Problems with the U.S. Department of Energy's contracting process increased the risk that Alaska Native corporations might receive federal 8(a) contracts they aren't eligible for, a recent report found.
The main finding of an inspector general audit released in April was that the DOE's procurement office didn't always effectively manage contract awards made to Alaska Native corporations.
Specifically, the DOE could not demonstrate that it always determined whether Alaska Native corporations were eligible to receive the no-bid 8(a) contracts they were awarded.
Between 2012 and 2014, the audit said, Alaska Native corporations were awarded 30 contracts worth more than $237 million from the DOE's procurement office. Of that, $226 million came in the form of noncompetitive contracts from the 8(a) program.
The audit, which examined 12 sole-source 8(a) contracts awarded to Alaska Native corporations, also found the DOE didn't always make sure the corporations complied with rules about subcontracting.
In one case, an Alaska Native corporation subsidiary landed a $58 million award that "appeared to conflict" with the 8(a) program's intent to prohibit follow-on contracting.
The report did not explicitly identify the contracts it audited, nor the parties involved.
Alaska Native corporations have long utilized the Small Business Administration's 8(a) program, which gives preference to small businesses owned and controlled by socially and economically disadvantaged people, for contracts. Since 2012, the DOE has been in partnership with the SBA to dole out such contracts.
But in recent years, Native corporations here have drawn less money from the controversial program and are diversifying their revenue sources as it has become more difficult to get contracts through 8(a).
The possibility that an 8(a) contract could be awarded to an ineligible firm could hurt other businesses that take advantage of the program, the audit said.
"If an ANC firm was awarded a sole-source contract that it was not eligible to receive," the audit said, "qualified ANC firms and other disadvantaged small business concerns could be denied the opportunity to take advantage of the business development benefits afforded by a competitive award under the 8(a) program."
While the report focused on Alaska Native corporation awards, these problems might also be the case for contracts to other types of firms within the 8(a) program, the audit said.
Issues with follow-on contracts were also the focus of a report from the U.S. Government Accountability Office in March. That report found that weaknesses in oversight limit the Small Business Administration's ability to make sure Alaska Native corporation contracts comply with requirements of the 8(a) program.
SBA rules prohibit firms from receiving an 8(a), no-bid contract immediately after such a contract with the same requirements performed by another firm that's owned by the same Alaska Native corporation (that's what's known as a follow-on).
But the GAO's report found that agencies are not required "to directly identify whether a sole-source contract is also a follow-on contract" in offer letters to the SBA.
The SBA would need better data in order to determine whether companies that are owned by the same Alaska Native corporation are complying with the rules of the 8(a) program, that report found.