How government agencies avoid competitive bidding

Are you an Eskimo from Alaska?  Are you part Eskimo?  Do you know an Eskimo?  (That term, by the way, according to Wikipedia is NOT pejorative when referring to the Alaskan tribes.)  If so, you can start a company and get a government contract without having to compete for it.  Then you can sub-contract the actual work to other companies, pocketing millions for yourself.

That’s one of the ways the federal procurement process avoids having to comply with time-consuming but money-saving laws about taking the lowest bid .  From The Washington Post:

United Solutions and Services, known as US2, had just three employees and several small contracts for janitorial services and other work. It was based in a four-bedroom colonial, where the founder worked out of his living room.

But the firm had one quality the Army prized: It was co-owned by an Alaska native corporation (ANC) and therefore could receive federal contracts of any size without competition, under special set-aside exemptions granted by Congress to help impoverished Alaska natives.

On Sept. 2, 2008, US2 was granted a deal worth as much as $250 million – 3,000 times the $73,000 in revenue the firm claimed the year before. The contract enabled the Army to quickly fund a wide array of projects, including a global campaign to prevent sexual assault and harassment, without seeking outside bids.

US2 could not do the work by itself, though. With the Army’s knowledge, the firm subcontracted the majority of it to more established companies, a Washington Post investigation has found.

Federal rules generally require prime contractors on set-aside deals to perform at least half of the work, something US2 did not do on more than $100 million worth of jobs, according to interviews with Army officials and an analysis of federal procurement data.

via Alaska native status gave tiny, inexperienced firm a $250 million Army contract.