Native American firms climb small biz ladder (fwd)

[Phil CashCash]

09/15/03; Vol. 18 No. 12
Washington Technology

Native American firms climb small biz ladder
Companies more 'entrepreneurial' in government market

By Nick Wakeman
http://www.washingtontechnology.com/news/18_12/federal/21635-1.html

When Barney Uhart came to work for Chugach Alaska Corp. in 1993, the
company was emerging from bankruptcy.

The corporation and its Alaskan Native members in the coastal area of
Prince William Sound had been devastated by the Exxon Valdez oil spill,
which severely damaged the fisheries they depended on as major source
of revenue.

"I came on board to find another line of business for the corporation,"
said Uhart, president and chief executive officer.

Chugach decided to pursue government support services, particularly base
operations and maintenance work. The company won its first contract for
$5 million in 1994 to operate and maintain the King Salmon Airport in
Alaska, an Air Force facility.

>From that humble start, the corporation has built a $500 million annual
business with operations in 24 states and six foreign countries. The
majority of the work is base operations and maintenance.

"We do everything that it takes to run a facility, and a lot of IT
services are included," Uhart said.

The IT portion of its work was enough to land Chugach the No. 6 spot on
this year's Washington Technology Top 25 8(a) list, which ranks the
largest 8(a) firms doing business with the federal government. The
company had about $38.8 million in overall IT during fiscal 2002, with
about $2.4 million from 8(a) contracts.

Chugach is one of eight Native American-owned firms on this year's list.
Six of the eight are tribally owned or Alaskan Native Settlement Act
corporations: Arctic Slope Regional Corp., Bowhead Support Services
Inc., Choctaw Management Services Enterprise, Chugach, S&K Technologies
Inc. and TKC Communications LLC.

Individuals of Native American ancestry own two of the eight companies:
Arrowhead Global Solutions Inc. and Cherokee Information Services.

The top ranked Native American company is Choctaw of Durant, Okla.,
which was ranked No. 3 with $47.7 million in overall IT revenue and
$40.8 million in 8(a) contracts. The Choctaw Nation of Oklahoma owns
the company.

The prominence of the Native American companies on this year's list
stands in contrast to last year, when only four Native American
companies -- Choctaw, Arctic Slope, Datatrac Information Services Inc.
and Wyandotte Net Tel -- made the list. Arctic Slope of Barrow, Alaska,
is ranked No. 8 this year with $36.2 million in overall IT revenue and
$35.6 million in 8(a) revenue.

Other 8(a) companies that provide a range of services join these
companies.

At No. 1 is Force3 Inc. of Crofton, Md., which had $105.8 million in
overall IT revenue and $38.6 million in 8(a) revenue. The companies on
the list are ranked by overall IT revenue, not 8(a) revenue.

Force3 provides IT services, particularly in networking. Ranked No. 3
last year, Force3 is one of 11 companies on the list making a repeat
appearance. In fact, the top four companies are veteran Top 25
companies: Force3, Artel Inc., Choctaw and Computer & Hi-tech
Management Inc.

Several notable companies from last year's list have graduated from the
8(a) program, including 2002 top company Datatrac of Richardson, Texas,
and the No. 2 company RS Information Systems Inc. of McLean, Va.

The rise of the Native American companies isn't attributable to any
single factor, industry and government officials said.

There are 513 Native American-owned 8(a) companies, according to the
Small Business Administration. Tribes own some, and individuals of
Native American ancestry own some.

"There were two or three things that helped us," said Greg Dumontier,
president of S&K Technologies of St. Ignatius, Mont., the No. 7 company
with about $38 million in overall IT dollars and $2.4 million from 8(a)
contracts.

The Confederated Salish and Kootenai Tribes on the Flathead Indian
Reservation own the company in western Montana. S&K Technologies got a
fast start, Dumontier said, because it used the business infrastructure
of S&K Electronics, a former 8(a) company that the tribes owned. Under
the 8(a) laws, tribal governments and Alaskan Native corporations are
allowed to own multiple 8(a) companies.

S&K Technologies started as a three-person unit of S&K Electronics in
1997, Dumontier said. It became its own company in 1999, and today has
250 employees, he said.

"The tribe has a reputation of being one of the more progressive ones,"
he said.

Companies owned by tribal governments and Alaskan Native corporations
have benefits not available to other 8(a) companies, such as no ceiling
on sole-source awards. In addition, prime contractors can apply for a 5
percent fee if they use a Native American company as a subcontractor on
Defense Department work.

The tribal-owned and Alaskan Native corporations get these benefits
because the profits from their businesses go back to the tribe or
corporation shareholders to be used for training, education and other
government services.

"The villages are historically poor and lack many resources," said
Katharine Boyce, a partner at the Washington law firm Patton Boggs LLP,
who specializes in Native American issues. "And federal funds have
never met the requirements under the treaty obligations."

But many of the 8(a) benefits for Native American companies have been in
place for more than 20 years, and likely are not the reason for the
recent growth of the Native American contractors, said Darryl
Harriston, SBA deputy associate deputy administrator for government
contracting and business development.

SBA has been trying to increase awareness of these programs, but "what
you are seeing is Native American companies being more aggressive and
understanding the procurement process better," he said. "Over the last
few years, the tribes have become much more entrepreneurial."

The Army, Air Force and Navy have been particularly good at creating
opportunities for Native American-owned companies, Boyce said.

"It used to be weird to see a Native American company on someone's
team," said James Kane, president of Federal Sources Inc., McLean, Va.
"Now it isn't." *