Trump administration declares war on Alaska 8(a) contracts

Sen. Dan Sullivan is racing on his “Team Dan” campaign website to post as many endorsements as he can from Alaska Native corporate leaders before they have a chance to reconsider.

Speed is of the essence for Team Dan because the Trump administration has just declared war on the 8(a) contracting program that has been an economic lifeline for the majority of the most profitable Alaska Native corporations.

Defense Secretary Pete Hegseth opened the attack on 8(a) contracts, saying he is “taking a sledgehammer to the oldest DEI program in the federal government, a program few people outside of Washington have ever heard of, that I hadn’t heard of.”

No one inside an Alaska Native corporation is as uninformed as Hegseth, the former TV talker.

Hegseth has handed Mary Peltola’s campaign an enormous gift. The opponents of Nick Begich the Third should also send a thank you note and flowers to the alleged Secretary of War.

Sullivan and Begich the Third will have to side with Hegseth—who derides 8(a) contracts as a race-based “breeding ground for fraud”— or with the leaders of Alaska Native corporations who will defend the concept and practice.

Hegseth and Sullivan, who like to drop “lethality” into every other sentence, will have a hard time pretending they are on the same page about 8(a). Hegseth is on the lethal side, while Sullivan will try to claim it’s about reform.

Hegseth is not calling for reform. He posted a video Friday saying that 8(a) contracts have “morphed into swamp code words for DEI race-based contracting.”

Sullivan, Sen. Lisa Murkowski and those who have preceded them in Washington, D.C. have long been champions of 8(a) contracts and done everything possible to protect and enlarge participation for Alaska Natives.

Last month Sullivan praised the 8(a) Alaska companies for doing “mission-critical work for the federal government, particularly for the Department of Defense, with efficiency and speed.” He celebrated a change at the Small Business Administration that he said would make it easier for Alaska 8(a) contractors.

The Alaska delegation bristled for years about a 2009 amendment that required a written justification for any sole-source contract over $20 million. In 2019, Sullivan inserted language into the law to repeal the requirement, claiming that it discriminated against Alaska Native corporations.

The program goes back 40 years to the work of Sen. Ted Stevens who helped set up a system that today allows the largest of the Alaska Native corporations to be treated as small businesses under the law.

In the Pentagon video, Hegseth said that cutting 8(a) contracts is part of his campaign to “gut the corruptive unconstitutional nonmerit based DEI programs that have weakened our military and distracted us from our primary mission.”

He said “waste, fraud and abuse that has run rampant in this department for decades.”

“And here’s the worst part. In many, many instances these socially disadvantaged businesses they don’t even do work. They take a 10 percent, 20 percent, sometimes 50 percent fee off the top and then pass the contract off to a giant consulting firm, commonly known as Beltway Bandits,” Hegseth said.

“For decades this program 8(a) has been a breeding ground for fraud. And this administration is finally doing something about it. The Department of Justice under Attorney General Pam Bondi recently exposed half a billion dollars in 8(a) fraud, Treasury led by Secretary Bessent, found another quarter-billion and their investigation is just beginning. Treasury, Justice and the Small Business Administration under Administrator (Kelly) Loeffler are all actively investigating their 8(a) contracts right now.”

“Now in the Pentagon $100 million sole-source contracts go out the door to these 8(a) firms almost every day. $100 million sole-source contracts go out our door to these 8(a) firms almost every day, without any competition or opportunity for anyone else to bid,” he said.

“The Department of War (defense) is required by law to do almost $100 billion worth of contracts per year with small businesses, including 8(a) firms. Hmmm. Seems 8(a)’s quite important. But we’re not required to pay enormous brokerage fees, only to have these firms pass those contracts along to giant consulting companies. And we won’t. We’re not doing this anymore.”

“So effective immediately, I’m ordering a line-by-line review of every small business sole-source 8(a) contract that is over $20 million. And we’ll look at everything smaller than that too. The Department of War has the biggest chunk of 8(a) spending by far, 10 times more than any other agency. So our cleanup, it’s gonna be 10 times tougher. It’s a two-stage mission. First, if a contract doesn’t make us more lethal, it’s gone. We have no room in our budget for wasteful DEI contracts that don’t help us win wars. Period. Full stop.”

“Second. We’re doing away with these pass-through schemes. We’ll make sure that every small business getting a contract is the one actually doing the work. And not just some shell company funneling your money to a giant consulting firm. This approach is of course not meant to hurt small businesses, that’s not the point. America’s full of great, amazing small businesses. This is part of a larger effort to transform our acquisition ecosystem into one that makes sense for the threats we face in the 21st Century. I gave a long speech about this back in November.”

“Our goal is to spend your money to build our defense industrial base with businesses large and small that share our mission, not to line the pockets of Beltway fraudsters or to advance the agenda of DEI apologists. Only lethality. And we’re gonna look at every single contract.”

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