ANC Contracting Advantages
Special Status of 8(a) Subsidiaries Owned by ANC
Chatham is a certified small disadvantaged 8(a) business 100% owned by Kootznoowoo Inc, an Alaskan Native Corporation. As an ANC owned 8(a), Chatham has some very desirable contracting advantages for potential customers:
- ANC 8(a) companies are not subject to the same $3 million limitation on sole source contracts as are other 8(a) companies without ANC status Unlike other tribal or regular 8(a)s, Chatham can receive sole source “direct awards” of any size, that are not protestable.
- Direct award contracts can be openly negotiated, allowing the government agency to receive a customized solution. This streamlined process eliminates rounds of questions and answers presented by multiple bidders, and the time-consuming source selection and evaluation process involved in a competitive selection. In many cases, directly negotiated contracts can be completed in less than a couple of weeks.
- Agencies and Government Contractors may claim 100% Small Disadvantaged Business credits and Native American Set-Aside credits when contracting with Chatham.
- Prime contractors that contract with Chatham may be eligible for 5% of the amount paid to Chatham under the DoD Indian Incentive Program.
Tribal 8(a) Program
Since 1952, the federal government has granted special privileges to businesses owned by disadvantaged minorities, including: Latinos, African-Americans, and Native Americans. Federal agencies have goals to conduct a certain percentage of their business with firms owned by traditionally under-served communities. In previous years, individual contracts with small disadvantaged businesses were limited to $3 million dollars per contract. Recently the financial restrictions on the size of the contracts were lifted for all Native American corporations; due to the fact that a program designed for a small business owned by a family or individual never worked well for Native American groups, including Alaska Natives and Native Hawaiians. These Native American corporations have hundreds or thousands of members or shareholders, most of them subsistence low-income. The ultimate test of the SBA’s 8(a) program is that our customers, the federal agencies we work for, are pleased with our performance and continued success. Once a contract is awarded, we are treated like any other company. We develop our companies to “graduate” from the 8(a) program and compete fully on the open market, which is the eventual goal of the program.
For more specific information please see the federal regulation citations shown below.
Absence of a Sole Source Dollar Threshold – 13 C.F.R. 124.506(b):
(b) 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
Economically Disadvantaged – 13 C.F.R. 124.109(a)(2):
(2) An ANC that meets the requirements set forth in paragraph (a)(1) of this section is deemed economically disadvantaged under 43 U.S.C. 1626(e), and need not establish economic disadvantage as required by paragraph (b)(2) of this section.
Non Challenged 8(a) Sole Source Award-13 C.F.R. 124.517(a):
(a) 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.
Special Rights Under the A-76 Program
The A-76 program (“A-76” refers to the number of the implementing Office of Management and Budget (OMB) Circular) imposes a long and cumbersome procedure for any government facility that wishes to contract out (i.e., outsource) an activity that employs ten or more civilian government employees. (The average A-76 study takes 23 months.) One of the few options open to a DOD command, service or agency that wants to contract out a function but avoid the cumbersome A-76 process is to award the contract to a tribal or ANC 8(a) firm.
Language in the Defense Appropriations Act3 provides that a command does not have to go through the A-76 process but may do a direct conversion of that function to a private contractor, regardless of the number of civilian employees, if the command contracts with a firm that is 51% or more Native American owned, so long as the conversion is cost effective. While this opportunity is available to any 51% or more Native American owned firm, in practice it is only available to tribal and ANC 8(a)s on the larger conversions, because the Appropriations language does not create a new procurement vehicle. As a result, the only way the command may contract with a Native American firm is to do it through the 8(a) sole source authority. As indicated above, the only entities that may receive an 8(a) contract in excess of $3 million for services are tribal and ANC-owned 8(a) firms and the bulk of the A-76 contracts are far in excess of $3 million.
The 5% Subcontracting Bonus– DFAR 252.226-7001:
A DOD contractor that subcontracts with a firm that is 51% or more Native American owned is entitled to receive a bonus equal to 5% of the amount of the subcontract award. While this provision is theoretically available to all agencies, Congress has provided appropriations to implement it only to DOD, which, after some initial resistance, has initiated it fully (out of the DOD Office of Small and Disadvantaged Business Utilization). Defense Appropriations Acts provided $11 million to this program in FY 2005. DFAR states: (f)(1) The Contractor, on its own behalf or on behalf of a subcontractor at any tier, may request an incentive payment in accordance with this clause.