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Tuesday, December 16, 2003

The U.S. Supreme Court on Monday refused to enter a debate over government contracting preferences for American Indian and Alaska Native-owned businesses.

Without comment, the justices rejected an appeal sought by the largest federal employee union. The American Federation of Government Employees, which claims a membership of 600,000, said the contracting set-asides violate the U.S. Constitution's ban on race-based preferences.

But in rejecting the case, the Supreme Court let stand a ruling that upheld language in the 2000 Department of Defense appropriations act. The provision, inserted by Sen. Ted Stevens (R-Alaska), chairman of the Senate Appropriations Committee, allows federal officials to award contracts to majority Native-owned firms without going through a competitive bidding process that non-Native businesses are subjected to.

"The Native American exception," Stevens said in June 2000, "is intended to advance the federal government's interest in promoting self-sufficiency and the economic development of Native American communities. It does so not on the basis of race, but rather, based upon the unique political and legal status that the aboriginal, indigenous, Native people of ... America have had under our Constitution since the founding of this nation."

In June of this year, the D.C. Circuit Court of Appeals agreed with Stevens' reasoning. In a unanimous decision, a three-judge panel said Supreme Court precedents ensure that Congress can enact legislation that treats American Indians and Alaska Natives differently.

"The [Supreme] Court's decisions 'leave no doubt that federal legislation with respect to Indian tribes, although relating to Indians as such, is not based on impermissible racial classifications,'" wrote Judge A. Raymond Randolph, who was nominated by former President George H. W. Bush.

The Department of Justice had urged the high court to reject the union's appeal. "Unlike other individuals or entities, Indian tribes -- political units -- have a 'unique legal status' under the Constitution as domestic sovereign nations," Solicitor General Ted Olson wrote in a brief last month.

"Consequently, where Congress singles out interactions with the tribes for differential regulation, the distinction is political rather than racial and must be upheld so long as it is rationally designed to further Indian self-goverance," he added.

The case revolved around a $170 million military contract for Chugach Management Services -- a joint venture of Chugach Alaska Corporation, a regional Alaska Native corporation, and Afognak Village Corporation, a village corporation. The Air Force awarded the contract, for maintenance work at Kirtland Air Force Base in New Mexico, pursuant to the 2000 act.

The contract was just one of several that have put large military-related projects in the hands of Native businesses. In December 2001, the National Imagery and Mapping Agency, a DoD agency, awarded a $2.2 billion, non-competitive contract to two Alaska Native corporations. It is considered the largest outsource to a Native-owned company.

But Alaska Native firms have been able to secure military work through competitive bidding as well. Last year, a Chugach subsidiary won a $2.5 billion contract -- to be shared with two partners -- for public works, engineering, aviation and marine-support services at a missile testing facility in the South Pacific.

In May, another Chugach firm won a $3.3 million non-military contract to take over maintenance and operations at the Midway Atoll National Wildlife Refuge, also in the Pacific.

The Chugach corporation, owned by about 2,000 shareholders, emerged from bankruptcy three years ago. It has since been named one of the top 49 businesses in Alaska.

Department of Justice Brief:
AFGE v. U.S (November 10, 2003)

Get the Decision:
Amer Fed Govt Empl vs. USA (June 6, 2003)

Lower Court Decision:
Amer Fed Govt Empl vs. USA (March 29, 2002)

Relevant Documents:
Kirtland Litigation Briefs and Other Information (AFGE)

Relevant Links:
Chugach Alaska - http://www.chugach-ak.com
American Federation of Government Employees - http://www.afge.org/Index.cfm

Related Stories:
Court rejects union claim against Native contract (06/09)
Native corp close to $2.5B contract (09/09)
Alaska Native deal criticized (6/14)
Native Corp. survives bankruptcy (5/30)

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