Increased Oversight Needed for Native 8(a) Program

 
10/28/2019

The House Committee on Small Business Subcommittee on Investigations, Oversight, and Regulations heard from government and private sector witnesses on the state of the Small Business Administration’s (SBA) 8(a) program, particularly as it applies to tribes, Alaska Native Corporations, and Native Hawaiian Organizations.

“Utilization of the 8(a) program by these specially-recognized groups has risen exponentially over the last several decades, prompting the Government Accountability Office to undertake a series of reviews spanning from 2006 to 2016,” said Ranking Member Ross Spano (R-FL).  “The GAO has historically found weaknesses limiting the SBA’s ability to monitor compliance with 8(a) program requirements, which raises questions as to whether all program participants, individually-owned or group-owned, are in full compliance with all laws and regulations governing the program.  While the SBA has taken some steps in improving its monitoring processes over the years, the GAO still found deficiencies in SBA oversight in its 2016 report which raises questions as to whether some 8(a) groups may be operating outside of regulation.”

Witnesses Emphasize Inconsistent Guidelines and Overall Benefits

“In three reports issued between 2006 and 2016, GAO has found persistent weaknesses in the Small Business Administration’s (SBA) oversight and monitoring of Tribal 8(a) firms, in particular the Alaska Native Corporations’ (ANC) subsidiary firms (ANC-owned firms) that participate in [the] SBA’s 8(a) program,” said Mr. Seto Bagdoyan, Director, Forensic Audits and Investigative Service, United States Government Accountability Office, in Washington, DC. 

“The NHO 8(a) model is not perfect.  It is difficult managing a non-profit organization while establishing and developing profitable for-profit subsidiaries…,” said Mr. Edwin A. "Skip" Vincent, Chairman and Founder, The Hawaii Pacific Foundation, in Honolulu, HI.  Mr. Vincent testified in his role as board member of the Native Hawaiian Organization Association (NHOA).  “Our members have observed and experienced inconsistencies in the interpretation, application, and enforcement of rules, regulations and SBA’s Standard Operating Procedures (SOPs). These inconsistencies occur between SBA offices and even among personnel in the same District Office.”

“Native American businesses in the 8(a) Program represent only a fraction of all Federal contracts.  Yet, the effects of those dollars are amplified in the Native American communities and the communities to which they serve,” said Ms. Christine V. Williams, Managing Partner, Outlook Law LLC, in Anchorage, AK.  “The 12 regional ANCs contribute, on average, 75-85 percent of their total net income annually to scholarships, contributions to Alaska Native non-profit organizations, and shareholder dividends.”

SOURCE: Small Business Committee Republicans



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