Alaska Dispatch

When the National Nuclear Security Administration found itself up against a deadline for continuing a multimillion-dollar agreement to keep one of the feds' biggest contractors monitoring nuclear materials abroad in 2004, it came up with a novel solution in the form of a small Alaska Native corporation.

Little could anyone imagine then that the marriage the government was about to arrange between a subsidiary of Ahtna Inc. and Tetra Tech EC Inc. -- a New Jersey-based company with employees scattered worldwide -- would five years later blow up into a major federal lawsuit with hundreds of millions of dollars at stake.

Tetra Tech, or TtEC as it is called in court documents, claims Ahtna Government Services Corp., a subsidiary of the regional Native corporation, swindled it out of almost $182 million in business. Ahtna denies the allegation, adding that if it did do any sneaking around behind the back of its partner it was only following orders from the government.

Glennallen-based Ahtna represents about 1,200 Native shareholders scattered across the north. Before it took advantage of a U.S. Small Business Administration program designed to steer government contracts to Alaska Native corporations, it was struggling. The company reported a $7.5 million loss in 2004. It took advantage of the SBA's 8(a) program the next year and subsequently reported a profit of about $2.5 million. By 2007, it was reporting a $6.3 million annual profit that enabled it to pay shareholders a dividend of $2.79 a share.

TtEC is one of the top-100 American firms doing business with the federal government. At the moment, it ranks 56th on the list, with $353 million of income from government contracts. It has about 8,500 employees -- nearly seven-times as many workers as there are Ahtna shareholders. TtEC boasts expertise in engineering, construction, environmental cleanup and nuclear monitoring.

Alaska's Institute of Social and Economic Research has concluded 8(a) contracting provides a huge boost to Alaska Native corporations, but the program has come under fire from some in Congress. U.S. Sen. Claire McCaskill, D-Mo., has been pushing a probe into waste and fraud in the program.

The dispute between Ahtna and TtEC dates back to 2004 when the U.S. nuke-monitoring agency was nearing the end of a deal with TtEC to "provide throughout the world rapid, integrated, sustainable nuclear material detection and monitoring systems to minimize the risk of nuclear proliferation and terrorism,'' according to a lawsuit now pending in U.S. District Court for the Central District of California. Under the terms of what was called the Second Line of Defense Program, TtEC had in 2002 been contracted to track nuclear materials in the former Soviet Union, Eastern and Southern Europe, and Central and Southeast Asia.

Two years on, however, there was a problem. The sole-source, $9.5 million contract the government had signed with TtEC -- a contract that had subsequently grown to $41.4 million -- was expiring. The Nuclear Security Administration was now looking at the possibility of putting out to bid a new contract. That can be a long and complicated federal process, but the agency had a solution.

If the agency could arrange a partnership between TtEC and Ahtna Government Services, it might preserve the sole-source contract under the terms of the SBA's 8(a) program. The 8(a) program was established largely at the behest of former Alaska Republican Sen. Ted Stevens to aid struggling, 49th state corporations established under the terms of the Alaska Native Claims Settlement Act. Ahtna, the parent of Ahtna Government Services, is one of those Native corporations.

The Nuclear Security Administration apparently saw Ahtna Government Services as its best opportunity to keep TtEC on contract to monitor nuclear materials, according to documents filed in the case. The Nuclear Security Administration summoned Ahtna to Albuquerque, N.M., in March 2004 to ask the company about its interest of going nuclear, so to speak, in the business world. Ahtna, according to court filings, was asked if it would be willing to team with "another directed larger business." It was subsequently referred to TtEC.

The two companies met. A deal was struck. And, according to court documents, TtEC and Ahnta were to form a "teaming agreement," with Ahtna getting 15 percent of the business generated by the team and TtEC 84 percent. Ahtna, the agreement stipulated, would "have lead responsibility for program management, including financial management, project controls, quality assurance and health and safety oversight," while TtEC would take "the lead responsibility for engineering surveys, installation design, and construction management and field engineering activities necessary to support system installation and testing.''

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