When Federal Programs Collide Or The Road To Hell

(MoneyWatch)  The Federal Government has a variety of laws favoring certain types of minority owned and small businesses. One of the largest groups receiving these preferences are those owned by Native American tribes and individuals. They receive consideration when they bid on contracts and as part of the small business participation as sub-contractors. One limitation on these companies, though, is that the size of the contract they may bid on is limited to $5.5 million.

There is now concern that the Alaskan Native Corporations are taking advantage of the fact that they qualify for these set asides for minority owned businesses. Former Senator Stephens (R-AK) changed the law to allow Alaskan companies to bid on any size contract and they have rapidly taken advantage of this.

One issue that has arisen is that the companies have expanded their business to provide services, especially to the Defense Department, all across the world. They have now reached a point where they were awarded over five billion dollars in contracts in 2008. Some members of Congress are now questioning this advantage as perhaps gaming the system at the expense of other contractors.

This is one of the issues related to this kind of contracting requirements. It does not always lead to the most efficient or best use of government money. There have been various law suits related to these regulations some of which have been successful. This type of social engineering is one of the major differences between government and the civil sector.

If Congress wants to change the way the Alaskan Native Corporations do business they will have to reimpose the size limit on them; or make it harder for them to qualify and win the contracts. This will allow other companies to win and the money be spread around to others considered more deserving.