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For many with stake in Alaska native corporations, promise of better life remains unfulfilled
In 2000, NJVC was a new joint venture formed by two new Alaska native subsidiaries with 30 employees and little technology expertise. The next year, it received a 15-year contract worth up to $2.2 billion to help manage a Defense satellite program at what is now known as the National Geospatial-Intelligence Agency.
How could a tiny start-up help manage the government's main spy satellite program?
The ANCs immediately subcontracted much of the work to a team of major Beltway contractors, including Lockheed Martin, General Dynamics and BAE.
This was allowed under federal rules, as long as employees of the subsidiaries did 51 percent of the work. But oversight was lax, congressional investigators later found.
In the late 1990s, the SBA delegated much of the responsibility for executing the deals with the Alaska firms to the Pentagon and other federal agencies, a move intended to make procurement more efficient. That included making sure that the firms performed the required amount of work and received the proper amount of revenue.
But audits have found that many of the contracting officers in other government agencies did not know how to track those firms or enforce the rules.
"They have no idea of their responsibility," said Karen Forsland, director of the SBA district office in Anchorage.
Another Alaska native subsidiary shared the lead on a $1.1 billion contract to manage missile and weapons research in Huntsville, Ala. Two other inexperienced subsidiaries received contracts without competition worth nearly a billion dollars to provide guards to Army bases and passed on much of the work to Wackenhut Services and another security giant. The Army knowingly overpaid by 25 percent on the contracts compared with deals for the same work awarded through competitive bids, auditors later found.
Steven Schooner, a contracting law professor at George Washington University Law School, said the unique rules offer "irresistible temptation to exploit the weaknesses in the system" and play "what might be described as corporate 'shell games.' "
In an interview with The Post, the Pentagon's top procurement official, Shay Assad, said that the ANC contracts have boosted the costs to taxpayers because they have been used "for expediency," and "you pay a premium for expediency."
"It's just the nature of how it comes about. We don't have a free and open competition," Assad said. "The program has goodness at its foundation. But because of the nature of the way it is structured, it can be abused."
Even some Alaska native corporation executives now say they think the system is flawed.