Alaskan bruise.

One omission from your article ("Polar Fleeced" by Benjamin Wallace-Wells, July/August) is the tremendous negative impact that the Alaska Native Corporations (ANCs) "legal loopholes" have had on legitimate small businesses around the nation. Federal agencies across the country have funded mega-contracts to ANCs by taking contracts intended for small firms and bundling them into large contracts to award to ANCs. As a result, hundreds of millions in small contracts have been taken away from legitimate small companies and handed to ANCs.

Jesus R. Gonzalez

President

Builtek Contractors, Inc.

Albuquerque, N.M.

I find it amazing that the editors of your publication would spend the money to send a writer all the way to Alaska on research and then allow publication of such a far-fetched, misleading article.

The Chugach people are a proud and resilient group. They have been through a great deal and continue to move ahead. I am honored to serve them, and every day that goes by, I feel a greater kinship with the shareholders of this corporation. You do them a huge disservice portraying them as country bumpkins. I would like to call the writer's statements about the villagers bigotry; however, pure ignorance is probably closer to the truth. Chief Gary Kompkoff is one of the most honorable men I have ever known. I take a great deal of pride in knowing he places his trust in me. Knowing him as I do, I can only imagine the pain he is feeling for his village and his people as a result of the writer's stupidity. Gary and the residents of the village of Tatitlik are gracious and welcoming. I suspect, however, this article will cause them to be less so in the future, and that truly is the real shame.

In response to Mr. Wallace-Wells's implications that it is the large defense contractors and white owners of ANC subsidiaries who are benefiting from the advantages the ANCs enjoy, I offer the following:

1) All of Chugach Alaska Corporation's (CAC) subsidiary companies are wholly-owned and controlled by Chugach shareholders. The Board of Directors of the parent company and of every subsidiary are CAC Native shareholders.

2) Many employees of the subsidiaries and the parent are native shareholders, including many in executive and middle management positions, project level managers, and many other widely varied positions. The contracting programs and so-called "loopholes" that are mentioned are not designed as "jobs" programs but rather, business development programs. We still strive, through educational and training benefits provided to shareholders, to offer employment opportunities. We also believe that we are making a positive impact on those whom we help educate and train who would rather be doctors or lawyers or engineers instead of employees of CAC.

3) The statement regarding our large business partners benefiting from sole-source contracts of ours is as ludicrous as saying The Washington Monthly is a strong supporter of the current administration in Washington! Lockheed Martin (LMCO) and Bechtel were named in the article as being recipients of these benefits. The only thing they benefit from is our experience, reputation for service and quality, and our history of extraordinary performance on our contracts. The $2.5 billion contract for services in the Marshall Islands that was highlighted is $2.5 billion over 15 years (potentially). The writer conveniently failed to mention that this contract was awarded under full and open competition (the competition being Northrop Grumman and Raytheon) and that Chugach is a subcontractor to LMCO and Bechtel! Not the other way around.

As the (white) President/CEO of CAC, I am paid a salary for my services to the corporation. The difference between me and my counterparts in public corporations is that I do not receive stock options or other perks typically associated with executive management of a large corporation. The stock is inalienable and cannot be traded, sold, bartered or given away except within the native community and even then there are restrictions.

There are no prime contracts in the Chugach portfolio where any large (or small) corporation has any sort of controlling interest or management authority over Chugach. We are proud of our accomplishments and believe we provide a valuable and cost-effective service to the government. This is proven time and time again in statements from our customers who have documented the savings and performance history provided by Chugach. It's a shame the writer didn't check or include any of these facts.

Barney Uhart

CEO, Chugach Alaska Corp.

Anchorage, Alaska

Benjamin Wallace-Wells responds:

I am grateful for Mr. Uhart's reminders of some of the benefits provided by these organizations: the college scholarships they endow for members of their tribes, for instance, and the active role they have played in preserving Alaskan native history and culture--attributes which were detailed in my original article. I am grateful, too, for his reminder that Chugach, perhaps mare so than most Alaskan Native Corporations, bar begun to win some competitive contracts, and I hope that this category occupies a larger portion of its portfolio in the future.

But the point of my original article was not that the ANCs are completely meritless organizations, but that they are a deeply and problematically inefficient way for the federal government to achieve a policy goal. Giving exclusive benefits in federal contracting law to companies owned by Alaskan natives and hoping that some essential improvements will be made in the living situation of their shareholders is an awfully convoluted, costly, indirect, and just plain lousy way for the federal government to try to lift a fairly small population out of poverty--and it also has the effect of vastly benifiting a few groups which have nothing to do with Alaska: lobbyists and large corporations seeking contracts with the government that they wouldn't otherwise get.

As my article noted, Mr. Uhart's company and the other ANCs have been roundly criticized by groups as politically diverse as the Cato Institute and public employees unions for a simple reason: It seems unfair that prosperous firms such as these should enjoy advantages under federal law that other minority-owned businesses do not. If the ANCs would give up these special breaks, won only because of the clout of their state's congressional delegation, and resolve to be treated under federal law in the same manner as all other minority-owned businesses, I suspect that they would be widely applauded and that the articles critical of their position would stop.

Mr. Uhart raises an additional note of concern: that my article slandered the Alaskan native villagers by portraying them as country bumpkins. I'm sorry if the article gave that impression. The villagers aren't bumpkins, of course; they were smart and sophisticated enough to hire some extremely competent executives, including Mr. Uhart, who have led Chugach to great successes. The point of my visit to the native village described in the piece was to, more or less, assess what taxpayers were getting for their money, and to gauge to what extent all of these many advantages given to native firms for the ostensible purpose of improving life for natives really bad made things better for them. I'm not alone in having found only mixed results. Last, two corrections: First, my original article referred to the residents of Tatitlik as "Eskimos"; while many of the natives there are eskimos, some are not, and I should not have used the single term to describe a diverse population. Second, my original article referred in passing to a joint contract Chugach Alaska had received with S&K Technologies to manage military bases in Iraq. No such contract exists; S &K and Chugach Alaska each have individual contracts to manage military bases in Iraq.

Publisher's Note:

Though we don't normally combine our October and November issues, we are doing so just this once for a good reason. We need to reboot our publishing calendar to conform to the weird but widely-followed rule that says monthly magazines should hit the newsstands a month before their advertised cover dates. To compensate our esteemed paid subscribers, we are extending your subscriptions by one month, free of charge.