The former Senator Stevens (R-AK) was not only a past master at getting large amounts of earmarks for his state but also had a change in the law made that benefited the Alaskan Native American tribes greatly over tribes in other parts of the United States. He did this by allowing them to bid on any contract rather then the small business limit of under $5.3 million. The Federal Government does favor certain minority owned or disadvantaged businesses in contracting and they have small business goals that also must be met. Since the Department of Defense awards a large percentage of contracts they are also more affected by this then other Departments.
Some in Congress and in the contracting business have been critical of how Alaskan Native Corporations (ANC) have come to dominate certain business areas. The Senate recently held a hearing into the practice with the idea that limitations may be placed on the corporations. There have also been concerns expressed in Congress that some of the companies considered ANC are really in name only with non-Native Americans running and benefiting them. Anytime there are programs like this in existence there is a chance of abuse or fraud as the advantage these companies have to getting contracts makes it worth while.
Now the ANC are being defended by the Alaskan Senators who are looking for a more hospitable location for these types of hearings. There has to be an accepted inefficiency when social programming becomes a key part of your contracting process. The favored company may not be the lowest bid or the best able to do the work but they are getting it to provide to them a benefit. This is supposed to be done to make up for years of discrimination and adverse views of their abilities. The small business program is also to allow new and innovative companies to participate rather then the same old big ones winning again and again.
Of course like everything this is a business and a great deal of money is involved for the corporations, state and the Congress. It is obviously in the best interest of the state of Alaska to keep this source of money as it helps the Alaskan tribes and their tax revenue. It is important to the legislators from Alaska as it supports their campaigns. Other state Congressmen and Senators have the same motivations to bring the business home to their own native or favored corporations.
In many ways it is unfair to just single out Alaska for these types of contracts. It probably wouldn't hurt DoD and the Federal Government to conduct a full review of them and determine whether they really provide the benefit intended. There has been similar criticism of Federal Prison Industries (FPI) and there advantages in contracting by Congress. Perhaps in this day of massive deficits and restricted Federal spending there would be some effort to move back to best value as the primary reason to award contracts.