Loopholes Gone Wild

Let our journalists help you make sense of the noise: Subscribe to the Mother Jones Daily newsletter and get a recap of news that matters.

The SEIU has put out a new report on Wackenhut, a private security firm that won a contract to guard Army bases in Alaska, noting that the new guards have performed dismally at their job. Guards are using old and rusted weapons and often receive insufficient training; felons gain access to the bases without security clearances; no one has any radio equipment. It’s a disaster. The slightly glossed-over story here, though, is how Wackenhut got the contract. Michael Scherer did some reporting on this for Mother Jones earlier this year: Wackenhut—like Halliburton, Vance International and other large multinational corporations—took advantage of a loophole to “team up” with a local tribal company, Alutiiq, that received a no-bid contracts; a common phenomenon whereby tribal companies take advantage of minority set-aside programs in Alaska, and then fork over the profits to large corporations:

A Mother Jones analysis of federal contracting records shows that no-bid, or “sole-source,” awards to native companies have risen dramatically since the late 1990s (see chart). Back in 1999, the largest tribal firms received just $195.5 million worth of no-bid work, or roughly 3 percent of the awards under the federal government’s program to assist small and minority-owned companies. By 2003, however, large tribal companies were getting $1.3 billion worth of contracts without any competition, accounting for nearly 15 percent of the minority program. …

[I]n many cases, the biggest winners from the contracting exemptions are non-native companies. Under the federal rules, between 15 and 50 percent of the work must be done by employees of the tribal company. But tribes can also form joint ventures with other firms, allowing them to classify many of the non-native companies’ employees as their own. In some of the largest contracts, native corporations have simply taken over services the federal government wanted to privatize. In one $2.2 billion project to run part of the military’s mapmaking division, two Alaska tribes brought in their own managers to rehire and oversee hundreds of federal employees, a process in which many workers lost their civil service benefits. “Very little changes,” says Peter Fagan, a contracting consultant who has worked with tribal companies. “You just get new hats and business cards.”

This isn’t affirmative action so much as a spigot that runs from Congress directly to business coffers. And at the head of this entire scam sits Sen. Ted Stevens (R-AK), the president pro tempore of the Senate, who has extensive ties to several native companies in the state, as well as a number of defense and security contractors. Last month, Benjamin Wallace-Wells of the Washington Monthly did some additional reporting on the ways in which Stevens has used “sole-source” Eskimo contracts to funnel money to the defense industry. The GAO and other Senate and House Committees have begun investigating, so it’s entirely possible that this could turn into a major scandal of some sort or other. For the moment, though, GOP welfare—along with Wackenhut’s poor performance—has put Army bases at risk. Anecdotes like these are exactly why it’s worth getting jittery over the billions of dollars now being shoveled down south for post-Katrina reconstruction—with, as far as anyone can tell, little to no oversight.


Headshot of Editor in Chief of Mother Jones, Clara Jeffery

It sure feels that way to me, and here at Mother Jones, we’ve been thinking a lot about what journalism needs to do differently, and how we can have the biggest impact.

We kept coming back to one word: corruption. Democracy and the rule of law being undermined by those with wealth and power for their own gain. So we're launching an ambitious Mother Jones Corruption Project to do deep, time-intensive reporting on systemic corruption, and asking the MoJo community to help crowdfund it.

We aim to hire, build a team, and give them the time and space needed to understand how we got here and how we might get out. We want to dig into the forces and decisions that have allowed massive conflicts of interest, influence peddling, and win-at-all-costs politics to flourish.

It's unlike anything we've done, and we have seed funding to get started, but we're looking to raise $500,000 from readers by July when we'll be making key budgeting decisions—and the more resources we have by then, the deeper we can dig. If our plan sounds good to you, please help kickstart it with a tax-deductible donation today.

Thanks for reading—whether or not you can pitch in today, or ever, I'm glad you're with us.

Signed by Clara Jeffery

Clara Jeffery, Editor-in-Chief

payment methods

We Recommend