SBA 8(a) proposal leaves Native corporation carveout intact

The Small Business Administration proposed a rule Thursday removing a race-based presumption of social disadvantage for individually owned 8(a) firms. The agency said the change does not apply to Alaska Native corporation-owned businesses.

The proposed rule, published in the Federal Register on June 11, would require individually owned firms seeking entry into the 8(a) Business Development Program to prove social disadvantage with verifiable, fact-based evidence. Comments are due July 13.

The Alaska question is what the rule does, and does not, do to Native corporation participation in the federal contracting program.

The Federal Register notice is explicit. SBA says the proposal applies only to small businesses owned and controlled by individuals. The rule does not in any way amend or affect the eligibility of entity-owned small businesses, including firms owned by tribes, Alaska Native Corporations, Native Hawaiian Organizations or Community Development Corporations.

The SBA press release announcing the rule framed the change more broadly. The agency said it was moving to end racial discrimination in federal contracting and replace race-based eligibility with one standard for all applicants. SBA Administrator Kelly Loeffler said the rule would require clear evidence of social disadvantage rather than eligibility based on membership in a designated racial or ethnic group.

For Alaska, the carveout matters.

Alaska Native corporations use 8(a) contracting subsidiaries as a major federal-business channel. Alaska News previously reported that Alaska Native corporations generated about $9 billion in federal contracts through the program. An SBA freeze on new applications raised concerns about future revenue, shareholder dividends, jobs and village services tied to corporation earnings.

The new proposal does not appear to answer that separate freeze question. It addresses the standards for individually owned firms. It does not say SBA has resumed processing new 8(a) applications for Alaska Native corporation subsidiaries.

That distinction is likely to shape Alaska's response.

Alaska State lawmakers already moved this year to support continued Alaska Native participation in the 8(a) program. Legislative records tied to House Joint Resolution 44 include a sponsor statement supporting the continued participation of Alaska Native corporations and entities owned by federally recognized tribes. A 2006 Government Accountability Office report in the legislative packet described the special 8(a) provisions for Alaska Native corporations and called for tailored oversight.

Letters submitted to lawmakers, including from Bristol Bay Native Corporation and Calista Corporation, argued that 8(a) contracting supports Alaska Native shareholders and rural communities. Those records predate Thursday's proposed rule. They show the Alaska-side stakes: federal procurement policy can reach well beyond the contracting office and into corporation revenue, employment and community programs.