When exploring potential partnerships, understanding the different types of organizations and their unique advantages is crucial. Among these, Native Hawaiian Organizations (NHOs) stand out due to their unique cultural heritage and the significant benefits they offer both to their communities and to those who partner with them.
But what exactly is an NHO? NHOs are nonprofit organizations established and controlled primarily by Native Hawaiians, designed to serve the interests and needs of their community. A company owned by a Native Hawaiian Organization (NHO) is typically referred to as an NHO-owned company or an NHO-owned business. These organizations are recognized by the U.S. Small Business Administration (SBA) and can participate in the SBA 8(a)'s Business Development (BD) Program, which offers unique advantages in securing government contracts and promoting economic growth.
In this blog, we'll unpack what makes NHOs unique, how they benefit from the 8(a) program, and the distinct advantages they bring to the table. By exploring these aspects, you'll gain a clearer understanding of how partnering with NHO-owned businesses can help you achieve your procurement goals while supporting a mission of cultural preservation and community empowerment.
What is the SBA 8(a) Business Development Program?
The SBA 8(a) Business Development (BD) program was established to support small, disadvantaged businesses, particularly in accessing the federal marketplace. Small businesses owned by Native entities, such as NHOs, Tribes, and Alaska Native Corporations (ANCs), are eligible to participate in the SBA 8(a) program under special regulations. Although the rules vary based on the Native entity, the primary goal of the Native 8(a) program is to empower Native communities to create self-sufficient economic ventures that benefit their communities.
The NHO 8(a) program enables Native Hawaiians to quickly establish self-sustaining economic ventures that benefit their communities. Unlike SBA 8(a) participants owned by individuals, profits from NHO 8(a)’s are reinvested into Native Hawaiian communities.
What Makes an NHO Unique?
The unique historical and cultural context of NHOs sets them apart from Tribes and Alaska Native Corporations (ANCs). The Apology Resolution acknowledges the overthrow and annexation of the Hawaiian Kingdom and commits the government to a process of reconciliation with the Native Hawaiian people. This historical context has led to political, racial, and cultural marginalization, resulting in social and economic disadvantages for Native Hawaiians.
Limited economic opportunities are one of the root causes of the various problems that plague Native Hawaiians. NHOs specifically focus on providing services and opportunities that address these socio-economic challenges. The NHO 8(a) Business Development program plays a crucial role in this effort. By participating in this program, NHOs can create jobs and generate financial resources that directly benefit the Native Hawaiian community. This program provides a way for NHOs to develop self-sufficient economic ventures that support their mission.
Unlike other Native entities, NHOs operate within the unique framework of the Hawaiian experience, addressing specific needs through economic ventures tailored to the Native Hawaiian community. Their governance by Native Hawaiians ensures that cultural preservation and economic development are always prioritized, making NHOs distinct in their approach and impact.
NHOs and Government Contracts
NHO-owned businesses possess several distinct advantages when competing for government contracts including their participation in the SBA 8(a) BD Program.
Sole-Source Contracting Authority
Sole-Source Contracting Authority: NHOs can receive sole-source contracts of up to $25 million (or higher with justification) or up to $100 million within the Department of Defense (DoD), meaning they can be awarded contracts without going through the competitive bidding process. This allows for a more streamlined procurement process and faster contract awards. This is particularly beneficial for the DoD contracts, which can exceed the usual thresholds, providing NHOs with significant business opportunities. (48 CFR §19.808-1, 13 CFR §124.506(b)(5))
Small Business Set-Asides
NHOs are eligible for small business set-asides and have access to other socio-economic contracting programs. This increases their opportunities to secure government contracts, providing them with a competitive edge. By awarding contracts to NHOs, contracting officers can fulfill socio-economic contracting goals set by the government. This helps in meeting small business contracting targets and promoting diversity in federal procurement. (48 CFR §19.501)
Multiple Subsidiaries
Unlike individual-owned 8(a) firms, NHOs can establish multiple subsidiaries. These subsidiaries can benefit from the same advantages that the parent NHO business enjoys under the SBA programs, including the 8(a) BD Program. Each subsidiary, however, must meet the eligibility requirements independently. This flexibility allows them to diversify their business operations, including the ability to operate in different business sectors increasing the likelihood of securing contracts. By using a Corporate Service Center or Shared Services among their subsidiaries, NHOs and their subsidiaries can offer lower bid (wrap) rates, resulting in cost savings for the government. (13 CFR §124.110)
Mentor-Protégé Program
NHO-owned businesses can participate in the SBA's Mentor-Protégé Program, which provides them with developmental assistance and the ability to form joint ventures with more established firms, if the 8(a) performs at least 40 percent of the work performed in the joint venture and is more than an administrative focus. This enhances capabilities, competitiveness, and reduces performance risks. (48 CFR §52.219-14(g)(2))
Community Impact
NHOs reinvest their profits into the Native Hawaiian community, funding various educational, cultural, and economic development programs. This aligns with the government's objectives of supporting socio-economic development in disadvantaged communities.
As of January 31st, 2023, there are at least 53 parent NHOs, which collectively own 154 unique companies. These companies hold 184 unique (Commercial and Government Entity) CAGE codes, and 27 of them have received prime contract obligations.
For government agencies, working with NHO-owned businesses offers several benefits. Established NHOs have a mature infrastructure, a regional presence, and extensive past performance, which significantly increase the operational capabilities of the businesses they own. They possess higher financial capacity, allowing them to handle larger and more complex projects. Mature NHOs achieve economies of scale and operational efficiency, which reduce risks for the Federal Government.
Real-World Impact
NHOs are making a tangible difference. From 2018 to 2021, NHOs invested over $52 million in community programs, supporting 130 organizations. These investments have supported everything from educational scholarships to workforce development programs, providing countless opportunities for Native Hawaiians to thrive.
For example, the Alaka'ina Foundation's Digital Bus Program brings cutting-edge technology to K-12 students in Maui and Moloka'i, reaching over 50,000 students.
The Nakupuna Foundation's HIAPO Workforce Development Program at Purple Mai’a prepares adults for competitive careers in tech by providing training for in-demand IT skills.
From 2018-2020, $3.5 million was invested in scholarships with various programs to provide financial support for the educational advancement of Native Hawaiians at more than 30 academic institutions in Hawai’i and across the continent.
These programs demonstrate how NHO initiatives are creating lasting, positive change.
Why It Matters
Understanding NHOs and their subsidiaries is crucial because it goes beyond fulfilling procurement needs. Partnering with NHOs means supporting entities that are dedicated to making a positive impact on their community. It’s about contributing to a larger mission of equality, opportunity, and cultural preservation. In summary, NHOs are not just another contractor in the federal marketplace. They are key players in the effort to empower Native Hawaiians, offering unique advantages and profound community benefits. By choosing to work with NHOs, one can help drive significant socio-economic progress while meeting procurement goals.
Sources
- "A Native Hawaiian Organization (NHO) Program." Pacific Gateway Center, Hawaii Procurement Technical Assistance Center, https://hpfsps.org/the-nho-program/#:~:text=A%20Native%20Hawaiian%20Organization%20(NHO,%2C%20U.S.%20Department%20of%20Interior.
- "NHOs Explained." NHO Association, 4 Feb. 2019, https://www.nhoassociation.org/uploads/6/5/8/4/65847333/nhos_explained_2019feb4.pdf.
- "13 CFR §124.3 'Native Hawaiian Organization.'" Electronic Code of Federal Regulations, U.S. Government Publishing Office, https://www.ecfr.gov/current/title-13/chapter-I/part-124/subpart-A/subject-group-ECFR7734cf795d71904/section-124.3.
- "48 FAR §19.808-1." Federal Acquisition Regulations, U.S. Government Publishing Office, https://www.acquisition.gov/far/part-19#FAR_19_808_1__d1244e10.
- “13 CFR §124.506(b)(5).”_ Code of Federal Regulations_, U.S. Government Publishing Office, https://www.ecfr.gov/current/title-13/part-124/subpart-A#p-124.506(b)(5)
- "48 FAR §19.501." Federal Acquisition Regulations, U.S. Government Publishing Office, https://www.acquisition.gov/far/part-19#FAR_19_501.
- "13 CFR §124.110." Code of Federal Regulations, U.S. Government Publishing Office, https://www.ecfr.gov/current/title-13/chapter-I/part-124/subpart-A/subject-group-ECFR4ef1291a4a984ab/section-124.110
- "48 FAR §52.219-14(g)(2)." Federal Acquisition Regulations, U.S. Government Publishing Office, https://www.acquisition.gov/far/part-52#FAR_52_219_14
- "Alaka`ina Foundation." Alaka`ina Foundation, https://www.alakainafoundation.com/.
- "Digital Bus." Digital Bus, https://www.digitalbus.org/.
- "Nā Kūpuna Foundation." Nā Kūpuna Foundation, https://nakupunafoundation.org/.
- "Hiapo." Purple Maia Foundation, https://purplemaia.org/hiapo/.