Chu Looks to Improve Management of SBA's Native 8(a) Contracting Program

Statement

Today, the House Small Business Subcommittee on Investigations, Oversight, and Regulation under Chairwoman Judy Chu (D-CA) gathered government officials and representatives from Native contracting groups to examine the SBA's Native 8(a) program. The hearing comes in the aftermath of government reports and media coverage that brought issues with the program to light.

"We owe all businesses in the 8(a) program, including those from native communities, the certainty that the program is operating as Congress intended," said Chairwoman Chu. "It is also our job to ensure that the successes of native 8(a) contractors, which empower and help communities become self-sufficient, are not overshadowed by the inability of SBA to properly manage the program."

In the 1980s, Congress expanded the 8(a) contracting program, which focuses on minority-owned businesses, to include disadvantaged groups including Indian Tribes, Alaskan Native Corporations, and Native-Hawaiian Organizations. These groups typically do not participate in the program themselves but act as the parent entities of firms that do take advantage of the program. The Native 8(a) program provides a wide range of benefits to participants, including set-asides and sole-source contracts. Since it's implementation, the program has given native firms the chance to obtain billions of dollars' worth of government contacts. These contracts, in turn, provide benefits to these disadvantaged communities. Unlike individually owned firms, native 8(a) contractors use profits to do things like deliver dividends to community members and help pay for vital services.

However, in recent years, numerous concerns regarding the program have surfaced. Recent reporting by the Los Angeles Times alleged that more than $300 million in contracts have been awarded to unqualified participants through the 8(a) program. Reports produced by the Government Accountability Office (GAO) in 2012 and 2016, identified a lack of adequate resources within the SBA to conduct oversight of the program and institute mandated reforms. Specific weaknesses included the SBA's data collection, supervisory review, staffing levels.

The hearing's first panel gave members the chance to question Seto Bagdoyam, Director of Forensic Audits and Investigative Service at GAO, about reports his office conducted on the program. The second panel gave native contractors the chance to testify on the importance of the program and ways that it can be approved.

It is evident that when qualified and capable entities or individuals participate in the U.S. Small Business Administration Business Development 8(a) program, economies improve, communities and participants become more self- sufficient, and valuable services and products begin to become more accessible to those who need them, said Joseph Valandra, Executive Director of the Native American Contractors Association. "We ardently support SBA's 8(a) contracting program so that contracting companies owned by Native communities, and those owned by disadvantaged individuals, can continue to grow and prosper under this important and necessary small business program."

"The Native 8(a) program at the Small Business Administration has been one of the most successful economic opportunities for Tribes," said Annette Hamilton, VP and COO at Ho-chunk Inc. in Winnebago, NE. "In many cases, this program is the only economic opportunity available -- especially for tribes who are in rural areas. However, the program has not yet fulfilled its mission to ensure that tribal governments are self-sufficient."

"Despite progress made in recent years, Native communities across the United States face immense challenges and remain one of the country's most economically disadvantaged populations," said Edwin Vincent, Chairman and Founder of the Hawaii Pacific Foundation. "As with American Indians and Alaska Natives, Native Hawaiians face significant obstacles in improving the conditions of their community. Economic development is crucial to addressing these problems."

"Alaska Native Corporations still have great gaps to fill in helping to address the serious economic and social issues and struggles being experienced by our people," said Jana Turvey President and CEO of Leisnoi, Inc. in Anchorage, AK. "The opportunities offered through the SBA 8(a) contracting program is one tool we have to use in tackling these gaps and fulfilling our mission for generations to come."

"The important objectives and worthwhile purpose of the Native 8(a) program is not in question," said Chairwoman Chu. "However, there have been longstanding problems with SBA's oversight and implementation of the program, which this Committee intends to address."

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