The federal government is rewriting the rules for how it issues federal contracts. Some Alaska Native organizations – which depend on federal contracts to pay benefits to shareholders – say the changes could hurt their business.
President Trump signed an executive order in April directing the government to remove contracting rules that are not required by statute. Some Alaska Native leaders worry that the change could reduce tribes' and tribal corporations' ability to participate in those contracts.
"Less access to federal contracts means less revenue for our corporations," said Nicole Borromeo, the president of the ANCSA Regional Association. "This will impact the Alaska Native Corporations' ability to improve the life outcomes of Alaska Natives, which is a federal mandate under ANCSA, and contribute to the state's economy."
Alaska Native Corporations and federal contracts
Alaska Native Corporations were established under the Alaska Native Claims Settlement Act in 1971 to manage lands. Since then, they have been providing dividends as well as job opportunities and cultural programs to their shareholders.
Over time, the corporations have steadily increased their pursuit of government contracts, mainly from the U.S. Department of Defense. In 2021, Alaska Native corporations received more than $11 billion from federal contract revenue, according to data from the Federal Reserve Bank of Minneapolis. In fact, research shows that federal contracting is the primary source of revenue for the corporations.
Borromeo said that Alaska Native Corporations, which employ more than 8,000 Alaskans and support more than $6 billion in economic activity, use revenue from federal contracts "to make regional investments in infrastructure in rural hub-communities and provide cultural, educational, and social" programs for shareholders.
Christopher Slottee is an attorney who works with Alaska Native villages, regional corporations and tribal governments. He was previously a vice president of the Old Harbor Native Corporation. Slottee says that, in part, corporations' participation in federal contracts has grown because Congress gave tribal entities easier access to the U.S. Small Business Administration programs.
For example, tribes and corporations can participate in a program that helps businesses owned by socially and economically disadvantaged people and groups. The government sets aside some contracting opportunities specifically for what's known as 8(a) companies. Tribal entities can have multiple companies in the 8(a) Business Development Program, while individuals can only have one.
"It provides a little bit more of a level playing field for ANCs to compete for work," Slottee said. "They don't have to compete with Boeing or Northrop Grumman, right — these really massive multinational companies. "
Concerns about the Rule of Two
One worry that some Alaska Native contractors have is that, as the federal government eliminates contracting regulations, it might remove something called the Rule of Two. This rule, which is not required by statute, directs government agencies to set aside projects for small businesses if two or more small businesses are able to do them.
"The Rule of Two gives ANCs the opportunity to compete for federal contracts," Borromeo said. "It's not an award guarantee. Our corporations have to have unblemished audits, stellar past performance, and the demonstrated ability to perform the work just to be considered."
Quinton Carroll, the executive director of the Native American Contractors Association, said that eliminating the rule could make it difficult for small businesses, including Native contractors, to compete for the work.
"For us, as the Native contractors, we're keeping a really close eye on that to ensure there's continued small business participation in federal contracting," said Carroll, who is originally from Utqiagvik.
Pearl Brower, the president of the Ukpeaġvik Iñupiat Corporation, said the Rule of Two also allows federal agencies to honor their trust obligations to tribes "by delivering real economic benefits back to Alaska Native people and communities."
The deadline for rewriting federal contracting regulations is in the middle of October, according to the executive order.
Consolidating procurement and other changes
Another, separate executive order from the president directs the federal government to "eliminate waste" by consolidating procurement. That means that, instead of individual agencies like the Department of Defense shopping for a contractor, the broader General Services Administration would award all contracts.
Carroll said this can also hurt Native contractors.
"A lot of what they're looking at doing is using larger contract vehicles, which makes it difficult for small businesses to be participants," he said.
Slottee said that other recent changes that can affect Native contracting include workforce reduction within the Small Business Administration, which announced in March its plans to cut 43% of its staff. The agency manages the 8(a) Business Development Program, which Slottee said is "the primary driver of ANC's participation in federal government contracting."
"We are seeing, in the Alaska Native Corporation community, a significant slowdown in the amount of new 8(a) companies being approved, and just in general, SBA actions," Slottee said. "Not because the work's not there, not because the Native corporations can't do it, but because of these administrative delays caused by a reduction in SBA workforce."
Another change for Native-owned businesses is new federal contracting goals.
The Small Business Administration establishes the amount of money federal agencies are required to send to small businesses. SBA Administrator Kelly Loeffler reduced the goals for the 8(a) program from 15% to the statutory minimum of 5%, a change that an SBA statement said would "support competition and equal access to federal contracting for all small business owners."
Slottee said the reduction does not benefit Native contractors because now federal agencies have less incentive to increase the amount of money going to small businesses and tribal organizations.
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