The Alaska Native Corporation (ANC) program came under renewed fire recently at a joint congressional committee hearing on the benefits designated companies get and the degree to which fraud and abuse have undermined the program’s goals.

According to critics, the program gives the companies an unfair advantage even over those in other set-aside designations, and ANCs often are loosely connected, at best, to Alaska natives. Defenders, however, insist that the program is fulfilling its purpose of channeling contracting dollars to impoverished native populations in America’s 49th state.

A Government Accountability Office report released in April, which Rep. Tom Davis (R-Va.) cited at the hearing, found the value of contracts awarded to ANCs jumped from $265 million in 2000 to $1.1 billion in 2004.

“I worry about the impact of this program on our already overburdened competitive acquisition system,” said Davis, chairman of the House Government Reform Committee. His committee and the Small Business Committee were involved in the hearing in late June.

The government designed its acquisition system, including the Small Business Administration’s 8(a) program for small businesses, so that all segments of the market could contend for government contracts. Despite putting additional limits on certain competitions, small-business programs are intended to keep larger firms from overrunning small players.

Congress created the ANC designation through the Alaska Native Claims Settlement Act, passed in 1971. Its primary purpose was to resolve land claims and aid the economic development of Alaska native communities. Congress chose the ANC designation instead of a reservation system. ANCs fall under SBA’s 8(a) program. Initially, ANCs could only receive contracts worth up to $5 million, but that limit was eliminated in 1986.

“While these various restrictions often have laudable social goals, they all come at a price,” Davis said.

“[Contract] bundling and a runaway freight train known as the ANCs is [are] wreaking havoc on 8(a) firms and the African-American, Hispanic, Asian and, yes, the Native American communities,” said Harry Alford, president of the National Black Chamber of Commerce.

He said billion-dollar corporations have swooped in to reap the benefits of the special designation. “Very little of the revenue obtained through federal contracting finds its way to Alaska natives,” Alford said.

Rep. Don Manzullo (R-Ill.), chairman of the Small Business Committee, said his manufacturing-based congressional district has felt the impact of ANCs. Companies that lose contracts to ANCs hire fewer of his constituents, he said.

Rep. Don Young (R-Alaska) spoke in support of the program.

“These folks are doing right by the federal government,” said Young, who appeared as a witness at the hearing. “They’re doing right by the American taxpayer, and most importantly, they’re doing right by their impoverished communities back in Alaska.”