Chenega, Arctic Slope prepare for $2 billion contract

Posted: Monday, July 30, 2001

ANCHORAGE (AP) -- Chenega Corp. and Arctic Slope Regional Corp. are preparing to take over a $2 billion sole-source contract -- the largest government contract ever awarded to an Alaska Native corporation.

In mid-September, the National Imagery and Mapping Agency is expected to sign the joint venture contract with the Anchorage and Barrow-based companies. The agency provides photographic intelligence to the U.S. military.

Under the 15-year Defense Department contract, the joint venture would manage the mapping agency's information technology and provide library and other services. The work would take place in Bethesda, Md., and Arnold, Mo., near St. Louis.

The sole-source contract is being criticized by organized labor and some congressional Democrats as race-based and unconstitutional. A challenge of the federal law that allows sole-source contracting with Native companies is working its way through the courts.

Federal officials, including Sen. Ted Stevens, R-Alaska, stand by the no-bid process as legal and appropriate. Stevens has said it corrects an imbalance and helps a minority group that has had few job opportunities.

''It levels the playing field,'' said Charlie Brower, Arctic Slope's vice president for marketing. ''We have eight communities on the North Slope that don't have roads in or out. We have very little economy in these places.''

Chuck Totemoff, Chenega's chief executive, agrees.

''Congress has a responsibility to Alaska Natives. These contracts, the way they're negotiated and awarded, have their roots based in the Indian Commerce Clause of the U.S. Constitution. It's not race-based. It's treaty-based,'' he said.

The 600,000-member American Federation of Government Employees says the absence of competitive bidding cheats taxpayers and hurts federal workers. While Congress must look out for Natives based on history and law, defense contracting falls beyond the scope, the union contends.

''There's a trust responsibility to provide services that are required through treaties. But other than that, there's no requirement for government to build Native-owned businesses or give them a special break,'' said Steven Clapp, an Anchorage-based national representative for the federation.

The mapping agency can award the contract directly to Chenega and Arctic Slope, and bypass competitive bidding, based on a clause in the Defense Department's budget that allows sole-sourcing to companies with 51 percent Native ownership.

''It may be legal but it's not right,'' said David Owens, president of AFGE Local 1101, which represents more than 70 federal employees at Elmendorf Air Force Base in Anchorage.

The union estimates 600 government workers will lose their jobs when the Native joint venture takes over. Totemoff denies that, saying everyone will be kept on and that savings will come from attrition, early retirement, lower overhead and sharper management.

''We're going to retain the people that are working there,'' he said.

It makes sense to keep people who know how to perform the highly specialized work of the mapping agency and who already have high-level security clearances, Brower said.

The union is lobbying for passage of legislation that would require federal agencies to track the costs and savings from contracting out government work. The bill before Congress would also require public-private competition before government jobs could be outsourced.

Chenega shareholder and board member Paul T. Selanoff said if the corporation ends up with the $2 billion contract, it'll be an enormous win for the company and its 119 shareholders.

''Words can't describe it,'' Selanoff said from his home in Valdez, where he works as an oil spill response foreman. ''It's a chance to prove to the bigger corporations that we can do the job.''

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