Army Corps Scandal Shines Light on Alaska Firms The Army Corps of Engineers contracting scandal has ignited new congressional scrutiny of Alaska Native Corporations. An executive of EyakTek, an Alaska 8(a) company, is accused of taking kickbacks to steer work to another 8(a) firm in what federal prosecutors called “one of the most brazen corruption schemes in the history of federal contracting.” (SAA, 10/7) Two senators have asked the Defense Department to review all sole-source contracts with ANCs “to address the risk of the Department’s being defrauded.” Senators Claire McCaskill, D-MO, and John McCain, R-AZ, wrote that Eyaktek’s “ability as an ANC to secure, without sufficient scrutiny and review, a sole-source contract and enter into a pass-through arrangement with the unnamed contractor were apparently key to facilitating this alleged fraud.” Separately, a senior Democratic congressman has asked the Homeland Security Department for records of its dealings with EyakTek and its director of contracts, Harold Babb, who was indicted in the kickback scandal. Rep. Edward Markey, D-MA, said Babb formerly headed EG Solutions, an Eyaktek subsidiary that was suspended from contracting last year for allegedly serving as a front on Homeland Security’s First Source contract. Babb is accused of taking more than $700,000 in kickbacks in the Corps of Engineers case. He has pleaded not guilty. In a letter to Homeland Security Secretary Janet Napolitano, Markey wrote, “I think we need to understand more about EyakTek’s other contracts and work involving other federal agencies, as this incident may go beyond transactions with a single federal agency.” He said EyakTek had received more than $200 million in First Source orders over four years. Markey is the senior Democrat on the House Natural Resources Committee, which has jurisdiction over Alaska Native Corporations. He called for an investigative hearing on EyakTek. In a letter to committee Chairman Doc Hastings, R-WA, he wrote he is “concerned that EyakTek’s status as an ANC may have facilitated this scam.” He asked the Homeland Security Department to turn over documents, emails and other information related to its dealings with EyakTek and Babb. “There are real questions about whether this company is meeting its statutory and fiduciary obligations to its Native shareholders,” he wrote. EyakTek’s parent, Eyak Corp., said in a statement that it has followed federal contracting rules. Eyak CEO Rod Worl said Babb’s “alleged conduct in no way reflects the operations or corporate culture of The Eyak Corporation or any of our subsidiary companies.” A federal grand jury in Washington indicted Babb along with two Corps program managers and the son of one of them. They are accused of receiving $20 million in cash and gifts in return for steering subcontracts from EyakTek to an 8(a) firm identified as “Company A.” All four men pleaded not guilty. The U.S. Attorney’s office for the District of Columbia said the charges grew out of an unrelated investigation of Nova Datacom, a Virginia 8(a) company. (See below.) The Washington Post reported that Nova Datacom is Company A, and its chief technology officer, Alex Cho, paid the kickbacks and is cooperating with prosecutors. Nova Datacom Exec Pleads Guilty The U.S. Attorney’s office in Washington said investigators uncovered the alleged Corps of Engineers kickbacks in the course of a separate investigation of Nova Datacom LLC, a Virginia 8(a) company. Theodoros N. Hallas, the former executive vice president of Nova Datacom, pleaded guilty Oct. 13 to conspiracy to commit wire fraud. In a statement filed with U.S. District Court, Hallas admitted that he and Rajesh Kumar “Roger” Malik, the former executive vice president of MED Trends Inc. of Rockville, MD, traded false past-performance references to improve their respective companies’ qualifications. Malik has been indicted. The indictment charges that, at Malik’s instigation, MED Trends falsely claimed to be a service-disabled veteran-owned business and a HUBZone business. MED Trends allegedly received $17 million in contracts under those set-aside programs. SBA Inspector General Peggy Gustafson said, “Mr. Hallas’s actions and those alleged to have been committed by Rajesh Kumar Malik denied federal contracts to businesses that deserved such opportunities, including small businesses owned by service-disabled veterans.” No sentencing date for Hallas has been set.