Most people have heard by now of the $385 million DHS contract to Halliburton to build immigration detention facilities. Just when I think my outrage meter is broken, I read Jeffrey St. Clair’s tale (from his book Grand Theft Pentagon of no-bid DHS contracts, including some given to Native American cut-out corporations in Alaska which are then sub-contracted out to the usual Pentagon trough-feeders. Brokered by Ted Stevens. More big pork $$$.
How a Remote Alaskan Indian Tribe Got One of the Most Lucrative Post-911 Security Contracts, But Not a Single Job:
Over the past two years, about 30 percent of the Department of Homeland Security’s contracts have been awarded on a noncompetitive, no-bid basis. These contracts amount to about $2.5 billion, for services ranging from computer systems to the maintenance of airport scanning devices. {snip}
One of the biggest of Department of Homeland Security contracts went to an obscure company called Chenega Technology Services Corp, which is owned by Alaskan natives from the small village of Chenega. Chenega is a coastal village accessible only by floatplane. In July of 2002, the Customs Service asked Lockheed and Dyncorp to submit proposals for a $500 million project to upgrade and maintain the x-ray and gamma ray machines at the US’s ports and border stations. But six months later the Customs Service issued a press release saying that the project would not be put up for competitive bidding. Instead, it was being awarded on a no-bid basis to Chenega Technology. The decision stunned executives at DynCorp, who figured they were front-runners for the deal. {snip}
Chenega officials may have been stunned as well. Their company had little experience with the high-tech scanning machines. In the end, Chenega contracted most of the actual work out to two other companies, SAIC, Inc. and American Science and Engineering Inc.
The deal was actually brokered by Senator Ted Stevens, the Alaska Republican, who inserted the deal into a legislative rider on the Defense Appropriations bill. Stevens chairs the mighty Senate Appropriations Committee.
Chenega, however, appears to be a native corporation in name only. Of its 2,300 employees, only 33 are Alaskan natives. The headquarters of the company is located not in Anchorage or Juneau, but in shiny glass building in toney Alexandria, Virginia, just down the road from the Pentagon.
Through the legislative magic of Ted Stevens, Alaska Native Corporations enjoy cushy loopholes when it comes to federal contracts. For one thing, they can continue to maintain their small business status even when they are bringing in millions in revenue. This special dispensation allows them to be exempt from the $3 million federal cap on no-bid service contracts that are in place for other minority small businesses.
By another legislative quirk, Alaska Native Corporations, such as Chenega, don’t even have to be run by Native Americans. Moreover, they can subcontract out most of the work to non-Native firms without having to undergo the rigorous cost-benefit analysis required for other corporations. {snip}
Chenega’s success has hinged on the post-911 spending spree. In 2001, Chenega only recorded $42 million in revenues. Last year, Chenega’s revenues exceeded $480 million.
One of Chenega’s biggest contracts came after the start of the Iraq war when the Pentagon transferred most of its military police to places like Abu Ghraib and other prisons and detention centers in Iraq. This left thousands of open positions for military police at DoD facilities in the US. Strangely, Chenega and Alutiiq, another Alaska Native Corporation, won the contracts to provide security forces for 40 US military installations, ranging from Ft. Bragg to West Point to the Anniston Chemical Weapons Depot in Alabama. The contracts were worth about $500 million. They were awarded to the two Native Corporations on a no bid basis, even though neither corporation had any experience in providing security services. The Pentagon made no public announcement about the awarding of the contracts. {snip}
The deal calls for Chenega and Alutiiq to provide 4,385 private security guards. But neither company will actually provide any workers. Instead, both native firms subcontracted the work out to private security companies.
Partnerships make these contracts run smoother:
The 51-49 relationship is crucial to the deal, since under the Stevens loophole 51 percent of the money from the contract must go to the Native Corporation. It’s a great deal for Wackenhut, since as a foreign-owned corporation with a shoddy record at other federal facilities they were unlikely to get any Pentagon contracts.
Wackenhut is a subsidiary of Group 4 Securicor. After 9/11, the company came under scrutiny for its mismanagement of security at several Department of Energy facilities, including serious breaches at the Oak Ridge Nuclear Weapons plant in Tennessee.
Wackenhut is also one of the companies whose stock value rapidly rose as mandatory sentencing laws were being pushed through Congress in the 90’s that Catherine Austin Fitts discusses in her excellent Dillon, Read & Co. Inc. and the Aristocracy of Prison Profits series at NarcoNews. It’s a neat deal for them with Chenega:
As a subcontractor, however, Wackenhut not only avoids competitive bidding, but they also evade scrutiny of their work by the Pentagon. Neither the Pentagon nor the Department of Homeland Security has any legal recourse over the performance of Vance or Wackenhut. That responsibility is reserved for the native corporations.
the Pentagon thinks it’s pretty nifty too:
The Pentagon sees this kind of subcontracting as the wave of the future. An internal Pentagon memo unearthed by the General Accounting Office spoke of “contract security guards as a viable manpower option.” It’s not hard to see why the Pentagon likes it. They can please powerful senators like Stevens and free up troops for duty in Iraq and Afghanistan. Indeed, Rumsfeld has said that he would like to permanently transfer as many as 320,000 Pentagon positions to private companies.
. . . “It’s not complicated what they’re doing here,” says Anne Wagner, a lawyer with the American Federal Government Employees Union. “They hook up with a corporation like Wackenhut, which runs the entire operation.” Wackenhut then hires former soldiers at non-union wages and offers them few or no benefits.
In 2003, the union sued to halt the issuance of these kinds of no-bid deals, but lost when the US Supreme Court refused to hear the case.
& for the indigenous peoples these laws were supposed to assist? You guessed correctly:
In 2003 alone the Alaskan native corporations and their subcontractors brought in $12 billion dollars in federal contracts. But little of this money actually makes its way back to Alaskan Natives. In 2004, for example, Chenega Corporation, which brought in nearly a half billion in revenues, only distributed about $1 million to native shareholders and cultural and education programs for natives.
Back on those tribal lands in Alaska, poverty rates remain the highest in the nation and unemployment exceeds 40 percent. Not a single member of one of the Alaskan tribes works on any of the Alutiiq/Wackenhut or Chenega/Vance contracts.
These programs with their exceptional terms were engineered by Stevens under cover of providing just compensation to Native peoples as an alternative to the reservation system in the lower 48 states:
Congress formed Native corporations in 1971 under the Alaska Native Claims Settlement Act and endowed them with 44 million acres and nearly $1 billion to settle their aboriginal claims to most of Alaska. Some of the more than 200 corporations have achieved success and pay their shareholders sizable dividends. But many floundered, and their shareholders receive little.
To help them become more profitable, Stevens persuaded Congress to consider Native corporations as small and disadvantaged, a status that makes them eligible for government work set aside for such firms. But he sweetened the pot even more.
Unlike Black, Hispanic, Asian or women-owned businesses, for example, that can get no-bid government contracts no larger than $5 million, Native corporations can get contracts of any amount, without having to compete. link
Chenega Technology Services Corporation (CTSC) brags on its website that it “has experienced phenomenal growth over the first five years of its existence. Starting as a business in 1998, CTSC has grown to a company of over 1000 employees and increased its annual revenue from less than $500,000 in 1998, to over $170,000,000, in 2003 (projected at over $300,000,000 in 2004).”
Here’s their client list:
Current customers include:
Department of the Navy
— Navy Sea Logistics Center
Department of the Army
— Corps of Engineers-Major Shared Resource Center (Vicksburg, MS)
Defense Advanced Research Projects Agency (DARPA)Defense Threat Reduction Agency (DTRA)
Department of the Air Force
— Air Combat Command/Control and Reporting Center
— C-130 Systems Program Office
National Reconnaissance Office (NRO)
National Security Agency (NSA)
Federal Emergency Management Agency (FEMA)
Federal Railroad Administration (FRA)
Internal Revenue Service (IRS)
National Imagery and Mapping Agency (NIMA)
Department of Justice (DOJ)
National Institute of Justice
United States Department of Agriculture (USDA)In addition, CTSC has successfully provided services to the following customers:
Environmental Protection Agency (EPA)
National Oceanographic and Atmospheric Administration (NOAA)
Department of Defense (Joint Chiefs of Staff)
Naval Supply Systems Command
Chenega’s contract to DARPA (where Poindexter’s TIA program originated) “Information Systems Office” provides both “Advanced Intelligence, Surveillance, Reconnaissance (ISR)” & “Management (AIM)” services.
Is this spooky or what?
Exploitive & racist as these reported contracts appear to be, they still represent major income to traditionally impoverished indigenous peoples, so they are understandably worried as the GAO scrutinizes them:
The GAO has spent much of the last year studying whether American taxpayers win or lose from the no-bid contracts of unlimited size Native corporations can get. The contracting perks, spearheaded by Sen. Ted Stevens, have brought the Native-owned companies billions of dollars in recent years. They’ve also sparked scorching criticism from government watchdogs, other minorities and lawmakers on both sides of the aisle.
The final GAO report is expected in May with a draft due by the end of this month, said GAO assistant director Michele Mackin.
“People are anxious to see it come out because we think it’s going to tell a good story, the right story. That the program is working as intended and that the benefits are going back to the shareholders,” said Sarah Lukin, spokeswoman for Alutiiq, a Kodiak Island village corporation that is one of the bigger players in government contracting. {snip}
The GAO has spent much of the last year studying whether American taxpayers win or lose from the no-bid contracts of unlimited size Native corporations can get. The contracting perks, spearheaded by Sen. Ted Stevens, have brought the Native-owned companies billions of dollars in recent years. They’ve also sparked scorching criticism from government watchdogs, other minorities and lawmakers on both sides of the aisle.
Some Native corporations, in joint ventures with huge multinational firms, have won sole-source contracts in the $2 billion range.
Working for Uncle Sam has turned several Native corporations into formidable businesses. Almost all of the top 10 Alaskan-owned companies, based on total revenue, are Native firms. Chugach Alaska Corp., for example, which makes most of its money from federal contracting, generated $700 million in revenue in 2004. Chenega Corp., the corporation for a tiny village, made $481 million.
A survey of 15 of Alaska’s biggest Native corporations found they made $2.4 billion in revenue from federal contracting in 2004, up from $1.8 billion the year before, according to the Native American Contractors Association.
As St. Clair’s article makes clear, benefits to the tribes can’t be calculated by revenues alone. Henry C. Alford, president of the Black Chamber, gets it right when he describes these contracts as “corruption at the expense of the Civil Rights Act” whose native corporations are largely “white male owned firms based mainly on the East Coast who pledge to kick back a little of their net profits to some Eskimos in Alaska.” Unfortunately, the tribes get pitted against other minorities, and as they squabble over the trimmings, some one is pocketing some big $$$. Conquer & divide rules.
“The ignorance and hateful tone of the National Black Chamber of Commerce e-blast is exactly the kind of ignorance that has challenged minority populations in America since its founding,” Danner vented to Alford in an e-mail.
“Alaska Native corporations are not ‘white-owned’ companies,” Danner wrote. They are “social enterprises, owned by entire populations and communities of Alaska Natives,” she wrote.
Danner’s comments echoed those Native corporation leaders have voiced in the last year or more as they try to defend themselves from the scrutiny and attacks they feel they’re under.
Alaska Native and Native Hawaiian groups formed the Native American Contractors Association to lobby members of Congress to leave the contracting perks in place.
Someone other than the tribes is making a bundle here.
