All in the Family
Connecting the dots between an Alaska senator, his kin, and some fat U.S. contracts
Senate staffers meet with constituents all the time. But in some cases, maybe they shouldn't. Last month, staffers for Alaska Sens. Ted Stevens and Lisa Murkowski summoned officials from the Transportation Security Administration (TSA) to a meeting in Murkowski's Senate office to discuss awarding a multimillion-dollar, sole-source contract to Chenega Corp., an Alaska Native firm that is represented by Stevens's brother-in-law.
The contract is to provide logistics support for about 13,000 baggage and checkpoint scanners at 450 of the nation's airports. The contract's exact value has been classified by the TSA, an agency in the Department of Homeland Security. The TSA had been preparing to put the contract out for competitive bids next month, government officials say, but about two weeks after the October 19 meeting in Murkowski's office, homeland security officials put that process on hold. A homeland security official, speaking on condition of anonymity, said the department had instructed TSA contract officials to consider "other alternatives" to an open bidding process.
Department officials told U.S. News that the only alternative now being considered is to award the contract to a Chenega subsidiary, Chenega Technology Services Corp. Stevens's brother-in-law, William Bittner, a partner in the lobbying and law firm of Birch, Horton, Bittner & Cherot, has acted as a financial adviser to Stevens. He also represents a number of Alaska Native corporations, including Chenega. The company, which has paid Bittner $40,000 so far this year, said it did not use him in this case. Bittner did not return repeated phone calls seeking comment.
Stevens, in an interview, acknowledged talking to Bittner about some of the lobbyist's Alaskan clients. But he said he had no knowledge of the meeting in Murkowski's office until a week ago and added that he believes it was set up by her staff. "I want you to know that I never had any involvement at all," the senator said. "One member of my staff attended the meeting without my knowledge. . . . I'm happy to take an oath."
Stevens, who chairs the powerful Appropriations Committee, said his staff has been instructed not to advocate for specific constituents in gaining sole-source contracts, but he added that he did not believe the staff member involved did anything improper by attending the October 19 meeting. Chuck Kleeschulte, a spokesman for Murkowski, says the meeting was of the sort his office conducts all the time on behalf of constituents who are having trouble navigating the Washington bureaucracy. Kleeschulte later listed several Alaska Native firms that had gotten Murkowski's office to hold "informational meetings" with agencies to discuss each firm's interest in specific contracts. Jeff Hueners, the CEO of Chenega, said his company first sought help from the two Alaska senators after "getting the impression that [TSA] was going to go down their own procurement path." Hueners added that it is sometimes difficult to "get the attention" of contracting officials without bringing them to "such a forum." "We thought they should look at Chenega Technology's option to sole-source it [because] we had just stood up an operation that was analogous in scope for Customs and Border Protection, a sister department," Hueners said. "We thought there were clearly some synergies, both in terms of cost savings and operations efficiencies."
TSA officials declined to provide details of the meeting in Murkowski's office. Amy von Walter, a TSA spokeswoman, said: "The senators wanted to ensure Chenega's proposal would be evaluated during the procurement process. We advised that we will follow applicable procurement procedures." She then referred all other questions to Stevens's office, which she said made the original request for TSA contracting and legislative affairs officials to attend the meeting.
$15,000 an acre. The TSA contract sought by Chenega wouldn't be the first awarded to the firm on a sole-source basis by Washington. Hueners estimated that of the 60 or so federal contracts that Chenega is the prime contractor on, only about six have been competitively bid. The Customs and Border Protection contract cited by Hueners is valued at $500 million. Several other firms that had planned to compete were unhappy about the sole-source award to Chenega.
Stevens has been the subject of criticism for his advocacy of these Alaska Native corporations (whose shareholders must be Native Alaskans but whose employees need not be) because he and his family have business relationships with some of them. The Los Angeles Times reported in December that one large Alaska Native corporation, Arctic Slope Regional Corp., pays $6 million a year for a 20-year lease at an office tower in Anchorage that is owned by Stevens and a few other partners. Stevens was also instrumental in Chenega Corp. and Arctic Slope's jointly receiving a $2.2 billion sole-source contract from the National Imagery and Mapping Agency in 2001. The companies used $2 million stuck into the omnibus spending bill to prepare their proposal. According to published reports quoting agency officials, the money had been inserted after agency officials discussed with Stevens their interest in contracting with an Alaska Native firm. More recently, Stevens was criticized for inserting up to $2.5 million into the Defense Department spending bill, with the money earmarked to pay the family of Jacob Adams, the president of Arctic Slope, $15,000 an acre for one 160-acre tract contaminated by the Air Force. Asked by U.S. News of the status of this payment, Stevens's spokeswoman, Courtney Schikora, said that another appraisal had been sought and that the wording of the bill had been changed. Stevens's son, Ben Stevens, is a state senator in Alaska. But he also runs a consulting firm that is employed by Alaska Native firms, such as Cook Inlet Region Inc. That company, which has benefited financially from legislation backed by his father in Washington, paid Ben Stevens $145,854 in 2002, according to financial disclosure filings with the Alaska Public Offices Commission.
Sometimes called "Stevens Act" corporations, the Alaska Native firms, as a result of Stevens-sponsored legislation, have an important edge in winning federal contracts because they do not have to bid on them competitively. Chenega, as a result, is now ranked as one of the fastest-growing government contractors in the United States. Its revenues have increased 10-fold since 2001.
Asked if his relationship to both Alaska Native corporations and to those representing them before the Appropriations Committee might be of concern, Stevens said absolutely not. "There is hardly anyone in Alaska that does not intersect with me," he says, "because I am a senior senator in Alaska. One is my brother-in-law; one is my son. What are they supposed to do, drop anything I have business with? I have talked to people that Bill Bittner has brought to my office on various matters. There is nothing illegal about that."
With Edward T. Pound
This story appears in the December 6, 2004 print edition of U.S. News & World Report.