Could the ANC bribery scandal happen to anyone?

The indictment of an official at EyakTek puts an uncomfortable spotlight on the Alaska Native Corporation program, but is there really a connection?

The bribery and kickback scandal involving an executive from an Alaska Native Corporation may have less to do with problems with the ANC program and more to do with poor contract management.

“This is a story about bad guys getting caught. It’s not related to the company’s ANC status,” said Stan Soloway, president and CEO of the Professional Services Council. Soloway also is a Washington Technology columnist.

With the news of the indictment, supporters of ANCs moved quickly to distance themselves from scandal. But pressure on the set-aside program likely will increase.


Related stories:

Eyak fires indicted exec; more pressure likely on ANC firms

Obama builds up controls against Alaska Native Corporations


The Justice Department officials announced on Oct. 4 they indicted Harold Babb, director of contracts at Eyak Technology LLC, an ANC-owned small business based in Dulles, Va., on allegations of fraud and bribery.

Babb, along with Michael Alexander and Kerry Khan, both program managers at the Army Corps of Engineers, and Lee Khan, the son of Kerry, are accused of conspiring to hide the money from their bribery and fraud scheme through a series of financial transactions.

Rod Worl, CEO of The Eyak Corporation and president of EyakTek, said on Oct. 5 that Babb had been fired from his position at the company.

A Justice official called it “one of the most brazen corruption schemes in the history of federal contracting.”

Despite its brazenness, Roger Waldron, president of the Coalition for Government Procurement and former federal procurement official, said regulators and lawmakers should not write rules based on a single case. This should not be part of the proof of a program's problems, he said.

In the same vein, the federal contracting community cannot label an entire set of companies because of this case, just as government employees should not be labeled as corrupt because of the two involved in the collusion, Soloway said.

That’s not always how it goes though.

“Too often, people do regulate and legislate based on the worse case scenarios,” Waldron said.

But regulatory changes need in-depth cost-benefit analysis with the broad community in mind, he said. The vast majority of law-abiding companies should not be punished with overburdening oversight.

In fact, “this is demonstration that the system works,” Waldron said.

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