Piliero Mazza & Pargament, PLLC   Vol. 6, Issue 4  April 2004

Addressing Tribal and Alaska Native Corporation
Legal and Business Issues

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  A R T I C L E S

COURT WATCH - Florida Court Declares Statutory "Preferences" Unconsitutional
GOVERNMENT CONTRACTING - Joint Venturing as a Small Business (Part II)
REGULATIONS - Regulatory Update
SMALL BUSINESS - SBA Releases Proposed Rule


From time to time, the Tribal Advocate hears from its readers that many government program and contracting personnel seek more information on how the federal government may do business with tribes and Alaska Native Corporations. The following Question and Answer series is designed to provide some basic answers with regulatory citations to serve as a reference that our readers may pass on when appropriate. Please let the Tribal Advocate know of other questions that we should address as they arise.

What is an ANC?

Alaska Native Corporations (ANCs) are tribal corporations that are owned and controlled by Alaska natives. Congress created such entities in the early 1970s when settling claims of Alaska natives to rights in Alaskan land. Unlike Indian tribes in the lower 48 states, whose land is often held in trust by the federal government, each ANC owns the land and resources of a different region in Alaska. Congress granted all ANCs minority status. The definition of an "Indian tribe" includes any Alaska native village or village corporation as defined in, or established pursuant to, the Alaska Native Claims Settlement Act (ANCSA). 25 U.S.C. §450b(e).

Do tribally-owned and ANC-owned firms qualify as SDBs?

An SDB is a "small and disadvantaged business." The business must be (1) owned, controlled, and managed by one or more economically and socially disadvantaged individuals, and (2) meet size standards set forth in regulations for each particular industry. Since the SDB program began, Congress has been passing legislation that has simplified the process for certifying ANCs, tribes, and SDBs. For purposes of program eligibility, ANCs and tribally-owned firms are presumed to be socially disadvantaged. 13 C.F.R. §124.103. However, ANC-owned firms, not tribes, are considered to be economically disadvantaged. Id. at §124.109(a)(4). Tribes must demonstrate economic disadvantage to be eligible for the 8(a) Program. Id. at §124.109(b)(2).



  Florida Court Declares Statutory "Preferences" Unconstitutional

A U.S. District Court in Florida recently invalidated provisions of a state statute that sought to remedy past racial and gender discrimination against minority contractors in the state procurement system. The ruling was an important victory for the Florida Associated General Contractors, a commercial builders’ group.

In Florida A.G.C. Council, Inc. v. The State of Florida, the Court said that a state procurement statute adopted invalid preferences in contravention of the Fourteenth Amendment’s Equal Protection clause. The Court held that the legislature’s adopted means to achieve greater minority participation in state contracting was not narrowly tailored to fit their named objectives.




  Joint Venturing as a Small Business
(Part II)

In our March issue, we discussed joint ventures under various small business and mentor-protégé programs. This month, in Part II, we will focus on some of the more legal/technical considerations in establishing a joint venture.

Joint ventures are recognized as legal entities for purposes of contracting with the federal government. See FAR Subpart 9.6. The GAO has defined a joint venture as an "association of persons or firms with an intent, by way of contract, to engage in and carry out a single business venture for joint profit, for which purpose they combine their efforts, property, money, skill and knowledge."

A joint venture has three main characteristics: (1) co-management by participants;
(2) sharing of profits and losses; and (3) limited duration (i.e., the length of a given contract). Joint ventures typically possess the characteristics of joint control, such as joint property, joint liability for losses and expenses, and joint participation in profits. Generally, each venturer participates in the overall management of the venture.

An attractive attribute of a joint venture is that participants are normally entitled to co-manage the project. This can be a critical (and even determinative) factor, particularly if team members are investing considerable resources and manpower in a long-term project. The ability of participants to effectively co-manage a project, however, can be impeded if there are too many voices. Therefore, a preliminary consideration is whether the number of contractors is too large for the joint venture format, taking into account the nature and scope of the contract.



DOD Poised to Release Rule on Task/Delivery Order Contracts

The Department of Defense intends to release an interim rule in the near future that would limit all new task order (i.e. services) and delivery order (i.e. supplies) contracts to five years, including options. This new time limitation is intended to increase the level of competition for multiyear contracts by placing caps on task/delivery order contracts. Previously, such contracts had a limit of up to eight years, which included a five-year base period and up to three option years. The new DOD rule would limit the contract period, including both the base and the options, to five years total. The rule is being reviewed by the Office of Information and Regulatory Affairs, a unit within the Office of Management and Budget.



   SBA Releases Proposed Rule

On Friday, March 19, 2004, the Small Business Administration released a proposed rule to simplify size standards by reducing the categories of size standards from 37 to 10. Also under the proposed rule, size will be determined by the number of employees in almost all cases rather than by revenues. The size standards for small businesses will range from 50 to 1,500 employees depending upon the industry. In 31 industries, an annual average receipts cap is also proposed. Some of these industries include construction, computer services, engineering, consulting and facilities support services.




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