Grand Traverse Engineering & Construction (GTEC) was hired to provide construction management services to reconstruct part of the M-72 corridor — a major roadway in the heart of Michigan.
This article originally appeared in the March 2019 “Infrastructure” print edition of Native Business Magazine.
The United States government doles out $500 billion each year to buy the goods and services it needs to keep the country running smoothly. That’s a staggering amount of money enriching businesses fortunate enough to land these coveted contracts. And thanks to the Tribal 8(a) Program, Tribal enterprises can dip into the honeypot of federal contracting, too.
According to the Congressional Research Service, the Tribal 8(a) Program is a special provision to the Small Business Investment Act of 1958 that gives eligible Alaska Native Corporations, Tribes, Native Hawaiian Organizations and Community Development Programs an exclusive stronghold to compete more advantageously in the federal marketplace through set-aside (only certain contractors may compete) and sole-source (without competition) awards.
The idea behind this business development program, managed by the Small Business Administration, is that it gives qualifying Tribal enterprises the opportunity to generate much-needed revenue to fight poverty and promote economic development in their disadvantaged communities.
As the Native American Contractors Association (NACA) says, “The Native 8(a) Program is a hand up, not a hand out.”
Both NACA and the National Congress of American Indians acknowledge that the Tribal 8(a) Program has a few legislative bugs to work out — including reforms that will make the program accessible to more Tribes. Even so, some Tribal businesses are already in lockstep with the rules and regulations of federal contracting and are profiting quite nicely.
Native Business Magazine spotlights two of them.
If You Build It, Profits Will Come
As Doyle Lowry says, “The U.S. government buys everything. You can sell them thumbtacks, if you have a company to do it.”
Instead of thumbtacks, Lowry chose construction. As the CEO of Four Tribes Construction Services, a general contracting firm owned by the Susanville Indian Rancheria (SIR) in California, Lowry oversees tens of millions of dollars in federal construction jobs.
In fact, 98 percent of Four Tribes’ work is with the federal government, which is why the construction company is headquartered in Maryland. “We need to be near the decision makers,” Lowry explains of the Tribe’s coast-to-coast wingspan.
In 2018, Four Tribes signed more than $40 million in federal construction contracts. Its best year ever. “This year , we have brand-new construction projects ranging from $500,000 to more than $20 million,” including a current $12 million project refurbishing roads at Arlington National Cemetery, the SIR Native shares. “It has really been a great way to create revenue for the Tribe and fund social programs that help our people.”
Four Tribes’ first client was the Army Corps of Engineers in South Carolina. It built a gravel parking lot and remodeled a secure facility at Joint Base Charleston to the tune of $800,000. “In the construction world, you live and die on your reputation, so you gotta do that first one right.” After that initial success, contracts started rolling in regularly. The Corps remains Lowry’s largest client today.
This federal contracting formula has worked so well that the SIR Tribe has developed six more Tribal 8(a) companies since Lowry launched Four Tribes in 2010, including IT, personnel and environmental businesses.
But it wasn’t easy getting to this cha-ching moment. Lowry admits his Tribe did not know how to get into the federal contracting arena at first. “We spent three years trying to figure it out. You have to jump through a lot of hoops,” some of which can be quite scary for Tribes, says Lowry.
“Sovereign immunity is a big issue. The federal government won’t contract with you if you have total sovereign immunity,” so he advises hiring good lawyers to meet this challenge and structure firewalls to protect your Tribe.
However, if you are willing to adhere to specific requirements set by the U.S, government, he claims that federal contracting is very profitable, very fulfilling.
“There is so much work out there. I am surprised more Tribes don’t do this,” Lowry says, hoping to encourage other Tribes to take that first unsteady but thrilling step toward more economic empowerment.
An Army Ranger Captain Leads the Charge
Last year, the Grand Traverse Band of Ottawa & Chippewa Indians hired Thomas Wilbur, an enrolled member of the Oneida Tribe of Indians of Wisconsin, to marshal the Tribe into the federal contracting space. Diversification into this arena just made sense.
“Gaming is becoming saturated and we worry about how online gaming will affect our bottom line,” says Wilbur, the new CEO of Grand Traverse Economic Development (GTED), the Tribe’s non-gaming investment division.
Wilbur brought with him impressive wins in government contracting, and a special formula. “Ten years ago, some professionals and I came up with a model of what happens to a company when you place it under Indian ownership in the federal space.” Wilbur discovered the company’s fair market value increases by approximately 35 percent due to competitive advantages in the SBA Tribal 8(a) Program.
Fast-forward to January 2019 when GTED purchased Bay Shore Steel Works (BSSW), a steel and aluminum manufacturer for many industries, including the U.S. military. “The day we bought them, their fair market value increased by about 35 percent, based on my model,” says Wilbur, who now runs two Tribal 8(a) companies (BSSW and Grand Traverse Engineering & Construction or GTEC) and has three more close to launching — in IT, development and land-holding.
Wilbur, a former U.S. Army Airborne-Ranger captain, says he is especially proud of the BSSW acquisition. “I believe we are the only Tribe in the federal contracting space to have a component that protects our war fighters.”
In five years, Wilbur envisions GTED owning nine to 10 Tribal 8(a) companies. Using his formula, he estimates they will help create a $100 million portfolio for the Tribe, depending on contract awards. His longer-term vision? It is predicated on the success of regional Alaska Native Corporations.
“Thirty years ago, they were start-ups in the federal space. Now they are billion-dollar-plus companies with tens of thousands of employees and multiple 8(a) firms,” explains Wilbur. “I believe in the 21st century, we can achieve that in a third of the time because we have learned from ANC’s best practices, the pace is much quicker and federal contracts are much larger than they’ve been in the past.”
Want to Land a Tribal 8(a) Contract: Here Are Some Tips
The first step to winning government contracts is to get certified as a Tribal 8(a) business through the Small Business Administration. Once you meet the requirements, consider advice from Natives who have done it successfully:
Thomas Wilbur, CEO of Grand Traverse Economic Development:
- Hire people experienced in the federal arena who understand business, marketing and financials. “It’s a complicated business, but very lucrative if you know how to navigate it.”
- Separate yourself from the business and Tribal politics. “Don’t let emotions get in the way.”
- Once you’re in, you must deliver with each project. “A bad performance is the kiss of death.”
- Be patient. “It’s a long-term investment that requires a long-term strategy.
Doyle Lowry, CEO of Four Tribes Construction Services:
- Get ahead of contracts before they are published online. “Set up a meeting with an SBA representative in your chosen expertise who will tell you about projects coming down the road.
- For construction contracting, it’s imperative to find a bonding company to insure each project. “Bonding is everything to construction. These companies start out conservatively but will increase your bonding rate the longer you work together. We are bonded for $35 million per project.”
- When setting up the business, Tribal economic boards must be independent from election boards. “It’s hard for some Tribes to give up that control, but totally worth it.