Eyak fires indicted exec; more pressure likely on ANC firms

Will the indictment of an employee of an Alaska Native Corporation bring changes to the ANC contracting program?

Supporters of Alaska Native Corporations moved quickly to distance themselves from bribery scandal involving an employee of an ANC company. But pressure on the set aside program likely will increase.

First, the company, Eyak Technology, fired its director of contracts, Harold Babb, who was indicted this week along with three others for an alleged scheme involving an Army Corps of Engineers contract.


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“Eyak and its shareholders will not tolerate this type of conduct by anyone employed by or associated with an Eyak company,” said Rod Worl, CEO of The Eyak Corporation and president of EyakTek said.

Native 8(a) Works, an advocacy group for ANCs, also moved to condemn the alleged criminal activity.

“At a time when Native corporations’ status as 8(a) contractors is constantly under attack, we hope that the alleged actions of one company will not contribute to further misconceptions about Native 8(a) contractors,” the organization said in a statement released late on Oct. 4.

“The alleged wrongdoing by a few individuals is exactly that—the actions of individuals,” the organization said.

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. EyakTek was the prime contractor for the Technology for Infrastructure, Geospatial, and Environmental Requirements (TIGER) contract of the U.S. Army Corps of Engineers.

“This indictment alleges one of the most brazen corruption schemes in the history of federal contracting,” said U.S. Attorney Ronald Machen when announcing the arrests.

The four men pleaded not guilty in federal court in Washington, D.C., on Oct. 4, according to reports today.

But as a result of the scandal, the ANC small-business set-aside program may feel more pressure from senators.

Sen. Claire McCaskill (D-Mo.), who has investigated the program and found loopholes, released a statement late on Oct. 4 about the indictment.

“For several years I’ve been crusading against the large loopholes in our contracting laws that allow waste, abuse, and—as these charges show—fraud,” said Sen. McCaskill, chairwoman of the Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee.

She added that the ANCs need to compete, like other small businesses, for large contracts. Agencies should not have the option of awarding a sole-source contract of any size to an ANC through the 8(a) set-aside program.

“The Alaska Native Corporations should compete for these large contracts and further should not be allowed to ‘front’ for other corporations that are actually doing the work,” she said in her statement.

In the Justice Department’s indictment, officials cite an e-mail in which Babb notes how the small business set-aside program could get them around certain parts of the Federal Acquisition Regulation.

Babb wrote in an e-mail in July that, “With a SBA 8A award you bypass some of the FAR rules for advertising the [request for proposal] and qualifications to bid the RFP,” according to the indictment document.