Rise of the Native National Security Corporation

Native American corporations, led by dozens from Alaska, are coming under fire in Congress for their preferential access to billions of dollars in defense, intelligence, and homeland security contracts – and because of the often shoddy, largely unaccountable work on national security and homeland security contracts.

Another related concern is that these preferential contracts – granted without the normal open bidding process – are actually performed by other corporations who receive subcontracts from the Native American corporation, which functions largely as a vehicle to secure contracts, not implement them.

Two of the main critics of the Alaska Native Corporations (ANCs) that have captured major national security contracts are Sen. Claire McCaskill (D-Mo.) and former senator and current Secretary of State Hillary Clinton. ANCs were created in the wake of the Alaska Claims Settlement Act of 1971.

Since 2000 ANCs have captured large military and homeland security contracts even though these corporations have only minimal in-house experience in the much of their contracted jobs. The Chenega Corporation, which partners with the infamous Blackwater (recently renamed Xe Services), lists the “strengths and services” of its “Intel and Military Operations” on its corporate website:

• Transformation and future force development

• Support to Intel and special operations

• Operational readiness, asymmetric warfare and C4ISR support

• Weapons system engineering and logistics

• Operational analysis, concept of operations development

• Linguistics, debriefers, and translation services

Two federal initiatives – one by the Small Business Administration and the other by the contracting oversight committee of the Senate Homeland Security Committee – are investigating the pillaging of federal defense and homeland security contracts by ANCs and their subcontractors. But neither the efforts of the SBA to reform its own contracting regulations nor the work of Senator McCaskill’s subcommittee have gained much media attention or public support – in part because of the esoteric nature of these preferential contracts and in part because of the power of the national security industry that has benefited by partnering with ANCs.


Overview of the Alaska Native National Security Bonanza 

Contract awards to ANCs increased by 916% from 2000-2008, rising from $508.4 million in 2000 to $5.2 billion in 2008. A sharply declining percentage of ANC contracts are performed in Alaska. In 2008 approximately 80% of the contract dollars went for work outside Alaska – with Virginia being the leading state for ANC operations

The first volume of a two-part report recently prepared for the Senate Committee on Homeland Security and Governmental Affairs for Senator McCaskill found that ANC federal contracts have been increasing at a 33.6% annual rate since 2000 – six times greater than the overall increase in federal contract spending.

The value of federal contracts did rose rapidly during the Bush administration – up $149% in eight years – but the dollar amount of ANC contracts jumped more than 900%.

Despite their being multimillion corporations, the ANCs still depend on their officially designated status as small businesses to rake in billions of dollars in preferential federal contracts. ANCs receive a disproportionate share of 8(a) or federal small business contracts. Between 2000 and 2008, ANCs received $12.1 billion in federal contracts through the 8(a) program. In 2008, awards to ANCs constituted 18% of all federal contract dollars awarded through 8(a) prime contracts. Also in 2008 nearly three-quarters of all federal contracts were awarded to ANCS under the government’s small business procurement practices.

There are federal regulations that limit the amount awarded in small business contracts. As a rule, sole-source 8(a) contracts must be valued under $5.5 million for goods or $3.5 million for services. That’s not a problem for the ANCs, which are exempt from this restriction because of their special Native Alaskan status. ANCs captured a flood of 8(a) contracts in 2000-2008 valued more than the stated maximum.

 In that eight-year period the federal government issued $6.3 billion in contracts to ANCs like Ahtna, Chugach, ASRC Management Services, and Chenega that far out-stripped the $3.5 million set by the federal government to give preference to small businesses. Generally, sole-source 8(a) contracts must be valued under $5.5 million for goods or $3.5 million for services. ANCs, which are exempt from this restriction, received $6.3 billion in 8(a) contracts valued at more than $3.5 million each between 2000 and 2008.

 Key Findings of the Senate’s Homeland Security

Contracting Oversight Subcommittee T


The key findings (below) of the contracting oversight committee are alarming. They point to widespread and systematic abuse of preferential contracting by the ANCs and their subcontractor partners. 


 • ANCs are now among the largest federal contractors. In 2008 four ANCs – Arctic Slope Regional Corporation, Afognak Native Corporation, NANA Regional Corporation, and Chugach Alaska Corporation – were among the top 100 recipients of federal contract awards. 


• ANCs are big businesses.

The majority of the Alaska Native Corporations surveyed by the Subcommittee exceed the size requirements applicable to other 8(a) companies. 11 out of 19 surveyed companies have had annual revenues higher than the Small Business Administration’s limit since 2002. 


• ANCs have created multiple 8(a) subsidiaries. The ANCs have taken advantage of the exemption from the size requirements to create multiple 8(a) subsidiaries. Over the last 9 years, the 19 companies surveyed by the Subcommittee have enrolled 248 subsidiaries, joint ventures, or partnerships in the 8(a) program. 


• ANCS are awarded multiple large federal contracts on a sole-source basis. Between 2000 and 2008, ANCs received $6.6 billion in 8(a) sole-source contracts valued at more than $3.5 million each. The single largest ANC 8(a) contract is the $1.13 billion Inter-Service Supply Support Operations Program (ISSOP) contract that was awarded by the Defense Department to FSS-Alutiiq, a joint venture of Arctic Slope Regional Corporation and Afognak Native Corporation, in 2002. 


 • ANCS are passing work through to subcontractors. The Afognak Native Corporation can be viewed as a case study of how ANCS create subcontracts to pass work to large, non-Native companies. Nine subcontractors alone received more than 70% of all subcontract awards under Afognak contracts. For 91 individual contracts collectively worth more than $827 million, Afognak paid subcontractors more than 50% of the total prime contract revenue on each contract. 


• ANCs employ a relatively small percentage of shareholders. The 19 Alaska Native Corporations that provided information to the Subcommittee employ more than 45,000 individuals throughout their corporations. Of these, approximately 2,400 employees – 5.2% - are shareholders (or relatives of shareholders) of the employing corporation. On average, nearly 95% of ANC employees are not ANC shareholders. 


 • ANCs have relied heavily on highly-paid, non-Native executives. Of the 13 corporations that provided detailed information to the Subcommittee regarding executive compensation for non-Native executives, 69% of executive compensation was paid to individuals who were not shareholders in the Native Corporations. The information produced to the Subcommittee also shows that for one or more years between 2000 and 2008, eight Alaska Native Corporations paid their Chief Executive Officer, who was a shareholder, substantially less than a non-shareholder holding a lower-ranked position. 


* Little Trickle-Down to ANC Community Members or Shareholders. One of the primary rationales for the ANC contracting preferences is that they provide economic support and other benefits for Native shareholders and communities. The Subcommittee’s investigation shows that the 19 ANCs have provided cash, scholarships, preservation of cultural heritage, or other benefits valued at approximately $720.1 million over the last nine years to members of the Alaska Native community as a result of federal contracts. On average, that amounts to a value of $615 per person per year. 

 Border Security Bonanza Boondoggle

 The awarding of homeland security, defense, and intelligence contracts to ANCs has been on the upswing since the late 1990s but has experienced a major up-tick since 2001 when national security outsourcing has become core to post-Sept. 11 national security and operations.

It’s not that there is a new federal emphasis on doing business with Native America corporations. Rather, it’s simply that there has been a surge in outsourcing as a result of hurried attempts by DOD to keep the Iraq and Afghanistan wars going while the military itself is overstretched, and also as the result of a dramatic surge in homeland security and intelligence contracting.

 From the beginning of this upswing in outsourcing, ANCs have been plied with federal contracts. Some of the most stunning problems with this outsourcing to ANCs have been associated with border security. One of the earliest cases of wasted money and failed projects that came to the attention of government investigators and brought unwanted attention to one of the Democratic Party’s rising stars in intelligence, defense, and homeland security issues – U.S. Rep. Silvestre Reyes (D-Tx.), who represents the El Paso area.

 Like many of the Native American national security contracts, a 1998 Border Patrol contract for border electronic surveillance with Chugach Development Corporation also involved a non-ANC subcontractor, International Microwave Corp. The Integrated Surveillance Intelligence System (ISIS), which was to be deployed along portions of the southern and northern borders, was a predecessor of the Border Patrol’s current SBInet. T

The chief promoter of ISIS, which operated through two successive no-bid contracts, was Rep. Reyes, who served as district Border Patrol chief of the El Paso sector before his election to Congress in 1997. Reyes was closely tied to the project not only through his role in Congress but also through family members who found high-level jobs at Chugach and later ISIS (and still later in the management of L-3 Communications, which bought IMC).

Questions about Reyes' campaign financing and possibly related contracts have surrounded the congressman's persistent and longtime support for high-tech electronic surveillance along the border, involving two no-bid contracts. Since coming to Washington in January 1997 Reyes has been a key advocate of constructing a "virtual fence" along the southwestern border, despite the all-too-real multibillion dollar price tag and absence of hard data that the billions result in improved border security.

Although the oversight problems with ANC contracting – and with border electronic surveillance projects – had existed since the late 1990s with the launching of the ISIS pilot project, it wasn't until the Inspector General (OIG) of the federal government's General Services Administration in December 2004 released an audit of the border electronic surveillance project that some of the details of the electronic surveillance project were publicly revealed.

The audit focused on the Border Patrol's relationship with the two ISIS contractors, starting with the Alaska native-based Chugach Development Corp. (headquartered in Virginia) and continuing with its successor, International Microwave Corp. Rebecca Reyes, daughter of Rep. Reyes, directed the ISIS project for the two contractors.

According to GSA, the audit review of ISIS encountered serious management issues that undermined the value of the more than $200 million that had been spent on the surveillance project.

The GSA inspector general found, among other things, that ISIS suffered from: "lack of competition in the awarding" of the contract, "inappropriate contract for construction services," "inadequate contract administration and project management," "providing equipment without contract approval," and "ineffective management controls."

The GSA inspector general's audit concluded that the government had paid for "shoddy work" or "for work that was incomplete or never delivered." Official inattention to the contracted project "placed taxpayers' dollars and … national security at risk."

Also See:

New National Security Complex:Bringing Together Homeland Security, Intelligence, and Defense

Native Corporations as National Security Corporations

Native American corporations, particularly an array of Alaska Native Corporations, have become major defense and homeland security contractors – responsible for a wide range of national security operations, including electronic surveillance on the border, running immigrant detention centers, and supplying security and other services in U.S. overseas wars and energy exploitation.

Ahtna Inc., one of the thirteen Alaska Native Corporations (ANCs) established in 1971 through the Alaska Native Claims Settlement Act, received an infusion of federal funds in compensation for common lands lost to government and the private sector. Its subsidiary Ahtna Technical Services operates the Varick Street Detention Facility in Greenwich Village under a 2008 contract with Immigration and Customs Enforcement (ICE), which is an agency of the Department of Homeland Security.

Its role at the NYC immigrant detention center was reported recently in a New York Times article by Nina Bernstein. Ahtna is a major federal contractor. In addition to fifteen DHS immigrant-detention related contracts in 2009, the Native American corporation has multiple contracts with the Department of Defense, Department of Energy, and Veterans Affairs.

 Why does a Native American company from distant Alaska, one that was initially capitalized with federal funds, operate an immigrant detention center in the heart of New York? Because the Native Alaskan company specializes in penal services? Because it is intent on reviving the Indian connection with the original Manhattans who sold their island to the Dutch West India Company – and now want a better financial return? Because the federal government, and in particular the Department of Homeland Security, believes that these Alaskan natives deserve favored treatment in securing federal contracts?

 There is no ready answer that explains why Ahtna Technical Services has the ICE contract to manage, operate, and maintain the Varick Street Detention Facility in New York City. Nor is there a good explanation or rationale why Homeland Security has selected Ahtna, which has no experience in correctional services, to provide operational, maintenance, and other support services at two other ICE immigrant detention centers – Buffalo Federal Detention Facility and Krome Service Processing Center in Miami. In addition, ICE has contracted the Alaskan corporation to manage food services at six other ICE processing centers.

 The explanation lies in complex mix of well-intentioned economic development theory, grave historic grievances, modern identity politics and affirmative hiring, preferential contracting, political contrivances, a recent surge in government outsourcing, and ostensibly strict federal contracting requirements that are easily manipulated. Ahtna’s recent entrance into the immigrant incarceration business is but one example of how federal programs and statutes that were created to alleviate Native American poverty and promote development have become badly distorted and misused.

What Does Ahtna Do?

 That’s not easy to determine given the corporation’s own lack of specificity and the variety of its contracts. The simplest thing would be to say, as it does, that it is “A Full-Service Operations and Maintenance Company.”

 Or if you want a slighter more fleshed out description the Ahtna Development Corporation, the umbrella entity that spins out all the Ahtna subsidiaries, asserts that it “possesses the talent, vision and resources to the leader by providing our clients with customized solutions and the technological edge needed to meet their goals and to build partnerships, cultivate talent, invest in resources and integrate services in the marketplace of tomorrow.”

 What is more, Ahtna says it has:

“…positioned itself for future growth, both financially and geographically, by offering clients a strong, balanced, and diverse portfolio of services in both the private and public business arenas. [We are] a multi-disciplinary operations and maintenance (O&M) services company which offers a suite of service capabilities to federal agencies and private sector that are essentially global in nature.”

With respect to its “Business Classifications,” the Ahtna Development Corporation highlights its following four classifications for federal contracts: Alaska Native-owned, Woman-owned, Minority-owned, and Small Disadvantaged Business. Alaska Native Corporations have come under escalating criticism in the last couple of years from congressional oversight committees, governmental investigative bodies, angry competitors, and government watchdogs.

 At the heart of the mounting criticism of Ahtna and other Native American corporations, particularly the ANCs and the numerous Alaska Native Village Corporations, is the breakdown and abuse of federal contracting. Preferences are given to these Native American corporations in federal procurement as part of an affirmative action social and economic policy framework that was intended to offer economic development opportunities to impoverished, disadvantaged communities.

 But the preferences have functioned as shields to deflect competition, to gain access to no-bid contracts, and to pass the bounty of federal defense, homeland security, energy, and services contracts to non-Native partners. Nine of the top ten federal contractors based in Alaska were ANCs in 2009. Chugach Alaska Corporation, the top ANC federal contractor, won $496.7 million in federal contracts in 2009, according to preliminary estimates. Ahtna Inc. was sixth with $86.9 million.

Top 10 Federal Contractors in Alaska, 2009

Chugach Alaska Corporation $496,679,772
Nana Regional Corporation, Inc. $294,486,882
Afognak Native Corporation $207,556,969
Arctic Slope Regional Corporation $195,743,314
Inuit-Nci JV $90,490,505
Ahtna, Incorporated $86,865,509 
Watterson Construction Company $80,786,703
Suulutaaq/Sloan Fencing JV $73,496,604
The Kuskokwim Corporation $68,961,125
Ukpeagvik Inupiat Corporation $63,486,802

Source: USASpending.gov

Through skillful political intervention and corporate maneuvering, the ANCs began to develop a higher profile in the late 1990s and blossomed this decade as national security corporations. More than 70% of ANC contracts in 2000-2008 came from the Department of Defense. From 2000 to 2008 DOD had $16.9 billion in contracts with Alaska Native Corporations. Next largest federal contractor was the Department of Interior with $1 billion in ANC contracts, followed by the Department of Homeland Security with $980 million in ANC contracts in the same period.

Next: Rise of the Native National Security Corporation Also see: New National Security Complex: Bringing Together Homeland Security, Intelligence, and Defense 

Native Americans Profit from Abusive Immigrant Detention and Billions of Dollars in National Security Contracts

(Another article in the continuing Border Lines series on the Homeland Security Complex and National Security Contracting.) 


The New York Times had another horror story about immigrant detention, another in a impressive string of investigative articles by NYT’s Nina Bernstein that have underscored the federal government’s lack of oversight and abusive treatment of legal and illegal immigrants. 

Such stories – about deaths and suicides in immigrant prisons, huge profits in immigrant inmate outsourcing, and the tragic isolation of immigrants without legal recourse or access to families – are now common fare in both the mainstream and alternative media.

 What’s new in this latest report on the country’s abusive and systematically outsourced immigrant detention and imprisonment system is that the contractor that runs the NYC detention center is an Alaska Native Corporation (ANC) – one of the dozens of such corporations that since 2000 have cashed in on billions of dollars of preferential and often no-bid, single-source contracts from the defense, homeland security, interior, and energy departments.

 Many of the recent immigrant-outsourcing stories involving private prison firms are of remote prisons, many along the border, where immigrants are mass incarcerated and mass processed for deportation. In this case, though, the maltreated immigrants are largely New York residents who are locked up in a little-known immigrant jail on the fourth floor of the federal building in Greenwich Village.

 The Varick Street Detention Facility is an Immigration and Customs Enforcement (ICE) facility with a 275-500 bed capacity that sits three floors above the local Greenwich Village post office on the corner of Houston and Varick Streets. There are no open-air or recreational facilities in the lock-up, which functions as a temporary holding center for male immigrants picked up by Homeland Security’s ICE or other federal agents in the New York City area.

As many as 11,000 immigrants pass through the Varick lock-up every year. The Native American corporation Ahtna Inc., which is increasingly specializing in immigrant detention, has a collection of management, operational, custodial, and maintenance contracts to run the immigrant holding center for ICE. 

Its subsidiary Ahtna Technical Services took over the operation and management of the facility in 2008 after ICE reopened the controversial detention center – which had become unmanageably overcrowded in the late 1990s as the result of an influx of legal immigrants held on mandatory detention and deportation orders because of new laws that greatly expanded the number of deportable offenses, including drug possession.

The center also gained notoriety after of the 1999 death of a Dominican immigrant from untreated pneumonia.

Systematic Barriers to Legal and Community Support

 One of the main tragedies and abuses here -- and at most other immigrant detention centers -- is the transient character of immigrant detention and imprisonment. For lawyers and families, it is a challenge to find client and loved ones because they are routinely transferred to other, often far-removed prisons with little or no prior notification.

 Regarded as “aliens” with no right to be in the country, the federal imprisoning agencies at Homeland Security and the Justice Department give little consideration to the family, legal, or community ties that immigrants have made in the areas where they have lived or worked – in many cases for decades.

 When asked about the legal, emotional, and psychological problems of placing immigrants so far away from their families, community of friends, and legal and other support networks, Hassel Terry, warden of the Otero Processing Center in New Mexico, replied with a smirk:

“We are taking them away from their homes. They left their homes in Mexico or wherever else they came from. We are simply trying to get them back home.”

The Otero Processing Center, located in the barren desert alongside north of El Paso, holds ICE detainees from all parts of the country, including New York, Maine, Massachusetts, and other distant states. Warden Terry is an employee of the Management Training Corporation, the country’s fourth largest prison company.

Most of the immigrants held at the Varick center are transferred out of New York City to geographically remote and rural areas to larger ICE detention centers as well as to immigrant prisons and detention centers contracted out by the U.S. Marshals Service and the Bureau of Prisons – the two Justice Department agencies that imprison immigrants. Depending on their ICE- and Justice Department-defined status – legal or illegal, criminal aliens, asylum petitioners, fugitive aliens – the immigrants go to a succession of USMS, BOP, and ICE prisons and detention centers.

From the big city they are scattered throughout the country in a network of isolated privately run facilities that are federal in name only. Those immigrants (legal and illegal) with criminal records, often simply drug possession or driving violations, go first to Department of Justice prisons sponsored by the USMS and Bureau of Prisons – although all operated by private firms – and then to detention centers operated under the authority of the Department of Homeland Security.

 Immigrants without criminal records are also shifted to remote ICE detention centers in Texas and Louisiana where the per-diem fees are much lower than the $227.68 per day that ICE pays Ahtna Inc. for detaining immigrants at the Varick detention center.

  Immigration Consequences for Criminal Violations -- Double-Jeopardy

 What’s so striking – and so typical – about the horrors of immigrant detention at this ICE lockup in Greenwich Village is the double-jeopardy faced by immigrants, especially long-term legal residents. At the Varick facility, like every ICE, USMS, and BOP immigrant prison, the merger of misguided drug control and immigration control policies forms a juggernaut of enforcement -- from which there is no legal escape and which metes out immigration consequences for even nonviolent drug violations.

 The NYT story highlighted the case of a Haitian, described as a barber, interpreter, and legal resident of Brooklyn for 23 years, who had previously served time for a drug-related offense but now was being processed for deportation because of his criminal record—not apparently because he living and working illegally in New York.

“It is double jeopardy,” he protested, nursing a swollen jaw with teeth missing. “I become a diabetic here, because of anxiety, stress and suicidal conditions.” Bernstein described the case of another 25-year-old who had come to New York as a legal immigrant from Belize at age 2. As an adult, the Belizean immigrant had been working at Kentucky Fried Chicken to support his 5-year-old daughter, a citizen, when his sickle-cell anemia permitted.

Despite his long presence in the country, lawyers told him, according to Bernstein, that since he had old convictions for marijuana where was ineligible for release on bond or with an electronic monitoring bracelet. 

The Fordham Law Review has published an excellent report in its November 2009 edition that treats the Varick jail as a case study in the systemic barriers to legal representation. Next: What Does Ahtna Really Do?