TWO WORLDS A WASHINGTON POST INVESTIGATION
Behind lucrative deals, a disconnect
IN DULLES, VA. As one of the most successful Alaska native corporations, Eyak Technology occupies an entire floor of a four-story glass-and-concrete building in a bustling technology corridor minutes from Dulles International Airport.
The home base of Eyak Technology's parent in Cordova, Alaska, is not so impressive.
It is a single-story structure with faded yellow siding, weedy, gravel parking spaces and a rusting light fixture near the door. In July, the only thing showing a connection between the two companies was a faded photocopy of the Eyak Corp. emblem taped to the windows.
The two buildings embody the contradictions that have accompanied more than $29 billion in government spending over the past decade on firms known as Alaska native corporations, or ANCs. After the terrorist attacks of Sept. 11, 2001, the Pentagon and other agencies rushed to award the firms billions in contracts without competition, taking advantage of special privileges granted by Congress more than a decade earlier.
The mandate of the ANC program is to improve life for Alaska's struggling indigenous people. But much of the money has gone instead to nonnative people and companies in the lower 48 states.
The story of Eyak provides a case study of how Alaska native corporations and their subsidiaries have been used to pass on work to large Washington area firms, sometimes under circumstances that have been questioned, a Washington Post examination found.
One nonnative executive at Eyak Technology wrote to an established firm as they discussed how to split profits that they had to take care to avoid activity that might be construed as "contractual fraud," according to an internal e-mail obtained by The Post.
"We cannot put our Company at risk of being accused of [being] a front for a large company, end up on the front pages of the Washington Post," the executive wrote to a vice president at the large contractor in Fairfax County.
Eyak Corp. is one of more than 200 ANCs formed four decades ago to settle native land claims. Through a Small Business Administration program, they are able to receive federal contracts of unlimited size without competition.
In 2002, Eyak teamed with the contractor, GTSI Corp., to form Eyak Technology, better known as EyakTek. It has become one of the top 100 federal contractors, racking up about $1 billion in set-aside contracts from the Pentagon and other agencies for communications equipment, information technology, engineering and health-care services, said Paul Murphy, a senior analyst at Bloomberg Government.
All ANCs are exempt from oversight by the U.S. Securities and Exchange Commission. Eyak also does not have to file documents with Alaska state financial regulators because it has fewer than 500 native shareholders. As a result, much of the information about EyakTek's finances, including executive salaries, is not public.
The Post examination drew its picture of Eyak from interviews, visits to Cordova and Eyak's corporate office in Anchorage, an Eyak annual report, the IRS filings for Eyak's private foundation, internal Eyak and GTSI documents contained in court filings, and financial filings from GTSI, a public corporation.