lose income that many native Alaskans have come to depend on.
JEFF BRADY: Based in Kodiak, Alaska, Afognak Native Corporation runs contracts for the federal government around the world. In 2004, it finished a $54 million renovation of a U.S. consulate in Brazil. It provides law enforcement to the army in the Marshall Islands, and it helps young people find work for the Job Corps program. These are just some of the government contracts that bring in over a half-billion dollars a year in revenue. Afognak owes much of its success to a contracting set-aside program for small, disadvantaged businesses, called the 8(a) Program.
BLOCK: I am a perfect example of the success of the 8(a) program and what it means for native communities and native people.
BRADY: Sarah Lukin is Afognak's vice president of external relations. Her company is one of over 200 Alaskan-native corporations created by Congress in 1971 to settle land and financial claims.
BLOCK: I grew up very poor, and it was through scholarships from my native corporation that I was able to go to college. And I was - my sisters and I were the first in our family to ever earn college degrees.
BRADY: The corporations distribute money and services to shareholders, all descendants of native Alaskans. Over the years, former Senator Ted Stevens successfully pushed through Congress a series of bills that helped ensure the ANCs were successful. Today, they are allowed to bid on all kinds of contracts and in some cases, they don't have to compete with anyone else. That bothers some other small-business owners.
BLOCK: There has got to be a time period when the subsidy ends.
BRADY: Barbara Hennessy is president of a company called Command Decisions Systems and Solutions. She works primarily with the Departments of Defense, Homeland Security and Education. She says 8(a) contractors like her have difficulty competing with Alaskan-native corporations. In some cases, especially early on, Hennessy says it appears the ANCs didn't even perform most of the work but were just fronts for larger companies. Her biggest complaint is the sole-source contracting benefit. That means a federal agency can go directly to an ANC without the hassle of a competitive-bidding process.
BLOCK: Instead of dealing with 65 bidders, they're dealing with one sole source, and they come to the table, and let's craft a contract. That's a very hard thing to compete with.
BRADY: And, Hennessy says, that costs taxpayers more. A 2006 Government Accountability Office report concluded that an Army contract for security guards awarded to an ANC cost the government 25 percent more than if the contract had gone through the competitive process. But this isn't just about saving money, according to Karen Atkinson. She heads the Native American Contractors Association and says the federal government has a duty to help natives who gave up their rights to millions of acres of land.
BLOCK: Part of that includes, you know, self-determination and economic self-sufficiency. And so, the federal government does have an obligation to support policies that will promote both of those values and those principles.
BRADY: Most critics won't argue that the federal government owes something to Native Americans. They just don't think preferences in federal contracting is the way to pay that debt. Steven Schooner is co-director of the Government Procurement Law Program at George Washington University.
P: If the government believes it has a duty to native Alaskans, then Congress should appropriate whatever amount of money to the individual Alaskans they believe the duty entails.
BRADY: Schooner says mixing up social policy with the federal procurement system is inefficient, but he understands why lawmakers do it.
P: The true cost of the programs are invisible. Nobody has to budget the subsidy to the Alaskan population that's basically skimmed off the top of the procurement process.
BRADY: Congress may take up this issue relatively soon, and that clearly has the ANCs worried. They've recently launched a letter-writing campaign to win new allies on Capitol Hill, and show lawmakers how individual native Alaskans have benefited. Jeff Brady, NPR News.