12.17.19

Sullivan Works to Strengthen 8(a) Contracting in NDAA

Senator’s language undoes harmful and discriminatory decades-old provision

WASHINGTON, DC – U.S. Senator Dan Sullivan (R-Alaska), a member of the Senate Armed Services Committee, today voted with 85 of his colleagues to pass the Fiscal Year 2020 National Defense Authorization Act (NDAA), which authorizes $738 billion in critical defense spending and includes many provisions introduced by Sullivan that positively impact Alaska. One Sullivan-provision of particular importance would undo a discriminatory contracting requirement that applied only to businesses owned by tribes, Alaska Natives and Native Hawaiians. For nearly a decade, this contracting requirement, called Section 811 because it was enacted as Section 811 within the FY 2010 NDAA, has negatively impacted the ability of these entities to obtain sole-source contracts with values in excess of $22 million (inflation adjusted from $20 million). Section 811 had a chilling effect on the ability of Native contractors across the country to compete with larger contractors. 

“Alaska Native Corporations are an integral part of Alaska’s economy,” said Senator Sullivan. “Unfortunately, the restrictions put on these entities, in the midst of a recession in our state, not only negatively impacted Alaska Native corporations and their shareholders, but also the thousands of Alaskans – Native and non-Native – who work for these corporations. Since joining the Senate in 2015, I have worked relentlessly to fix this discriminatory provision. With the support of Native groups across the state, I’ve repeatedly made the case to my colleagues—sometimes in tense debates—that these restrictions unfairly targeted all Native peoples and hurt small business opportunities in Alaska and throughout the country."

“I want to thank Congressman Young for passing this provision in the House, as well as Senator Inhofe and his staff for their help in getting this important provision across the goal line,” said Senator Sullivan. “I’m hopeful that this new law will streamline contracting practices within the Department of Defense, drive additional business to Alaska companies, and allow these businesses to continue their work enriching their communities with jobs, educational opportunities, dividends, and new investments.”

The Provision

Senator Sullivan’s provision – Section 823 – requires the Department of Defense to remove overly burdensome restrictions first enacted in late 2009, which applied only to Native 8(a) contractors. Specifically, this language reduces the administrative burden and lowers the disproportionately high level of approval authority for small-to-medium-sized sole-source contracts – $100 million and below – awarded to Native 8(a) contractors. The language – which Senator Sullivan included in the Senate Armed Services Committee markup of the FY 2020 NDAA and had broad bipartisan support among the senators on that committee – also positively impacts contracts above $100 million by delegating the approval for these contracts to the head of the procuring agency, or their designee.

Moreover, this provision, which applies to Tribes, and Alaska Native and Hawaiian firms, helps ensures that DOD contracting officers have the additional tools they need to quickly and efficiently procure products and services when the need arises. As the 2018 National Defense Strategy explicitly states, “Current processes are not responsive to need; the Department is over-optimized for exceptional performance at the expense of providing timely decisions… We must not accept cumbersome approval chains… Delivering performance means we will shed outdated management practices and structures while integrating insights from business innovation.”

Background on 8(a): 

In late 2009, less than a year after Senator Ted Stevens’ departure from the U.S. the Senate, an extremely harmful contracting provision was “airdropped” into the National Defense Authorization Act by Missouri Senator Claire McCaskill.

Section 811 of the FY 2010 NDAA created a unique and burdensome requirement on the Justification and Approval (J&A) processes of sole-source contract awards. 

This requirement, which applied only to Native 8(a) small businesses, placed an onerous “Head of Agency” approval threshold on contracting agencies for contracts over $20 (now inflation adjusted to $22 million); these are relatively small government contracts compared to the high threshold of approval.

This process created confusion for contracting officers and resulted in overly high, undue levels of contract approval that were inconsistent with lower contract values and contracting agency risk.

For a decade, the separate and additional burden resulting from Section 811 created a chilling effect on contract awards to qualified Native 8(a) small businesses, effectively removing them from contracting officers’ consideration when awarding any sole-source contracts greater than $20 million to meet critical Department of Defense mission needs.

A graph from a September 2014 GAO Report, “Contract Management: DOD’s Implementation of Justifications for 8(a) Sole-Source Contracts,” showed a dramatic decrease in the number and total value of DOD 8(a) sole-source awards over $20 million, thereby significantly decreasing opportunities for Alaska companies to compete for and be awarded DOD contracts. Moreover, according to DOD’s 2015 Report, in FY 2014, DOD “did not award any sole-source contracts in excess of $20 million” in the 8(a) program. Section 811 ONLY applies to contracts “in excess of $20 million.” Since that point, only a few contracts above $20 million were awarded to Native 8(a) contractors, thus negatively impacting the broader Alaska economy where all of these companies are based.

A 2016 GAO Report, “Use of Sole-Source 8 a Contracts over $20 Million Continues to Decline,” stated, “Consistent with findings from our past reports, we found that sole-source awards generally declined in both number and value since 2011, when the 8(a) justification requirement went into effect.”

In sum, Section 811 was a discriminatory and unnecessary legislative change that was neither subject to normal congressional discussion nor amendment.

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