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Two Alaska Native firms who won contracts worth $480 million to hire guards for Army installations had weaknesses in screening procedures that resulted in people with criminal histories, including felons, being hired as guards.

That's just one example of wasteful spending in government contracting, according to a congressional report released June 27 by Rep. Henry Waxman, D-Calif.

The report, “More Dollars, Less Sense: Worsening Contracting Trends under the Bush Administration,” prepared at Waxman's request, says nearly half of the $412.1 billion spent on federal contracts in 2006 was without full and open competition.

The report found that in 2006 annual federal procurement spending crossed the $400 billion threshold and that more than half of that spending was awarded with little or no competition. It concluded that waste in federal contracts, including four to Alaska Native firms, now exceeds $1 trillion.

Last year Waxman, who chairs the House Committee on Oversight and Government Reform, released the first comprehensive assessment of government contracting under the Bush Administration. That report, “Dollars, Not Sense: Government Contracting Under the Bush Administration,” found that between 2000 and 2005, federal procurement spending rose by more than 80 percent, no bid and other contracts awarded without full and open competition doubled, and contract mismanagement led to rising waste, fraud and abuse in federal procurement.

The contracts cited in the new report include two contracts with a value of $480 million to Alutiiq Security and Technology, and Chenega Integrated Systems to acquire the bulk of contract security guards for Army installations. Another $100 million was awarded to TKC Communications to consolidate space available for contractor personnel, and $55 million to Alutiiq Management Services and private contractor Fluor to renovate office buildings in Sao Paolo, Brazil. A $40 million contract to Akima Site Operations to install portable classrooms in Mississippi was also cited.

The report said the $480 million sole-source contracts were awarded in 2003 to Alutiiq Security and Technology and Chenega Integrated Systems, both 8(a) Alaska Native firms. There are some 200 other Alaska firms certified through the U.S. Small Business Administration as small, disadvantaged businesses owned by Native Americans, a status that makes them eligible for no-bid, sole-source government contracts with no monetary limit.

The U.S. Government Accountability Office later found that the Army hired an inexperienced contractor to help refine the performance work statement, failed to monitor certain subcontracting limitations under 8(a) contracts, and turned to 8(a) sole-source contracts in a third acquisition phase despite having previously competed the contracts at a significant savings in cost.

The GAO also found that screening weaknesses resulted in applicants with criminal histories, including felons, being employed as guards. According to the GAO, the Department of Interior did not consider any alternatives other than sole-source contracting with TKC Communications, a subsidiary of NANA Regional Corp., because the Defense Department's Counter Intelligence Field Activity had requested the firm. According to the GAO report, at the time of the award, TKC did not qualify as a small business under the size standard for the contract.

A $55 million sole-source contract went to a joint venture between Alutiiq Management Services, a subsidiary of the Afognak Native Corp., and Fluor, headquartered in Irving, Texas, one of the world's largest, publicly owned engineering, procurement, construction and maintenance service firms. The GAO later found that the price proposed by Alutiiq Fluor was nearly double that of the government's original cost estimate.

According to Waxman's report, the State Department spent nearly a month negotiating with Alutiiq Fluor. Although the State Department considered ending the negotiations and awarding the contract competitively, it ultimately accepted Alutiiq Fluor's offer because of time constraints, the report said. The $40 million contract to Akima Site Operations, another Alaska Native 8(a) firm, also drew much criticism. According to the GAO, in the wake of Hurricane Katrina, the Federal Emergency Management Agency tasked the U.S. Army Corps of Engineers with purchasing 450 temporary classrooms for Mississippi schools. The Corps placed the order with Akima.

“The Corps accepted Akima's proposed price of $39.5 million although it had information that the cost for the classrooms was significantly less than what Akima was charging,” the GAO report said. “Based on our analysis of a quote obtained by Akima from a local Mississippi business, the price that Akima actually paid for the classrooms, and prices for similar units from GSA schedule contracts, we believe the Corps could have, but failed to, negotiate a lower price.”

The report is based on information from the Eagle Eye Federal Prime Contracts Database, a federal procurement database application published by Eagle Eye Inc. The database contains information from 1999 to 2006 that is compiled from the Federal procurement Data System, the federal contract tracking system established by the General Services Administration.

The GAO has found that this data system is currently the only system providing information on more than $300 billion in annual government spending, and the best available data set for assessing the impact of government wide acquisition policies with respect to specific geographic areas, markets and socio-economic goals, the report said.