House Hearing on Native 8(a) Contracting: Emerging Issues

House Hearing on Native 8(a) Contracting: Emerging Issues November 26, 2019
Emerging Issues

Fueled by Los Angeles Times reporting on “fake” Indians reaping millions of dollars of contracts set aside for minority contractors, the reauthorization of the Small Business Administration’s (SBA) Native 8(a) program was the focus of an October 22, 2019 hearing before the House Investigations, Oversight, and Regulations Sub-Committee of the House Committee on Small Business.

House Hearing

Chaired by Cong. Judy Chu (D-27th District of CA), the committee heard testimony on the strengths and weakness of the program established to help Native people including Tribes, Native Hawaiian organization and Native Alaskan corporations obtain some economic parity with the rest of the United States. The hearing focused on entity owned 8(a) businesses, not individual owned businesses.

What The Newspaper Reported

Recently, the Los Angeles time wrote a series of articles on contractors claiming to be tribal members of questionable state tribes of Cherokee Indians who were literally making millions off of set-asides contracts. According to the paper, “In applying for the minority programs, 12 of the 14 business owners involved claimed membership in one of three self-described Cherokee groups, according to government records and interviews. Those three groups have no government recognition and are considered illegitimate by recognized tribes and Native American experts, however. The three groups are the Northern Cherokee Nation, based in Clinton, Mo.; the Western Cherokee Nation of Arkansas and Missouri, based in Mansfield, Mo.; and the Northern Cherokee Nation of the Old Louisiana Territory, based in Columbia, Mo.”

The Northern Cherokee Nation of the Old Louisiana Territory has received contracts totaling $269 million. The Northern Cherokee Nation reaped $31.5 million in government contracts and the Western Cherokee Nation of Arkansas and Missouri has received $3.1 million.

GAO Testimony

The hearing, as all good Congressional Oversight hearings should, began with testimony from a Government Accountability Office (GAO) auditor testifying on three reports they had produced on the Native 8(a) program. Those reports may be found here. Part of the testimony talked about the recommendations made by the GAO to the SBA that have been adopted and the need for a new look at the program by the GAO. He concluded his testimony stating that it was time for a new GAO look at the SBA program for Native entities and individuals.

Native American Contractor’s Association (NACA)

Joe Valandra, the new President of NACA, in his written testimony stated: “The SBA 8(a) contracting program is one of the only federal programs that has been successful for Native American communities. It has helped provide economic opportunity and increased investment in Native communities.” He cautioned that “undertaking any changes to Small Business contracting rules that could in any way limit Native community involvement or access to contracting revenue. Any proposed changes to the program must involve extensive, meaningful consultation with impacted Native community leaders.” NACA also urged any reauthorized acts to maintain the difference between individual and community based organizations. NACA members oppose proposals to dramatically increase sole source contracts for many set-asides in the name of parity. They also oppose the elimination of option year amounts from the calculation of the total contract value. Eliminating the option year costs would hide the true amount of the contract. NACA advocates for increased education for SBA employees.

Tribal Testimony Provided

Annette Hamilton, Vice President and Chief Operating Officer of Ho-Chunk Inc., a tribally owned corporation of the Winnebago Tribe of Nebraska, presented testimony on behalf of the tribe stating that “the 8(a) program has been one of the most successful and consistent federal program aimed at creating economic opportunities and affecting generational change in Indian Country.” Native 8(a) corporations enhance the economic and social conditions of the tribes who own the corporations – not just a single owner or small number of owners.

Ms. Hamilton echoed concerns also voiced by NACA that"

  • The category management system has created unintended consequences by removing small business contracts from the jurisdiction of the SBA without notice or justification.

  • Section 809 Panel established in the fiscal year 2016 National Defense Authorization Act with the mission of streamlining DoD procurement. However it lacked small business representation and, most importantly, tribal representation. HoChunk would like to see tribal consultation conducted before the panel’s 98 recommendations are implemented.

  • Sole Source Contract proposed changes – see the narrative in the NACA statement.

  • Indian Community Economic Enhancement Act of 2019/Buy Indian Act proposed legislation would make the Buy Indian Act apply to other federal agencies than the Bureau of Indian Affairs and Indian Health Service.

Alaskan Native Issues

Also providing testimony was Ms. Jana Turvey, President and Chief Executive Officer of Leisnol, Inc., a small Native Village Corporation established under the Alaskan Native Claims Settlement Act (ANCSA). Ms. Turvey also serves as Treasurer of the Alaska Native Village Corporation Association (ANVCA) that represents 177 ANCSA village corporations that, according to Ms. Turvey, means 177 village communities. She would like to see the 8(a) eligibility clock of nine years start to run when the first contract is awarded. Not all Alaskan Village corporations participate in the program so there is still room for growth. Because the application and reporting regulations are complex, she sees the need for additional training and education on how the system works.

Native Hawaiian Organizations

Native Hawaiians are the aboriginal, indigenous Native people of Hawaii.  The legal definition is found in 13 C.F.R. Sec. 124.3, that defines Native Hawaiian as "any individual whose ancestors were Native, prior to 1778, of the area which now comprises the State of Hawaii.  The NHO are community organizations that give back to the Native Hawaiian community in various areas including culturally, educationally and through socio-economic activities.Currently there are 24 Native Hawaiian Organizations (NHO) that are nonprofits in Hawaii but only 14 are currently active in the SBA 8(a) program. In order to obtain 8(a) certification, the NHO must:

  • Identify in its governing documents what specific Native Hawaiian community it serves;

  • Discuss the activities it has done to benefit the community; and

  • Provide a detailed plan showing how revenues earned by the NHO will benefit Native Hawaiians by outlining specific goals, how it will achieve those goals and how revenues will be allocated to each goal.

Presenting testimony on behalf of NHOs was Mr. Edwin Vincent, President of the Native Hawaiian Organizations Association. T Mr. Vincent testified that they currently does not have any issues to rise about the SBA’s program. SBA has a rigorous screening process for NHO and also requires yearly reporting that includes community “giveback.” NHO would like SBA employees to be better educated about Native Hawaiian issues. They are concerned that during reauthorization of the Small Business Act legislation is being considered that would enhance opportunities for women-owned, service disabled veteran owned and HUBZone small businesses at the expense of Native owned 8(a) companies.

Overall Goal Is To Protect Tribal Sovereignty

Also, attending and, although not a member of the Committee, Cong. Sharice Davids (D-KS 3rd District) was allowed to ask questions and  repeatedly asked witnesses about how the SBA was protecting tribal sovereignty.  .Also providing testimony was Ms. Christine Williams, an Anchorage based attorney and managing partner of Outlook Law, LLC.All the testimony may be found here with a link to the hearing.The Committee is still accepting testimony on the issue and may be conducting additional hearings.

If you are interested in establishing a Native 8(a) business either for your tribe or as an individual, please contact the attorneys at Whitcomb, Selinsky PC for the legal assistance and expertise to assist you.  Please call (303) 534-1958 or complete an online contact form.

Tags: Federal Indian Law