Federal Contracting With Native Businesses Under Scrutiny

Native-owned corporations have benefitted greatly from federal preferences in no-bid and other set-aside contracts worth billions of dollars each year. That success has attracted criticism from other business owners, including Hispanics who remain ineligible for no-bid contracts, in addition to politicians and advocacy groups who say no-bid contracts are a bad deal for taxpayers. As a result, changes to the federal contracting program used by many Native firms are being actively considered in Congress, and one significant change has already been approved.

The rules for the contracting program, created to assist minority-owned businesses and run by the U.S. Small Business Administration, are still being rewritten. One of the proposed requirements is for Native-owned companies to report annually on how the federal contracts are benefiting their shareholders.

The change that has already moved forward is an amendment to a Department of Defense spending bill, which will prevent firms from receiving no-bid defense contracts worth more than $20 million unless a federal Contracting Officer provides a written justification that is then approved by the Department. Native-owned firms routinely obtain defense contracts worth hundreds of millions of dollars through the no-bid process, but Native owners were not given a chance to comment on the amendment, which was inserted into the spending bill after the conclusion of public hearings. The Defense Department must create new regulations for the amendment, and the Department has agreed to host Tribal consultations before creating them.

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