khän trëdäho˛h’įį | catalyze

SBA convened a tribal consultation in Anchorage on Sept. 14 that allowed Tribes, ANCs, and NHOs to offer public testimony.

SBA Convenes Tribal Consultations for 8(a) BD Program Proposed Rule Changes Affecting ANCs and Tribes

by Alaska Native Village Corporation Association (ANVCA)

ver the past several weeks, the Small Business Administration (SBA) has taken steps to revise the regulations governing the 8(a) Business Development (BD) Program in a manner that would significantly impact entity-owned firms—meaning firms owned by Tribes, Alaska Native Corporations (ANCs), and Native Hawaiian Organizations (NHOs)—in the Program. The 8(a) BD program allows for entity-owned firms and other qualifying small businesses to compete with large companies to provide services to the federal government, but there is a significant amount of work required for participating firms to maintain compliance in this heavily regulated industry. Part of that compliance is an annual recertification process. For entities participating in the 8(a) BD program, which are allowed to have multiple firms participating in the 8(a) BD program at one time, this annual recertification includes submitting an 8(a) participant benefits report form that demonstrates how the benefits of 8(a) BD program participation flow down to the Native communities they support. This form assigns a monetary value to the annual contributions of the firm to seven different categories: Health, Social, and Cultural Support, Education and Development, Lands, Economic, and Community Development, Employment, Economic Benefits, and Other.

On August 26, SBA published a notice of Tribal Consultation on changes it is considering making to the 8(a) BD program regulations, notably the proposed implementation of a “Community Benefits Plan” for entity-owned firms that would replace the 8(a) participant benefits report. As a rationale for implementing such a plan, SBA states in the Tribal Consultation notice that it has had difficulty quantifying the benefits of the 8(a) program to entity-owned stakeholders. Such a Community Benefits Plan would lay out commitments for entity-owned firms to “give back to the Native community in several specific identified ways,” and it would be submitted when a firm is applying for the 8(a) BD program.

Comments due November 8

Most notably, in the Tribal Consultation notice, SBA also sought feedback from Tribes, NHOs, and ANCs as to whether there should be consequences for not fulfilling the commitments laid out in the Community Benefits Plan and what those consequences should be. SBA indicated that potential consequences could be not allowing the firms owned by the entity to accept sole source awards or not allowing the entity to add additional firms to the 8(a) BD program until compliance with the Community Benefits Plan is met. Such consequences could be extremely detrimental to the profitability of the entity in the program, not just to the individual firm not in compliance, which would negatively impact benefits to Native Shareholders of ANCs and the communities that all 8(a) BD program participating entities support. When the proposed regulations were actually published in the Federal Register on September 9, the proposed Community Benefits Plan requirement was included, but a discussion of potential consequences of non-compliance was not.

While the stated intention of the proposed rule change—ensuring that benefits of 8(a) BD program participation flows down to the Native communities they support—is notably good, it is in direct conflict with the Alaska Native Claims Settlement Act (ANCSA). The purpose of ANCSA was to empower Alaska Natives to make their own decisions regarding how best to serve the needs of their communities. Since ANCSA was passed in 1971, ANCs have been successful in creating complex business structures governed by their board members and, ultimately through the annual election process, their shareholders. These for-profit businesses typically provide benefits to their Shareholders, descendants, and communities in the form of scholarships, employment, internships, cultural perpetuation programming, dividends, settlement trust distributions, burial assistance, Elder assistance, support for non-profit entities that benefit Shareholders and descendants, and more. If for some reason, the Shareholders do not believe its elected board is performing, they may elect new members to the board. If the board of directors does not believe its executive leader is performing, they may replace him or her. There is significant governance in place to exercise the self-determination promised by ANCSA.

SBA convened five Tribal Consultations and listening sessions across the country regarding the implementation of the Community Benefits Plan that allowed Tribes, ANCs, and NHOs to offer public testimony, with only one session available via Zoom for those unable to attend in person. At the Anchorage Tribal Consultation on September 14, ANCs spoke with a united voice that implementation of a mandatory Community Benefits Plan would be contrary to ANCSA and Alaska Native self-determination and that it would negatively impact benefits to Alaska Native shareholders and communities. While all Alaska Native Corporation attendees prepared their testimony independently, similar arguments were made by all Alaska Native Corporation representatives.

What is demonstrated by this exercise is both the ability to create a unified voice and the impact of using that voice… However, it is also clear that the issue of reporting community benefits is not going away.

The testimony offered questioned how the SBA could propose something so against the spirit of ANCSA’s promise of self-determination. It was mentioned multiple times that there is already an existing benefits report made by each entity annually to SBA with monetary contributions reported. One attendee pointed out that when the existing report, the 8(a) participant benefits report, was put in place, it was guaranteed that it would not be used in a punitive matter, meaning the SBA would not evaluate or judge the benefits reported annually. Many participants stated while they demonstrate healthy numbers on the existing benefits report, there is also an inability to completely quantify the benefits to its Shareholders and community as many are indirect or intangible. Others noted that while SBA may want to evaluate the monetary benefits provided within one fiscal year, often, it is impossible if the company is re-investing profits into ventures for future generations. Attendees shared that they, like the generations that worked hard to get these corporations to where they are today, are not just looking at the next five to ten years, they are building something for the next hundred years. It was also strongly reinforced that there is existing effective governance in place and therefore no need for SBA’s intervention to determine how ANCs allocate their limited resources.

The SBA panel—which notably included John Klein, SBA Associate General Counsel for Procurement Law, Jackson Brossy, SBA Assistant Administrator for the Office of Native American Affairs, and Aditi Dussault, SBA Senior Advisor to the Office of the Administrator—were attentive and receptive to the testimony provided at the Anchorage Tribal Consultation regarding the proposed Community Benefits Plan and noted in their closing statements they had heard the unified voice regarding the concern for self-determination. At the subsequent Tribal Consultations, similar testimony was received and the idea of a “working group” to assist the SBA in obtaining the information they seek regarding benefits without infringing on self-determination was brought forward. At the October 5th Tribal Consultation in Washington D.C., Mr. Brossy announced that, due to the feedback arising from the consultations and listening sessions, SBA would not be moving forward with the proposed Community Benefits Plan requirement at this time.

What is demonstrated by this exercise is both the ability to create a unified voice and the impact of using that voice. Through the Tribal Consultation process, Alaska Natives were able to provide a united front expressing concern on the infringement of the promise of self-determination made by Congress. It is admirable that the Tribal Consultation process did exactly what it was supposed to do: allow for changes that significantly impact the Native community to be discussed and let voices be heard. It is also impressive to know that the SBA is willing to work with the community and respect those voices.

However, it is also clear that the issue of reporting community benefits is not going away. SBA reinforced written comments are still welcome on the Community Benefits Plan, and of course, the other proposed rule changes in the 132-page document that sets forth the proposed rule. Such changes include those related to bona fide places of business, good faith efforts, sole-source contracts, joint ventures, ostensible subcontractor rule, size certification, and more. Comments on the proposed rule changes are due to SBA by November 8, 2022.

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