Native Companies Bilk U.S. Government

The U.S. Army’s $500 million contract for security guards with criminal records is the latest example of the flaw in a law that gives Native American companies lucrative government contracts while skipping the otherwise mandatory bidding process.

The 35-year-old Alaska Native Claims Settlement Act allows Native-owned companies to secure huge no-bid government contracts and even exempts them from the $3 million federal cap on service contracts in place for other minority small businesses. The law also endowed the Natives with 44 million acres of land and nearly $1 billion because Congress felt the need for a fair and just settlement of all aboriginal land claims by Natives of Alaska.

Made public this week in a 47-page report published by the Government Accountability Office, the Army deal is one of many disastrous contracts that the U.S. Government has secured with wealthy Native companies thanks to the decades-old law.

The GAO report reveals that the two Native companies – Chenega Intergrated Systems and Alutiiq Security and Technology – used employees with criminal records therefore jeopardizing the Army’s largest and most important installations, which they were hired to guard. These include Fort Bragg and West Point.

Only a few months ago, another Native company bilked the government in Mississippi during the Hurricane Katrina recovery effort. FEMA paid a whopping $90,000 to a Native American firm, owned by Inupiat and Unangan Alaskans, to provide 450 portable classrooms even though a local Mississippi company offered the same deal for 60% less.

Native companies have secured billions of dollars in government contracts over the years. They dredge ports in Iraq, provide security for U.S. diplomats, operate rescue boats in the South Pacific and fix broken windows and potholes in military bases. The question lately has been whether American taxpayers win or lose from the hefty, no-bid contracts given to Native corporations. The GAO is investigating just that and is expected to release a report later this year.