What does a Senator, Alaska, and Halliburton have in common?

From Salon:

Or, how the Alaskan Inupiat Eskimos got a no-bid contract in South America from the U.S. government.


June 19, 2007 WASHINGTON -- Deep in the jungles of the upper Amazon, in a land rife with coca plantations and drug runners, roughly 1,500 Bolivian soldiers and police camp out each night at U.S. taxpayer expense. They are offered three meals and a snack each day as part of a $31 million State Department effort to stop the cocaine trade at its source.

Until this spring, the troops were fed by a local Bolivian company, contracted to the United States through a competitive process for $3.34 per soldier per day. But in March, the same contract was awarded -- without competition -- to an Alaskan Inupiat Eskimo firm, Olgoonik Management Services, which is headquartered 180 miles north of the Arctic Circle. The new cost is $5.16 per soldier per day, an increase of 54 percent, or about $1 million more each year.

Given the State Department's $32 billion budget, an additional $1 million for food hardly ranks as a major scandal. But this tangled tale of how an Alaskan tribal company ended up in a South American tropical forest sheds an illuminating spotlight on the often-secretive world of federal contracting, an area of government rife with abuse and poor oversight. It is a story that involves Bolivian police, Balkan nationals, a no-bid contract, a senator whose office has been contacted by the FBI, emergency military rations and a helping hand from the biggest private contractor in Iraq -- a recently spun-off division of Halliburton, the Fortune 200 company once run by Vice President Dick Cheney. It is also a story that squarely addresses one of the principal concerns of lawmakers looking to reform federal contracting: the ability of Alaska native companies to get no-bid government contracts of any value. During the Bush administration those contracts have grown fivefold and now probably top $1 billion.

The Olgoonik Corp. is a relatively recent entry into the federal contracting game. It is a village-owned firm based in Wainwright, a tiny community on Alaska's remote northern Arctic Ocean coast. It listed 412 shareholders in 2003, many of whom are subsistence hunters of seal, walrus, caribou and whale. For most of its history, the company's main function has been operating the local general store, the gas station, a restaurant and the town hotel, as well as maintaining local sewer services and doing other nearby construction, according to a recent report for the U.S. Interior Department. But in 1999, the corporation established several for-profit subsidiaries, which have since won hundreds of millions of dollars in federal contracts around the world. In several of these projects, Olgoonik has partnered with KBR, which was a subsidiary of Halliburton until it was spun off in April 2007. One Olgoonik subsidiary, Kuk Construction, has long maintained a partnership with KBR worth at least $125 million to provide construction services to three Alaskan Army bases. The same subsidiary has a $145 million contract with the State Department to do security upgrades with KBR at foreign embassies. A court filing in 2006 revealed that KBR had been the proposed subcontractor in a 2004 effort by Olgoonik Management Services to provide operations and maintenance support for the Army in Fort Carson, Colo.