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Contracts Take Alaska to Iraq

Native firms can bypass normal bidding. Some say it speeds rebuilding; others are skeptical.

March 07, 2004|T. Christian Miller | Times Staff Writer

WASHINGTON — Snow-covered Alaska is a long way from the deserts of Iraq, but that doesn't worry Janet Reiser, the president of an Anchorage-based company planning to help rebuild the war-torn country.

Because of the efforts of Sen. Ted Stevens, Alaska Native-owned businesses like Reiser's are allowed to receive government contracts of unlimited size without going through the normal bidding process. Pentagon officials are turning to them to speed up the rebuilding of Iraq.

"If you exchange snow for sand, work in Iraq is similar to the work we've done in Alaska," said Reiser, whose Nana Pacific engineering company is in the final stages of negotiating a multimillion-dollar contract that will be awarded without competitive bidding. "We know how to do logistics in remote areas."

Over the years, Stevens, the Alaska Republican who is the powerful chairman of the Senate Appropriations Committee, has made sure that Nana Pacific and other small businesses owned by Alaska Native corporations and Native Americans enjoy special benefits in government contracting.

Their unique ability to land government contracts of any size, free of the bidding process -- which no other minority- or women-owned small businesses enjoy -- was a largely unknown part of contracting law until last fall, when Congress passed an $18.6-billion aid package earmarked for Iraqi reconstruction that contained restrictions calling for full and open competition.

Stevens, however, made sure the final bill contained language to protect Alaska Native corporations' ability to win no-bid contracts under federal law, according to Republican and Democratic budget analysts familiar with the process.

At the same time, Alaska Native officials and their lobbyists frequented industry conferences, the Defense Department and Capitol Hill in an effort to drum up Iraq business.

Some Pentagon officials responded by pushing the Alaska Native corporations as a way to quickly get work accomplished without going through the bidding process, which can take months.

Although only a handful of Alaskan and small tribal businesses have sought contracts to date, Pentagon officials said they hoped the number would increase. So far, many contracting officers have been skeptical of the companies' abilities to win no-bid contracts.

"Everybody was looking at this as though it were some sort of scam," said John Shaw, the deputy undersecretary of Defense for international technology security, who has been pushing contracting officials to take a close look at Alaska Native corporations. "In point of fact, it was all aboveboard, and, indeed, mandated."

Unions and government watchdogs, however, question whether the Alaska Native small businesses' ability to win no-bid contracts -- designed to help them in competition against bigger companies -- is now being abused.

"The rationale behind the exceptions is that they'll lead to an automatic trickle-down" for the Natives, said Gerry Swanke, a national vice president for the American Federation of Government Employees, whose district covers Alaska. "But nobody ever talks about the corporate greed side of things that inevitably raises its ugly head." Alaska Native corporations came into existence in the early 1970s, when the federal government created them as a way to settle outstanding claims from Alaska Natives and improve standards of living.

Thirteen regional corporations and scores of smaller village corporations were formed, with tribal members becoming shareholders. The idea was that the corporations would be able to use oil, mining and timber rights to provide impoverished Natives with income and jobs. Nana Pacific, for instance, is a small subsidiary of Nana Regional Corp., whose shareholders are Natives living in a section of northwestern Alaska.

By the 1980s, however, many of the corporations had plunged into debt or were verging on bankruptcy, either through mismanagement or failed business dealings. That's when Michael Brown stepped in.

Brown, a former Navy officer with experience in government contracting who retired in Alaska, realized that small businesses owned by Alaska Native firms had unique opportunities.

To promote the growth of small businesses owned by women and minorities, federal law permits U.S. government agencies to award them contracts of up to $5 million without the competitive bidding process that is normally required.

Alaska Native corporations had an additional advantage: They didn't have to be small operations. They can have thousands of shareholders and hundreds of millions of dollars in revenue.

As a result, Brown, who was employed by an Alaska Native company, said he worked in the 1980s with Stevens and other congressional members interested in tribal issues, leading to removal of the $5-million cap and allowing government agencies to award contracts of unlimited value to Alaska Native and small tribal companies.

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