Native Alaskan-owned companies have greatly benefited from defense contracting. To help the native peoples of Alaska, Alaskan Native Corporations, or ANCs, can receive federal contracts without competition.
Cha-ching. You, too, can be an Alaskan Native Corporation.
In 2008, a contract was awarded to a company that a year earlier had been three people in the founder’s Delaware living room. But United Solutions and Services, or US2, is also owned by an ANC. US2 was granted a sole-source $250 million contract to look into an apparent rise in Army sexual assaults. Until then, US2 reported annual revenue well under $100,000.
Since 1971 when the ANCs were set up to help the poverty-stricken in Alaska, $29 billion has gone to ANC companies according to The Washington Post. Chump change to the Lockheed Martins of the nation, but big money to a guy in his Delaware living room and all the businesses that could not compete for this and similar contracts.
Though an ANC has a 51 percent stake in US2, it is hands off. US2 got the contract and subbed out the work. But here’s the problem (not that the shell game with front companies isn’t an issue): US2 is required to perform at least 50 percent of the work, just like any prime contractor, but it did not. It collected its cut and sent a share of the booty to the ANC, but involvement ended there.
Surprisingly US2 handled the project well, and the Army is quite pleased with the results. This year US2 was finally able to take on the work required.
Under this system other small companies don’t have a shot at these contracts. Is the solution to become a US2? Partner with an ANC as a majority holder and watch the contracts come in? Sub like crazy and just collect checks like you’ve won the lottery? Is this what businesses will go to as federal contracts dry up?