Homeland Security contracts under fire


October 13, 2011

A senior lawmaker has asked the Department of Homeland Security to hand over e-mails, contracting records and other documents as part of an expansive congressional probe of an alleged $20 million kickback scheme at the Army Corps of Engineers.

Rep. Edward J. Markey (D-Mass.) is seeking information about Eyak Technology, known as EyakTek, an Alaska-native corporation that has received more than $1 billion worth of set-aside contracts from DHS and the Army.

Markey is the ranking Democrat on the House Natural Resources Committee, which has jurisdiction over the native corporations, which can receive set-aside contracts of any size without competition.

In an Oct. 12 letter to Homeland Security Secretary Janet Napolitano, Markey said he is focusing on EyakTek’s director of contracts, Harold Babb, who was arrested last week in what federal prosecutors said was “one of the most brazen corruption schemes in the history of federal contracting.”

Babb, two Army Corps program managers and another man were accused of wire fraud, bribery and money laundering. Babb allegedly arranged to receive hundreds of thousands of dollars to steer work awarded to EyakTek through the Army Corps’ TIGER contract to a particular company. In a court hearing, all four pleaded not guilty.


WAINWRIGHT, AK - JULY 19: Richard E. “Rick” Reanier, an independent archaeologist working for Shell Oil, navigates through swarms of mosquitoes along the Chukchi Sea coast near Wainwright, Alaska on July 19. Reanier was examining the remains of sod houses once used by Native Americans. (Photo by Bonnie Jo Mount/The Washington Post) (Bonnie Jo Mount/WASHINGTON POST)

In his letter, Markey said he is focusing on Babb’s connections to First Source, a $3 billion DHS contracting program for small and disadvantaged businesses.

While Babb was an EyakTek executive, he also ran the company’s homeland-security contracting subsidiary, EG Solutions. EG Solutions was one of several companies vying for work through the First Source contract.

“These revelations raise new concerns about EG Solutions’ contract with DHS,” Markey said.

DHS declined to comment for this article.

In a statement, the Eyak Corp., the parent of EyakTek and EG Solutions, said the companies followed all federal contracting rules and that Babb’s “alleged conduct in no way reflects the operations or corporate culture of The Eyak Corp. or any of our subsidiary companies.”

A Washington Post investigation last year found that EG Solutions passed on most of more than $166 million worth of First Source work to a large contractor, GTSI. After the story ran, the Small Business Administration suspended GTSI and EG Solutions from federal contracting.

In a Nov. 18 suspension letter addressed to Babb, the Small Business Administration said “there is adequate evidence that EGS committed fraud or a criminal offense in obtaining and attempting to obtain contracts, and in its performance of those contracts.”

The Post investigation also found that contracting officials at the department had known for two years about the alleged irregularities but did nothing. In one instance, a contracting officer at the department played down the concerns in an official letter to the Small Business Administration.

“I would like to know why DHS did not act sooner after receiving ‘numerous reports over a two-year period,’ ” Markey’s letter said, citing The Post article.

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