WASHINGTON – From reconstruction in Iraq to Hurricane Katrina, poor contracting oversight enables Alaska Native Corporations to capitalize on multimillion-dollar, no-bid deals at a potential cost to taxpayers and small businesses, a federal audit says.
A draft report by the Government Accountability Office, obtained yesterday, indicates gaps in the overseeing of federal contracts, which have boomed in recent years in part due to provisions backed by Sen. Ted Stevens, R-Alaska.
The review of 16 no-bid contracts found that administration agencies routinely picked Alaskan firms – which can be designated legally as “small and disadvantaged,” regardless of their size – to bypass burdensome competition requirements and fill small business quotas.
At the same time, government officials did little to determine if the Alaskan firms might be gaining an unfair competitive advantage or serving as illegal fronts for large businesses that were doing a majority of the work.
“There is clearly potential unintended consequences or abuse,” said the GAO report, which was being circulated for comment and possible revision before its expected release later this month.
It quoted unnamed agency officials who called the process an “open checkbook” and said they would be “laughed out of the office” if they raised compliance concerns.
They include a $145 million State Department contract with Kuk Construction, which is working in a joint venture for security work with a Halliburton subsidiary, Kellogg Brown & Root, which has separately been criticized for no-bid work in Iraq.
Another questionable contract was a $60 million NASA contract for technical services with Akima, recently cited separately by auditors for inflated prices for Hurricane Katrina-related classroom work.
Created under a 1971 law written to resolve historical land disputes, Alaska Native Companies have picked up more no-bid government work in recent years as dwindling, time-strapped agency staffs turned to them as a way to fulfill small business goals.
From 2000 to 2004, the number of ANC contracts awarded jumped fourfold to $1.1 billion, of which 77 percent were awarded without competition. The firms have won contracts to train security guards in Iraq, maintain scanning machines at ports and borders and operate search-and-rescue boats in the South Pacific.
