Alaska Native firms capture up to $700 million in no-bid contracts

The Interior Department's National Business Center awarded four no-bid contracts, which, combined, are worth as much as $700 million, to Alaska Native corporations in 2003 and 2004, according to documents obtained by Government Executive through the Freedom of Information Act.

The National Business Center is a fee-for-service organization that sets up contracts for other federal agencies.

The procurement center in June 2003 awarded Jacksonville, Fla.-based Chenega Technical Products (now called Chenega Integrated Systems and a subsidiary of Anchorage, Alaska-based Chenega Corp.) a contract worth up to $200 million over five years for information technology and administrative support services. The same month, the company captured an Interior contract worth up to $100 million over five years for logistics support and support services.

In 2004, TKC Communications and TKC Integration Services, both of which are subsidiaries of Kotzebue, Alaska-based NANA Regional Corp., received two contracts each worth up to $200 million over five years, primarily for telecommunications and computer-related goods and services.

The contracts were awarded through the Small Business Administration's 8(a) program, which allows agencies to make awards without competition to businesses that are considered small and disadvantaged, including Alaska Native corporations. Only tribally-owned companies are exempt from the normal limits of $3 million ($5 million for manufacturing contracts) on no-bid contracts awarded through the program.

"It happens all the time," said William Walker, a lawyer who represents Alaska Native corporations, referring to the frequency of large, no-bid contracts going to tribally owned companies.

A spokeswoman for NANA said the corporation pays almost all of its profits to its shareholders in the form of dividends and services, which added up to $5 million in dividends for 11,400 shareholders in fiscal 2005. She said 8(a) companies should not be held up to special scrutiny. A spokeswoman for Chenega directed all questions about the contracts to the Interior Department, and added that Chenega invests a large amount of time and money in the Alaska native community.

David Sutfin, assistant director of GovWorks, which is part of Interior's National Business Center, said when the shop makes awards through the 8(a) program, it conducts extensive market research and negotiates on price and technical issues before making an award.

Agencies likely pay more to award a contract without competition to an Alaska Native corporation because it lets them get the contract in place more quickly, said Steven Schooner, a George Washington University professor specializing in procurement law. He added that there's no evidence the procurement shop has the incentives or capability to ensure that its market research generates competitive prices.

Sutfin said he doesn't have data on whether the National Business Center pays more when making awards through the 8(a) program. But federal acquisition regulations require contracting officers to determine that prices on no-bid contracts are fair and reasonable by comparing them with prices on similar contracts, he said, adding that the program benefits the government by enabling contracting officers to make large awards quickly.

Rep. Tom Davis, R-Va., and Rep. Henry Waxman, D-Calif., chairman and ranking member of the House Government Reform Committee respectively, requested information about contracts with Alaska Native corporations from the State, Defense and Homeland Security departments in March 2005. Davis and Waxman also asked the Government Accountability Office to investigate the topic, especially the extent to which contracts with Alaska Native firms are subcontracted to non-tribally owned companies.

Davis said he'll hold hearings on the subject after GAO releases its report, which is expected in late spring,