Native Hawaiian Organizations Association 3375 KOAPAK A STREET, SUITE B200 HONOLULU, HAWAII 96819 POINTS OF CONTACT: Raymond Jardine, Jr., President. (808) 792-7526 Matthew Teho, Vice President. (808) 544-1211 Ethan Cooper, Secretary. (808) 522-7278 Vaugn Vasconcellos, Treasurer. (808) 943-9545 Christopher Dawson, Director Ron Jarrett, Directory Aimoku McClellan, Director

THE VISION, OBJECTS AND PURPOSES OF THE ASSOCIATION ARE:

(a) To unify, for mutually beneficial purposes, the efforts of those organizations which qualify under federal small business law as Native Hawaiian Organizations and are members (Hui ‘ia).

(b) To facilitate the development of the community services programs that each member Native Hawaiian Organization is required to establish, fund and maintain (LaweIawe).

(c) To assist member Native Hawaiian Organizations in their business dealings so that they operate with excellence (Maika'i loa) and adhere to the highest standards of business ethics (Küpono),

(d) To instruct and mentor member Native Hawaiian Organizations who are new to the business so that they may be successful (A ‘o).

(e) To educate and inform the general public of the benefits and good works that such Native Hawaiian Organizations are doing (Hõ‘ike).

THE NATIVE HAWAIIAN ORGANIZATION SECTION 8(a) PROGRAM

In 1952, to continue the important functions of earlier agencies that had been established during the Great Depression and during World War II, President Dwight Eisenhower proposed the creation of a new small business agency -- the Small Business Administration. In the Small Business Act of July 30, 1953, Congress created the Small Business Administration, whose function was to “aid, counsel, assist and protect, insofar as is possible, the interests of small business concerns.” The charter also stipulated that the SBA would ensure small businesses a “fair proportion” of government contracts and sales of surplus property. By 1954, the SBA already was making direct business loans and guaranteeing bank loans to small businesses, as well as making loans to victims of natural disasters, working to get government procurement contracts for small businesses and helping business owners with management and technical assistance and business training. However, for nearly 15 years there was something lacking.

The opportunity for full participation in our free enterprise system by socially and economically disadvantaged persons is essential if we are to obtain social and economic justice for such persons and improve the functioning of our national economy.

This philosophy expresses the foundation for federal programs encouraging minority business enterprise started in 1969. At that time, federal legislation granted preferential status in federal contracting under section 8(a) of the U.S. Small Business Act to qualified for-profit businesses owned by members of minorities. These so-called “8(a) firms” were allowed to receive federal contracts on a “sole source, non-bid” basis so long as the contracts did not exceed certain “thresholds”. This program still exists. The contract size thresholds today are $5.5 million, in the case of contracts involving manufacturing, or $3.5 million for all other contracts.

In 1990, qualified 8(a) firms in which a controlling interest is owned by a recognized Indian tribal organization or an Alaska Native Corporation ("ANC") were given a special status. These firms are not restricted by the thresholds but can receive sole source, non-bid contracts of any size. These firms are dubbed "Super 8(a) firms".

Later, Sen. Daniel K. Inouye (D -Hawai'i) introduced legislation that added firms in which a controlling interest was owned by a Native Hawaiian Organization ("NHO") to the program. An NHO must be a non-profit organization incorporated in the State of Hawai'i by Native Hawaiians (of no specific blood quantum). The NHO in each case operates as an "umbrella" organization for its for-profit subsidiaries and, as long as it owns a controlling (51%) interest in each of those subsidiaries (i.e., corporations or limited liability companies), the latter can qualify as an 8(a) contractor, receive contract awards on federal jobs, and so forth.

A very important difference separates NHOs from the Indian tribe-controlled firms and the ANC-controlled firms. By law, appropriate portions of the profits generated by the NHOcontrolled 8(a) firms must be used to fund social programs benefiting Native Hawaiians (again of no specific blood quantum). ANCs have the option of paying out their profits to their stockholders or funding social programs benefiting their members. Similarly, an Indian tribal organization which owns an 8(a) firm has the option of distributing profits to the members of its tribe or funding social programs benefiting tribal members.

At the outset, another very important difference separated the Indian tribe-controlled and ANC-controlled firms from the NHO-controlled firms. An exemption from the contract thresholds was not given to NHO-owned firms. On September 30, 2003, that exemption was extended to NHO controlled firms seeking Department of Defense ("DoD") contracts. By legislation passed in 2006 (P.L. 109-148), the exemption was made permanent. However, the exemption only pertains to DoD contracts. NHO-controlled firms dealing with other federal departments and agencies are controlled by the thresholds just as regular 8(a) firms are.

Two things must be stressed in any discussion of the 8(a) or NHO programs. Firstly, don't go away thinking that either program assures that the participants will win federal contracts. It is still up to the qualified 8(a) firm to get out and sell its products or services to federal contracting officers. Some of these contracting officers understand and support the 8(a) program while others simply do not care or can't be bothered. In one case we know of, it took three years of hard sales work (and then retaining a person with already-developed relationships with key contracting officers) before a certified 8(a) firm got its first contract under the program. Secondly, please do not look at these programs as a way to generate funds for your already existing non-profit organization. If you are thinking that way, you have it absolutely backwards. You must start with a viable business plan which involves the selling of products or services to the federal government. After you've come up with that plan and execute it in a business-like manner with success (and profits), that's when you can start thinking about your non-profit organization.

* Executive Order 11625, October 13, 1971, page 1.