Inside the Alaska Native Claims Settlement Act

| Mon Dec. 20, 2004 1:00 AM PST

The Alaska Native Claims Settlement Act was originally passed in 1971 as way to legislate land claims that had been held by Native Alaskans for over 100 years. In exchange for the official surrender of their aboriginal claims, Alaska Natives—through their membership in regional, urban, and village Native Corporations formed by the act—were awarded 44 million acres of land and almost $1 billion. Many native corporations first sustained themselves through “natural resource development” focused on fishing, logging, and oil. In the late 1980s, however, these began to fail and new steps had to be taken to support the struggling economy of rural Alaska. Amendments and bills affecting the act soon shifted focus from Native membership and environmental concerns to contracting and business opportunities. One of the first of these gave Native Corporations the status of 8(a) disadvantaged small businesses (section (a)(13)), making them eligible for special aid, a move which the Department of Defense capitalized in later attempts to direct its civilian contracts. The Alaska Native Claims Settlement Act has been amended more than 20 times since its enactment in 1971 and affected by every DOD Appropriations Bill of the past 15 years.

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The incentives to use Native Corporations for military contracts began to gain strength in 1990, when the Department of Defense wrote a clause into its annual appropriations bill allowing firms with at least 51% Native American ownership exceptions from “a most efficient and cost-effective organization analysis” before using DOD funds for new projects using more than 10 contracted civilians contracted. This analysis, formally known as an A-76 study, has the stated purpose of establishing policy for competition when the government contracts private sector organizations. An A-76 is required in all cases except when those contracts are with Native Corporations or one of a list of nonprofits serving the blind or other “severely handicapped individuals.” The length of the average A-76 study, which becomes time saved for work done through a Native Corporation, has been estimated at 23 months.

Also in 1990, the Department of Defense directed $8,000,000 of the funds made available to the military toward “incentive payments” to Native Corporations acting as subcontractors. Both of these clauses, as repeated in the 1991 appropriations bill, can be viewed as SEC 8026 and SEC 8077(A) here.) They were resubmitted without change in every subsequent DOD appropriations bill for the next 9 years except, mysteriously, in 1993 and 1997. Toward the end of the 1990s, these clauses remained, but began to changes almost yearly in ways that cleared the way for an even stronger Native-Defense alliance.

In 1999, the $8,000,000 incentive payments usually allotted “of the funds” made available elsewhere in the bill were provided for the first time "in addition to” (see SEC 8024(a)) the other money appropriated for defense. In 2003, this money explicitly became available to Native Hawaiians as well, and its purpose expanded to "any Department of Defense acquisition of supplies or services" (SEC. 8021) including commercial items manufactured by civilian small business. In 2001, the “51 percent rule” -- allowing the evasion of the A-76—was expanded to include not only new projects but the transition of commercial or industrial functions that had been performed by the Department of Defense to civilian corporations. A transition to the private sector (see SEC 8014) had previously required, and in most other cases still did require, a report from the Secretary of Defense containing the function, location, cost, length of the proposed change.

Finally, the Department of Defense’s 2004 Appropriations billgave all 8(a) small businesses the same advantages as Native Corporations “for purposes of contracting with the Department of Defense” (SEC 8021) and defense contracts by non-Native civilian companies became much more difficult to win; for the first time, a strict restrictions beyond the A-76 was written into the bill (SEC 8014): civilian contracting agreements now required approval by the Competitive Sourcing Office that the civilian contract would save the Department of Defense $10 million or 10% of the cost of using federal employees instead. Native Corporations, of course, were still exempt.

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