Alaska Native Corporations (ANCs)

If you've been around Government contracting for any length of time, you've no double heard the term ANCs or Alaska Native Corporations. They're in the news a lot and its usually not positive coverage. For example, Eyaktek, an ANC, made the news recently when one of its employees was involved in an allegedly conspiracy to defraud taxpayers by $20 million under a U.S. Army Corps of Engineers contract. Senator McCaskill and other less vocal senators have railed for several years against the contracting preferences granted to ANCs. DoD is performing a comprehensive analysis to determine just how much money is going to ANCs through its contracts.

For the most part, ANCs try to take advantage of the opportunities afforded to them through legislation passed by Congress and signed into law by the President. And, why not? Its the smart thing to do and it makes good business sense. Many non-ANCs however would prefer a more level playing field. That's a reasonable position as well. However, as long as the laws stay on the books, ANCs will continue to avail themselves of the contracting preferences.

In our discussions with clients who are not ANCs, we find that there is a significant lack of knowledge as to what the ANC preferences are. There is also a lot of misinformation out there as well. So, to help elucidate the matter, we offer this brief explanation of ANC preferences.

In 1971, Congress passed the Alaska Native Claims Settlement Act which created thirteen regional Alaska Native Corporations (ANCs) and approximately 200 local village ANCs to stimulate Alaska's economy and settle land disputes between the United States Government and Alaskan natives.

Fifteen years after the passage of the Settlement Act, Congress, in 1986, authorized regional and village ANCs to be included in the SBA 8(a) program. The SBA is authorized by law to develop a program and promulgate regulations to assist socially and economically disadvantaged small businesses. The SBA's Section 8(a) program, the "Business Development Program" provids business development assistance to socially and economically disadvantaged small businesses, including help in obtaining federal contracts.

When Congress authorized ANCs to be included in the SBA 8(a) program, they also granted unique procurement advantages beyond those available to other Section 8(a) participants, including the following exemptions:

• ANCs were eligible to receive sole source 8(a) contracts regardless of dollar size, with no upper limit, while all other 8(a) firms could not receive sole source contracts in excess of $3 million for services and $5 million for manufacturing.
• The Alaska Native Claims Settlement Act automatically conferred "economically disadvantaged" status upon ANCs, while other 8(a) firms had to be managed by economically and minority disadvantaged owners.

Because of these preferences, ANCs are often awarded very large sole-source contracts. The contract between Eyatek and the Corps of Engineers discussed above for example, had the potential of reaching $780 million over a five year period.