Sen. Theodore Fulton Stevens
In his six terms as Republican Senator from Alaska, Stevens has done more for
corporations in his district than simply earmark chunks of money in the budget for
them. He has re-shaped the laws of federal contracting and land management to
Shortly after Stevens’ arrival in the Senate, the federal government settled a long-standing lawsuit with the native tribes of his home state by passing the Alaska Native Claims Settlement Act. It gave native Alaskans 44 million acres of land to be controlled by their tribes, and it also created regional corporations that tribes could use to manage the land and the settlement money. The companies were permitted by law to get into profit-making businesses, but for years they barely managed to stay solvent.
Stevens changed all that in 1992 when he wrote, and Congress passed, a law that transformed government contracting rules, but only for Native Alaskan corporations. It has created a competitive advantage for Native Alaskan companies, one they benefit from even when they grow to multi-billion-dollar corporations that employ few, if any, Native Alaskans. One such company, Arctic Slope Regional Corp., had more than $36 million in federal contracts in 2003, and frequently subcontracted its duties to non-Native Alaskan companies. Another Alaskan Native company now has more than 2,000 employees; only 33 are Native Alaskans.
The new rules allow the companies to get the special considerations reserved for small businesses when bidding on contracts, even if the Native Alaskan companies became multi-million dollar corporations. But the new designation only extends so far – the law exempts Alaskan Native businesses from the $3 million cap on federal contracts that limits other small businesses. And when Alaskan Native companies do win contracts, the new rules exempt them from having to comply with the same kind of oversight that other government contractors do. Several Alaskan Native Companies have parlayed these changes into billions of dollars in government contracts.
In 1993, Chugach Alaska Corp. was in bankruptcy when it bid on a contract to run an Air Force airport in Alaska, according to Washington Technology magazine. With the handicapping of the rules written by Stevens, Chugach won the contract, worth $5 million. In 2006, Chugach had more than $63 million in federal contracts, almost all of them in defense and national security. It won many of those contracts as a “small business,” yet it employs more than 5,000 people in 22 states and Washington, DC.
Another Top 100 contractor is the Chenega Corp., which has more than 60 federal contracts, according to the Washington Post. Among them is a no-bid $500 million contract with the Customs Service to maintain the equipment that scans cargo at U.S. ports. Chenega won the contract in 2002, even though it had no experience running that kind of high-tech equipment.
Though Chenega built its fortune by using its status as an Alaskan Native business, its headquarters are no longer in its home town on Prince William Sound, but rather a stone’s throw from Washington D.C., in Alexandria, Virginia. Of its 2,300 employees, only 33 are native Alaskans.
The Arctic Slope Regional Corp. in 2003 had amassed more than $128 million in defense contracts alone, many of them for providing services to the oil industry. Arctic Slope not only services the oil industry – it is poised to join it. In 1983, it made a controversial deal with the federal government – with Stevens’ help – to trade some of the land it owned in one national park for the subsurface rights inside the Arctic National Wildlife Refuge.
The deal not only puts Arctic Slope at the head of the line for oil profits if drilling is permitted in ANWR, it exempts the corporation from Alaskan laws requiring oil profits made on native lands to be shared with the Alaskan natives who own them. And Stevens has been one of Congress’ most vocal proponents for oil drilling in ANWR, often touting its potential to benefit Native Alaskans.
In 2001, Chenega Corp. and the Arctic Slope Regional Corp. joined together to take advantage of not only the special contracting regulations that Stevens created for them, but also the increased defense spending that followed the terrorist attacks of September 11th. That fall, they persuaded the National Image and Mapping Agency to give them a no-bid, $2.2 billion contract to provide “information technology services.”
NIMA is a relatively new agency with a highly sensitive mission to create and provide mapping, satellite imagery, and geospatial information to the federal intelligence community. Its founder, Army Lt. Gen. James C. King, left public service in 2001 to join defense contractor MZM Inc., and MZM won a $222,000 contract with NIMA in 2004. After MZM’s CEO Mitchell Wade resigned and pleaded guilty to corruption and bribery charges, MZM was sold to Veritas Capital, and King was named its CEO.
At about the same time that Arctic Slope and Chenega were winning the NIMA contract, Stevens and a group of investors were building a high-rise office tower in downtown Anchorage. Today, Arctic Slope is one of the tower’s tenants, with a 20-year lease renting at $6 million a year.
Despite his creativity in finding new ways to benefit corporations, Stevens is not a stranger to the use of good, old-fashioned earmarking, which is an action by congressmen that reserves money in a budget bill for a specific project. Stevens won infamy in 2005 for earmarking $223 million to build the “bridge to nowhere,” which would have connected a town with about 9,000 residents to an island of 50.
But he also used earmarks to give Alaska more homeland security grants than New York City. Between 2001 and 2006, he earmarked $80 million for a radio system that would connect all of the various law enforcement and rescue agencies in Alaska; in 2006, the Department of Homeland Security granted Alaska another $50 million for the project. The price of that single project exceeds the entire Homeland Security 2006 commitment to New York City, $130 million to $125 million. (New York has lobbied for a radio system like the one Alaska will purchase ever since the failure of the radio system in use in New York on September 11th, 2001.)
Stevens does not limit his favors to Native Alaskan groups. In 2003, the Los Angeles Times counted at least nine instances where he did favors for companies that employ the lobbying services of his son, State Sen. Ben Stevens. In one instance, Stevens mediated a contract dispute between the government of Pakistan and a construction and oil company called VECO. At the time, Stevens was on a House Appropriations subcommittee that was considering whether to lift sanctions on Pakistan, and Ben Stevens was on VECO’s payroll as a consultant. According to campaign finance records at the Center for Responsive Politics, VECO employees and executives donated $11,750 to Stevens’ campaign fund in the 2002 election cycle, $5,500 in the 2004 election cycle, and $14,000 in 2005. In August 2006, the FBI raided the offices of both VECO and Ben Stevens as part of an investigation into possible bribery and campaign finance fraud. (Ben Stevens was also the chairman of the Alaska Fisheries Marketing Board in 2003, when, according to TPM Muckraker, Stevens pushed through an earmark worth $29 million for it.)
As earmarking fueled scandals and public outcry during the 2006 mid-term elections, Congress considered and passed a law creating a public website to list the name of every company receiving federal grants and contracts. But before it passed, Stevens put an anonymous hold on the bill, an action that prevented it from being put to a vote. He removed the hold when it leaked out that he was the one who had placed it.
In 2006, Stevens announced his intention to run for re-election in 2008, when he will be 84.