WaPo looks at ANCs

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For many with stake in Alaska native corporations, promise of better life remains unfulfilled

Each of the 75,000 original Alaska native shareholders received a stake in one of the new corporations, which held out the promise of economic development and a better life. The corporations have received extraordinary exemptions that have enabled them to receive $29 billion in federal contracts in the past decade.

But the original promise remains largely unfulfilled.

Native shareholders have gotten relatively little of the contracting largess. In many cases, the bulk of the money and jobs has gone to nonnative executives, managers, employees and traditional federal contractors in the lower 48 states, a Washington Post examination has found.

The Defense Department and civilian agencies have used the Alaska corporations as a shortcut for a dizzying array of work: intelligence analysis, base security, satellite support, janitorial services, bioterrorism research, computer systems, water tanks in Iraq, support for the drug war in Colombia.

Few addressed the obvious question: How could small, inexperienced native companies handle giant government contracts? The answer was to hire nonnative executives and workers and partner with established firms, including major Pentagon contractors. ANC-owned firms won contracts and passed on much of the work and revenue to the nonnatives and major contractors, audits and other records show.

The spending surge has had little effect on problems afflicting native Alaskan people.

Last year, Sitnasuak earned after-tax profits of $14.5 million on revenue of $212 million. But the amount paid to Sitnasuak's 2,238 shareholders was just $305 apiece, a total of $682,000, according to a Post analysis of data provided by the corporation.

At the same time, millions ended up at a consulting firm based in the Bethesda home of H. James Nunes, a nonnative hired to help run the corporation's federal contracting operations, with the approval of the corporation's native president. Nunes got $6.4 million last year. His chief financial officer made $1 million. The executive vice president received $470,000. The chief operating officer was paid $403,000. All are nonnatives.

In an interview with The Post, the Pentagon's top procurement official, Shay Assad, said that the ANC contracts have boosted the costs to taxpayers because they have been used "for expediency," and "you pay a premium for expediency."

"It's just the nature of how it comes about. We don't have a free and open competition," Assad said. "The program has goodness at its foundation. But because of the nature of the way it is structured, it can be abused."

It's a long article and you should go read it, together with the following related item:

A drumbeat of warnings about impropriety regarding Alaska native corporation contracts

I have mentioned this subject several months back:

Native Alaska contracting preference under scrutiny