Basics of Native 8(a)

What is the Native 8(a) Program?

Under a provision created by Congress in the 1980’s to the Small Business Act of 1958, tribal corporations certified under Section 8(a) of the Small Business Act may contract with the federal government without a cap on the amount of a sole-source contract. Other individual small businesses certified by Section 8(a) of the Act may also be awarded a sole-source contract, but are limited by the dollar amount of the contract. Additionally, while tribal corporations can obtain 8(a) certification for affiliate enterprises, individual small businesses cannot own more than 20 percent of one additional Section 8(a)-certified affiliate in their lifetime. These provisions were created to acknowledge that Native 8(a) enterprises must provide benefits to entire communities — hundreds or thousands of disadvantaged people — whereas individual business owners provide benefits to one or two owners.

Why did Congress create the Native 8(a) Program?

In the 1980’s, the Reagan Commission on Indian Reservation Economies observed that federal procurement policy actually obstructed reservation economic development. A subsequent Congressional inquiry found that very few tribal enterprises participated in the Section 8(a) program. Recognizing the positive impact that the 8(a) program could have on tribal communities living in devastating poverty with little to no economic opportunity, Congress created the exceptions in the law for enterprises owned communally by tribes, Alaska Native Corporations and later, Native Hawaiian Organizations – community based organizations required to provide social, economic and cultural benefits to their Native owners in perpetuity.

What has the Impact of the Native 8(a) Program been for Tribal Communities?

The Native 8(a) Program is a hand up, not a hand out. This non-appropriated opportunity provides a channel from contracting profits to the members of the tribal or Native Hawaiian community it serves. In 2010, Tribal enterprises received less than 0.02% of the total U.S. procurement pie. Yet this minuscule market share creates educational opportunities to tribal members, housing for elders and other tribal members, preservation of tribal culture and language, and funding for governmental services such as police officers, court systems, health care facilities, and child welfare programs. This program has had remarkable successes and, in fact, supplements those underfunded federal programs as tribes exercise self-sufficiency and self-determination.

What does the future of the Native 8(a) Program hold?

A few Alaska Native Corporations have experienced great success with the Native 8(a) program and in so doing have become an “easy target” for those who do not fully understand the small scope and big impact of this opportunity. Many more tribal corporations are queued up to work hard and deliver quality services to the Federal government and return benefits to their members, but are finding opportunities more limited. Misunderstanding the program and who it serves, a few Members of Congress have put this program in their sights and tried to halt this successful program. The Small Business Administration is now finalizing new regulations that will address the majority of the concerns raised by these few members of Congress over the years. The Native 8(a) program continues to face many challenges. As tribal communities seek additional ways to diversify their economies, the Native 8(a) program is an avenue many tribes, Alaska Native Corporations and Native Hawaiian Organizations are looking to participate in. However, achieving 8(a) certification can prove time-consuming and costly. Additionally, recent scrutiny on the Native 8(a) program by members of Congress leaves some tribal corporations uneasy about making the investment. Nevertheless, the benefits of the program and opportunities for economic diversification are immense and the Native American Contractors Association and its members will continue to advocate for expansion of the program.

Why is the Native 8(a) Program Important?

Tribal governments, Native Hawaiian Organizations (NHO’s) and Alaska Native Corporations (ANC’s) use the profits gained from government contracting to provide benefits to their respective communities in a variety of ways. However, because the Federal legal structure of each community is different, the way in which the benefits are provided are different as well.

  • Tribal Governments provide government services to their members.
  • ANC’s are restricted by law from providing benefits that disproportionately benefit one class of members over others, and so must focus on delivering benefits in form of dividends or programs designed to benefit all members equitably and proportionately.
  • NHO’s must focus the proceeds of their profits on providing services to Native Hawaiians.

Tribal Governments

Tribal governments provide the same sort of governmental services and programs to their membership as any other state or local government. Generally, the services and programs are focused on the reservation or geographic location of the tribe. They use their tribal hard dollars, or dollars earned from various economic activities, such as gaming or government contracting, to supplement Federal government funding for healthcare, law enforcement housing, and other community needs.

For example, the Chickasaw Nation of Oklahoma recently built a multi-million dollar hospital to meet the needs of their membership, funded with tribal hard dollars. The Tulalip Tribes of Washington used loan funds to supplement federal funding for a tribal health clinic, and the Jamestown S’Klallam Tribe on Washington spends $175,000 annually to assist their individual tribal members with healthcare costs incurred off the reservation. In 2009, the Coeur d’Alene Tribe in Idaho spent almost $3 million dollars on road and transportation related project, and contribute over $500,000 annually to improve and preserve the Coeur d’Alene Lake. The Pechanga Band of Luiseno Indians in California has used tribal funds to fund environmental projects and their public safety departments.

Like NHO’s and ANC’s, Tribes realize the importance of providing an education for their community and many spend their funds ensuring their members have access to a good education. For example, the Suquamish Tribe built a $3.75 million dollar education center for children under the age of 12. Other Tribes support their tribal members attending post-secondary schools through scholarships

Alaska Native Corporations

ANC’s are specifically prohibited by federal law from providing the same sort of governmental services and functions that tribal governments in the lower 48 tribes provide their members. Because ANC’s are restricted from using their profits in a way that would benefit only a single class of shareholders, they cannot, for example, generally use their profits to install water infrastructure in a village or build new homes for people in the village. ANC’s must instead focus on providing benefits to their individual shareholder members equitably and proportionately which they do in a number of ways including:

  • Managing their remaining lands (lands the ANC is responsible for and which have great importance in Native culture)
  • Providing supplementary income to help augment a subsistence-based living
  • Coordinating economic development opportunities to provide jobs and resources
  • Providing scholarships for college and vocational training
  • Culture and language preservation programs
  • Donations to local non-profits that deal with a wide range of social services, educational and cultural issues affecting the region or village.

A 2009 Native American Contractors Association survey of 11 ANCs showed these Enterprises provided over $530 million in various categories of benefits to over 67,000 shareholders between 2000-2008. Over $341 million of this figure represented cash dividends.

Sealaska Corporation awarded more than $5.7 million in scholarships to more than 3,000 Native students from 2000-2008 while Chugach Alaska Corporation and Afognak Native Corporation have created Shareholder Development Departments committed to providing shareholders with the resources and tools necessary to succeed through focused on the job training, internship and apprenticeship programs, education, leadership and other job skills. Bering Straits Native Corporation constructed a wind farm in Nome, Alaska, to decrease the overwhelming costs of fuel for their shareholders, where a gallon of gasoline costs $4.49.

Native Hawaiian Organizations

NHO’s are required to provide services to the Native Hawaiian community. In addition to providing employment opportunities locally, NHO’s have focused their profits on education and vocational training programs.

The Alaka`ina Foundation on Maui, for example, has created the “Digital Bus” program, consisting of two mobile laboratories designed to stimulate interest in science and technology for grades K-12. The Digital Bus program utilizes a science and technology curriculum on specific projects designed to teach students about the application of science to efforts related to the preservation of Hawaii’s natural resources. Na Oiwi Kane has established a grant program which addresses the needs of Hawaiians without fathers. The Pacific Center for Economic Development has focused on vocational training by working collaboratively with the Hawaii National Guard’s Youth Challenge program in the areas of robotics and science, technology, engineering, and math, which has resulted in employment opportunities for qualified graduates of the program. The Native Hawaiian Economic Alliance focuses on job creation through the development of Native Hawaiian-owned businesses.

Summary

Self-determination is the United States policy for Native people. In spite of the federal legal restrictions directing Native enterprises decisions on how to utilize profits realized from government contracting, Tribes, ANCs and NHOs consistently exercise self-determination to make the best decisions for their communities.

As President Nixon stated in 1970, “… we must make it clear that Indians can become independent of Federal control without being cut off from Federal concerns and Federal support…” Government contracting allows Native communities to do just that.