A drumbeat of warnings about impropriety regarding Alaska native corporation contracts

By Robert O'Harrow Jr.
Washington Post Staff Writer
Wednesday, September 29, 2010; 11:06 PM

Government officials and the media have produced a drumbeat of reports about possible abuses of the large-scale contracts given to Alaska native corporations without competition.

August 2004: A Los Angeles Times story questioned the Army's award without competition of contracts worth nearly $1 billion for base security guards to two Alaska native subsidiaries, Alutiiq Security and Technology and Chenega Integrated Systems.

November 2004: A senior aide to Sen. Ted Stevens (R-Alaska), the chief counsel to Sen. Lisa Murkowski (R-Alaska) and others press to have the Transportation Security Administration award a $500 million technology maintenance contract for screening equipment directly to Chenega Technology Services Corp. The TSA rescinds the deal after a story about it appears in The Washington Post.

April 2006: A Government Accountability Office review concludes that spending on ANCs had soared because federal officials found them "a quick, easy and legal method of awarding contracts for any value." But the review found that government officials did not know the rules for overseeing the firms and cited "an increased risk that an inappropriate degree of the work is being done by large businesses rather than by the ANC firms."

April 2006: In another report, the GAO also found that the Army paid 25 percent more than necessary on many of the base security guard contracts with Alutiiq and Chenega, even though they knew they could get the lower price through competition. Close to half of the work was passed on to two established security giants, Wackenhut Services and Vance International. Auditors also found that the Army failed to check whether the subsidiaries were doing the required 51 percent of the work.

May 2006: After Hurricane Katrina, the Army Corps of Engineers awarded a $39.5 million contract for temporary classrooms in Mississippi to an Alaska native corporation subsidiary called Akima Site Operations, even though the Corps "had information that the cost for the classrooms was significantly less than what Akima was charging," according to a GAO report.

June 2006: At a hearing, Rep. Henry A. Waxman (D-Calif.) said ANCs were used to circumvent open competition at great expense to taxpayers: The "Administration has used ANC contracts to manage commercial property in Virginia, renovate buildings in Brazil, and train security guards in Iraq. And much of the work has been done by non-Native companies working as subcontractors." He added: "Good intentions have been replaced by avarice and indifference to the interests of the taxpayer."

January 2007: An audit by the Defense Department's inspector general's office concludes that a new intelligence agency called the Counterintelligence Field Activity agreed to pay up to $27 million more over 10 years than it would have through proper competition on a $100 million lease-and-construction deal let in 2003. The $100 million contract was awarded without competition to an Alaska native corporation subsidiary called TKC Communications. The audit concluded that the Defense intelligence operation "circumvented numerous laws" in making the expedited arrangements for the lease.

June 2007: The Department of Homeland Security issues an "acquisition alert" about the use of Alaska native corporations, warning contracting officials to be sure that they were getting a fair price and that the native corporations were doing their appropriate share of the work.

October 2007: The Department of Homeland Security inspector general issues a report criticizing a $475 million contract awarded without competition by the then-U.S. Customs Service in February 2003 to the Chenega Technology Services Corp. The work is to maintain thousands of gamma-ray, X-ray and other scanning machines at the nation's ports and borders. The DHS inspector general says the contract should not have been awarded because the corporation was too large to qualify, a circumstance that prevented qualified small businesses from competing for the work. Some evidence collected by the inspector general suggested Chenega "subcontracted more than the 50 percent allowed by federal regulations and the contract." But auditors said there was not enough information to come to a definitive conclusion.

April 2008: The Air Force's Air Combat Command warns all contracting officials about the use of contracts awarded without competition to ANCs and others. Contracting officers had to require written justification for using ANCs and specify the amount of work they were expected to do. "Effective immediately ALL sole source actions over $550K must be approved," the Air Force memo said.

May 2008: The Defense Department inspector general's office reported that senior Air Force officers at the Air Combat Command used an Alaska native subsidiary, Chugach McKinley, to direct a $128,000 contract awarded without competition to a favored vendor.

August 2008: Auditors in the Small Business Administration's inspector general's office find that two Alaska native corporation subsidiaries had allowed nonnative executives to receive millions in work and fees in violation of SBA rules. APM, a subsidiary of Cape Fox Corp., and Goldbelt Raven, a subsidiary of Goldbelt Corp., received contracts worth more than $833 million between 2003 and 2006. Executives in each agreed to pay more than $23 million over three years to nonnative executives at other companies, with whom they had personal ties, the auditors said.

October 2008: A Washington Post story reveals that officials at the FDA used a subsidiary of the Calista Corp. to direct work to a Washington public relations powerhouse called Qorvis Communications. An FDA official with ties to Qorvis later says that she and others skirted the rules simply as a "a matter of efficiency." FDA officials immediately suspended the contract and ordered an independent investigation.

July 2009: A study by the Senate subcommittee on contracting oversight finds that few ANC employees are Alaska natives but that the companies have joined the ranks of the government's largest contractors. The subcommittee's investigation shows that ANCs have taken advantage of their contracting preferences, "receiving large no-bid contracts and passing through much of the work to other contractors." The report, prepared for Sen. Claire McCaskill (D-Mo.), said: "The analysis finds that Alaska Native Corporations are multi-million or billion dollar corporations that are now among the largest federal contractors. Although ANCs provide some benefits to their shareholders, those benefits may not be in proportion to the potential for waste, fraud and abuse created by the ANCs' contracting preferences."

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