Reasons to work with an ANC 8(a) company for sole-source contracts
- ANCs may receive a sole source contract up to $20 million, and with proper justification, unlimited dollar amounts.
- Other 8(a) companies can only receive sole source awards for manufacturing contracts up to $6.5 million and for service contracts up to $4 million.
Exemption from competitive thresholds for Participants owned by Indian tribes. SBA may award a sole source 8(a) contract to a Participant concern owned and controlled by an Indian tribe or an ANC where the anticipated value of the procurement exceeds the applicable competitive threshold if SBA has not accepted the requirement into the 8(a) BD program as a competitive procurement. There is no requirement that a procurement must be competed whenever possible before it can be accepted on a sole source basis for a tribally-owned or ANC-owned concern, but a procurement may not be removed from competition to award it to a tribally-owned or ANC-owned concern on a sole source basis. – 13 C.F.R. 124.506(b)
- Non Challenged 8(a) Sole Source Award -13 C.F.R. 124.517(a): ( This includes ANCs) The eligibility of a Participant for a sole source or competitive 8(a) requirement may not be challenged by another Participant or any other party, either to SBA or any administrative forum as part of a bid or other contract protest.
ANCs were created under the authority of the Alaska Native Claims Settlement Act (ANCSA), enacted in 1971 to settle Alaska Natives’ aboriginal land claims to most of Alaska.
Congress intended ANCs to be vehicles for the economic development of Alaska Natives.
8(a) Definition of Tribes
This 1975 definition of “Indian tribe” was used in two later amendments to the Small Business Act. First, in 1978, the definition was incorporated by reference in an amendment specifying that small businesses wholly owned by Indian tribes were eligible for the loan program implemented under the authority of Section 7(a) of the act. Second, 1986 amendments to the Small Business Act used the language of the 1975 definition when making “economically disadvantaged” Indian tribes and ANCs eligible for the 8(a) Program.
In 1992, Congress further amended ANCSA to clarify that Native Corporations were to be considered “economically disadvantaged” for all purposes of federal law. Since 1988, according to Government Accountability Office (GAO) figures, ANCs have consistently increased their involvement in the 8(a) Program, as measured by the number of ANCs owning subsidiaries that participate in the 8(a) Program.
General Small Business Authorities
One of the alleged “special provisions” governing contracting with ANCs, discussed below, arguably assists ANC-owned firms in qualifying as “small” for purposes of contracting under the general small business authorities. While all affiliations between businesses, or relationships allowing one party control or the power of control over another, count when the SBA makes size determinations, certain affiliations with the parent ANC or its subsidiaries are generally excluded when the SBA determines the size of an ANC-owned firm. Although the SBA is authorized to consider these affiliations when not doing so results, or is likely to result, in an ANC-owned firm obtaining a “substantial unfair competitive advantage within an industry category,” the SBA and agencies exercising delegated authority on its behalf reportedly seldom exercise this authority.
Legal Authorities Governing Contracting with ANCs
Various authorities govern contracting between federal agencies and ANCs or ANC owned firms. These include:
- The general contracting authorities
- The general small business authorities
- Section 8(a) of the Small Business Act
- Authorities pertaining to Native Americans
- Various appropriations riders.
These authorities address the award of contracts, as well as related issues.
Section 8(a) of the Small Business Act
Agencies can also contract with ANC-owned firms, although not necessarily ANCs themselves, under the authority of Section 8(a) of the Small Business Act of 1958, as amended. Section 8(a) generally authorizes set-asides and sole-source awards to “socially and economically disadvantaged small business concerns,” which include firms at least 51% owned and unconditionally controlled by ANCs, Indian tribes, Native Hawaiian Organizations (NHOs) or Community Development Corporations (CDCs).
Contracts whose value is at or below the so-called “competitive threshold” ($4 million, $6.5 million for manufacturing contracts) may generally be awarded on a sole-source basis, without the competition among 8(a) firms that would result if the contract were set aside.(Note: ANCs have additional privileges where sole source awards can be made up to $20,000,000 without any special justification and over $20,000,000. with appropriate justification).
Contracts whose value exceeds the competitive threshold, in contrast, generally must be set-aside for competitions in which all 8(a) firms may compete unless there is not a reasonable expectation that at least two eligible and responsible 8(a) firms will submit offers at a fair market price.
5% “Subcontracting Bonus”
Federal prime contractors are eligible for so-called “bonuses” equal to “5 percent of the amount paid, or to be paid, to a subcontractor” when they subcontract with ANCs or ANC-owned firms, among others. Congress authorized such bonuses in 1988, in part, because of concerns that federal prime contractors had less incentive to use Indian-owned subcontractors than other minority-owned subcontractors because of the geographical “remoteness of [Indian] reservation[s].” Congress also appropriated funds for the Department of Defense (DOD), in particular, to pay subcontracting bonuses. The amount appropriated remained constant at $8 million per year between FY1989 and FY2006, and was increased to $15 million per year during the 110th Congress. Other agencies have not received similar appropriations to pay subcontracting bonuses, but have the same statutory authority to pay them that DOD has.
To be eligible for a bonus, the prime contractor must use its best efforts to give Indian organizations and Indian-owned economic enterprises … the maximum practicable opportunity to participate in the subcontracts it awards to the fullest extent consistent with efficient performance of its contract.
Congressional Research Service – Contracting Programs for Alaska Native Corporations – Historical Development and Legal Authority, Nov. 28, 2012
ANC Business Guide, U.S. Small Business Administration