Spotlight

California Watch senior reporter Lance Williams attempted to interview officials at Suulutaaq. The company declined interview requests but agreed to answer some questions in writing. Here is an edited transcript of that interview.

When did Suulutaaq begin pursuing federal contracts, and why?

Suulutaaq began pursuing federal contracts shortly after its inception. Suulutaaq is an Alaska Native Corporation (“ANC”). Under the Alaska Native Claims Settlement Act (“ANCSA”), Alaska Natives were required to establish corporations (separate from tribal governments) to promote economic growth. The establishment of Native 8(a) program through the Small Business Administration represents an important policy determination of the U.S. Congress that recognizes the importance of the ongoing relationship between the U.S. Government and the Native peoples towards correcting the economic disadvantage existing for Native communities. The Native 8(a) program seeks to address some of this economic disadvantage through access to the federal procurement market.

To put that in perspective, please consider the following:

“Native Enterprises, including Native Hawaiian Organizations, Tribes and Alaska Native Corporations, captured just 1.2 percent of the federal contracts awarded. In contrast, the five largest federal contractors received 24 percent of the total contract dollars awarded, almost 70 percent from sole source.”

Testimony for the US Senate,
Native American Contractors Association,
Sarah Lukin, Executive Vice President,
July 16, 2009

“In this regard, the Native 8(a) program is not unique. Since World War II, the Federal government has implemented various policies to help businesses that have barriers to capital formation and job creation. In 1987 and 1988, the Senate Indian Affairs Committee held hearings, inquiring as to why so few Native Americans participated in the federal contracting market. As a result of the hearings, changes to the federal laws took place that allowed Alaska Native Corporations created under ANCSA and American Indians to participate in the federal market that reflects the unique federal obligations and legal framework applicable to Native peoples.”

Testimony for the US Senate,
National Congress of American Indians,
Jacqueline Johnson-Pata, Executive Director,
July 16, 2009

“Indeed, the Federal government has argued in court that the Native 8(a) program “furthers the federal policy of Indian self-determination, the United States’ trust responsibility, and the promotion of economic self-sufficiency among Native American communities.” AFGE v. US, 95 F. Supp 2d 4 at 36 (D.D.C. 2002), aff’d 330 F.3d 513 (D.C. Circ. 2003). For instance, the nationwide poverty rate for Indian Country, with similar or higher rates for other U.S. indigenous people, is 25.7 percent, double the national average, with an unemployment rate at 40 percent, which is a multiple of the national average.”

Testimony for the U.S. Senate,
Native American Contractors Association,
Sarah Lukin, Executive Vice President,
July 16, 2009

Suulutaaq began pursuing federal contracts, like other Native Enterprises, in order to ultimately alleviate some of the economic disadvantage and poverty in the isolated and rural villages of its region and to fund further cultural preservation.

Has the company employed consultants in the lower 48 states to assist it in pursuing contracts? Has it retained lobbyists? Please describe.

Suulutaaq, as most, if not all businesses, will not answer questions which seek information relating to Suulutaaq’s propriety and confidential business information. Suulutaaq does note, however, that this question has potential undertones of a race based presumption on the activities of ANCs as compared to other corporate entities. Would other corporations who perform the same type of contracting with the federal government be asked this type of question, or is reserved for Alaska Native Corporations engaged in the federal procurement market?

Suulutaaq further notes that it has conducted a thorough search of its records and cannot find any evidence suggesting that Suulutaaq, either directly or indirectly through others, made any attempt at any time to influence the U.S. Army Corps of Engineers, the Napa Valley Flood District, the City of Napa or any other local, state or federal employee, agency or legislator to determine that the Napa Valley Flood Control Project should be: 1) a set aside of any kind or 2) reserved for Suulutaaq in any manner.

How did Mr. Samuel Boyle come to be CEO of TKC Aerospace?

Mr. Boyle was recruited for the CEO position in June of 2005 after he completed a consulting assignment for the company.

Does Mr. Boyle have aircraft manufacturing experience? Please describe.

Generally speaking, the Board of Directors for any corporation should hire a CEO on the basis of his or her skills, abilities and experience at leading and managing the entire organization. The CEO position is that of a business generalist, not a subject matter expert. Employees with that level of specialization generally occupy leading technical roles within the company.

In the case of Mr. Boyle, TKC Aerospace (TKCA) was afforded the opportunity to hire a CEO who had both substantial experience in the Aerospace Industry and the executive skills to implement the company’s strategy and vision. TKCA’s success over the past four and a half years, demonstrated in part by the company winning full and open competitive contracts, 8(a) competitive contracts, 8(a) sole source contracts and contracts from commercial enterprises readily affirms the Board of Director’s selection of Mr. Boyle as TKCA’s CEO.

Why is the company headquarters in South Carolina?

An ANC operation in states besides Alaska seems to be a question reserved for Native Enterprises who do federal contracting. Sarah Lukin, in her testimony before the U.S. Senate addressed this question and also quoted the testimony of Jonathan Taylor when he spoke in front of the House Resources Committee:

“[I]t is not surprising that Alaska has the greatest share of all Native contracting. Virginia and Maryland also figure prominently because so many federal agencies are headquartered in those states, of course. But note also that states with relatively large portions of Indians (Oklahoma) or large numbers of reservations (New Mexico and Washington) figure prominently in the top states where Native contractors perform their work.”

Testimony for the US Senate,
Native American Contractors Association,
Sarah Lukin, Executive Vice President,
July 16, 2009

TKCA’s Corporate Headquarters are located in Anchorage, Alaska. TKCA’s Operations in South Carolina are strategically located where its employees can rapidly respond to its customer base which is primarily located on the East Coast. While there were several East Coast hubs considered, the location was chosen primarily due to relative cost effectiveness and a geographically centered location within the company’s primary market.

The company would also note that local offices located in the lower 48 are very common for ANCs due to the reasons listed above. The company is aware of a large number of ANC operations in Virginia, North Carolina, Georgia, Florida, Maryland, etc. In this regard TKCA’s location in South Carolina is not unusual in any way.

How did Mr. Boyle come to be CEO of Suulutaaq? Does he have construction management experience? Please describe.

Mr. Boyle was asked to become the transitional President of Suulutaaq in March of 2009. While transitional President, Mr. Boyle has advocated for and trained a Native Shareholder from the region to take his place as the chief executive of Suulutaaq. Mr. Boyle does not have specific construction experience, but he does have invaluable business experience which enabled him to hire and direct those with the necessary construction experience to perform the site work on several contracts.

Mr. Boyle said in an e-mail that the Corps of Engineers approached Suulutaaq and invited the company to bid on the Napa River project. Who was Suulutaaq's contact with the Corps?

This question should be directed to the U.S. Army Corps of Engineers in Sacramento. Suulutaaq is not in a position to determine who can best serve as their point of contact to answer questions you might have for that organization. Suulutaaq would note that it is standard practice for federal agencies to alert relevant businesses when an opportunity has been identified that might solicit a bid from that business. For example, when a federal agency identifies an opportunity as a set-aside, be it for HUBZONE, Service Disabled Veterans, 8(a), small business, etc, that agency will frequently research the Central Contractor Registration (CCR) database to locate qualifying firms. Those firms will then receive an email notifying them of the opportunity and inviting their participation in the procurement process. This is a very common occurrence and Suulutaaq, like most other small disadvantaged businesses, receives such notifications on a routine basis. After further checking, it appears that this was the most likely way that Suulutaaq became aware of the Napa Valley Flood Control Project.

Does Mr. Boyle have ties to Alaska? To Alaska Native tribes? Please describe.

Suulutaaq notes that this question has potential undertones of a race based presumption on the activities of ANCs as compared to other corporate entities. Would other corporations who perform the same type of contracting with the federal government be asked this type of question about one of its executives, or is only reserved for ANCs engaged in the federal procurement market?

Mr. Boyle has strong ties to Alaska, including being a former resident and being responsible to Suulutaaq’s shareholders for the performance of their company. Mr. Boyle recognizes his obligations to the shareholders, including, but not limited to, honoring the shareholders’ choices as to who fulfills leadership positions within their companies. Suulutaaq would also like to note that while Mr. Boyle has been the transitional President of Suulutaaq, he has advocated for and helped train a shareholder to replace him in that position.

Subcontractors on the flood control project are being paid about 62 percent of the total contract. What is Suulutaaq’s role on the project, and what is the role of the subcontractors?

Suulutaaq is the prime contractor on the Napa project and as is standard industry practice employs a number of subcontractors on the project. Again, Suulutaaq, as most, if not all businesses, will not answer questions that seek information relating to Suulutaaq’s propriety and confidential business information. Suulutaaq would note, however, that Suulutaaq as the general contractor is required by Federal Regulations to self-perform a minimum of 15% of the labor on the Napa project. This 15% requirement for self performance by the prime contractor is the same for all Federal construction contracts that are awarded as small business set-asides, regardless of whether the contractor is individually owned, a Native Corporation, an 8(a) participant, a woman-owned business or a Service-Disabled Veteran owned company. The numbers you quoted make it clear that Suulutaaq is exceeding the mandated Federal requirements.

Are taxpayers paying a premium on the flood control project because it is a sole source contract? Does the contract contain a guaranteed profit for Suulutaaq?

The Federal Acquisition Regulation (“FAR”) Part 15, Contracting by Negotiation, requires that a contracting officer ensure the Federal Government is getting a “fair and reasonable” price in ALL contracts, including sole source contracts. The FAR proscribes a variety of tools for contracting officers to use in order to obtain a fair and reasonable price. Specifically, these procedures are spelled out in FAR 15.404-1(b)(2)(ii)-(vii) and are as follows:

(ii) Comparison of previously proposed prices and previous Government and commercial contract prices with current proposed prices for the same or similar items, if both the validity of the comparison and the reasonableness of the previous price(s) can be established.
(iii) Use of parametric estimating methods/application of rough yardsticks (such as dollars per pound or per horsepower, or other units) to highlight significant inconsistencies that warrant additional pricing inquiry.
(iv) Comparison with competitive published price lists, published market prices of commodities, similar indexes, and discount or rebate arrangements.
(v) Comparison of proposed prices with independent Government cost estimates.
(vi) Comparison of proposed prices with prices obtained through market research for the same or similar items.
(vii) Analysis of pricing information provided by the offeror.

Additionally, the contracting officer can require the contractor to provide specific estimates, subcontractor and supplier quotes and other measures to ensure a fair and reasonable price is obtained. In essence, the contractor may be required to lay open its books and data, which is not something normally done in the business world.

The Truth in Negotiations Act (“TINA”) requires openness and honesty in these negotiations.

Suulutaaq is performing on the Napa Flood Control Project under what is known as a Firm, Fixed Price (FFP) contract. This means that Suulutaaq is financially liable for any failure to perform within the negotiated price. Obviously, there cannot be any sort of guaranteed profit under a FFP contract.

Critics say Suulutaaq isn’t doing much work on the project, and Kiewit is doing the actual work. Please comment.

Suulutaaq is the prime contractor on the Napa project and as is standard industry practice employs a number of subcontractors for specific portions of the work to be performed. As previously stated, Suulutaaq has exceeded the Federal Requirements for self-performance on the Napa Contract. Beyond that, Suulutaaq, as most, if not all businesses, will not answer questions that directly seek information relating to Suulutaaq’s propriety and confidential business information.