Alaska Native
Giant Clients
ANCs diversify with government contracts
By Isaac Stone Simonelli
Image of Giant Clients
Alaska Native
Giant Clients
ANCs diversify with government contracts
By Isaac Stone Simonelli
Image of Giant Clients
JJPan | iStock
T

he diversified portfolios of Alaska Native Corporations (ANCs) go far beyond resource extraction projects and the state’s borders. ANCs are no stranger to government contracts, as the different corporations offer professional services, IT services, base operations and logistics support, hardware retail, wholesale distribution, construction, and more.

Cape Fox Corporation moved into government contracts around the turn of the millennium with the goal of diversifying.

“Cape Fox was originally focused on the timber industry in southeast Alaska,” Cape Fox Corporation CEO Chris Luchtefeld says. “As the company progressed and the timber industry was slowing, the corporation made the decision to enter into government contracting as a way to diversify the corporation.”

The company has more than fifty government contracts with various agencies, including the Army, Navy, Air Force, Coast Guard, National Institutes of Health, Nuclear Regulatory Commission, Department of Justice, US Agency for International Development, Defense Health Agency, GSA, and Department of Labor.

According to Luchtefeld, Cape Fox mainly focuses on four sectors: healthcare, professional services, IT, and construction services. Most of the contracts the corporation is awarded are three to five years long.

“Government contracting has been a consistent and stable revenue stream,” says Bering Straits Native Corporation (BSNC) Executive Vice President Dan Graham. “Government contracting has served an important role in BSNC’s growth and ability to provide shareholder benefits, including regular and elder dividends, bereavement payments, jobs, internships, scholarships, and support for nonprofit entities that provide services to BSNC shareholders and descendants.”

Graham notes that BSNC’s government work reaches beyond Alaska. “Revenue from government contracting brings economic diversity and strength to Alaska,” Graham says.

“Government contracting has served an important role in BSNC’s growth and ability to provide shareholder benefits, including regular and elder dividends, bereavement payments, jobs, internships, scholarships, and support for nonprofit entities that provide services to BSNC shareholders and descendants.”
Dan Graham, Executive Vice President, BSNC
The Learning Curve
Serving government contracts is different from the private sector in a variety of ways, explains Graham.

“For someone that is not in the industry, the bidding process can look very complicated. There are many laws, policies, and procedures that govern the bidding process. The typical process starts with a Request for Proposal [RFP] from the government for services that they need a contractor to perform,” Luchtefeld says.

“These documents are loaded with legal terms, government acronyms, references to government policies, and instructions to potential bidders. While on the surface it looks very complex, once you are in the industry, you learn the majority of government RFPs follow a very similar format, cite similar policies, and follow a general formula. Once you learn that formula, bidding becomes much simpler.”

Luchtefeld points out that the jargon, processes, and compliance requirements involved with pursuing government contracts make for a steep learning curve for the first few years.

“There are some unique government contracting skillsets that are needed to be successful. For example, individuals need to understand government security procedures, government contracting laws, government compliance, and other aspects not found in typical commercial companies,” Luchtefeld says.

“All that being said, the learning curve can be shortened significantly by working with someone familiar with the industry that can train the corporation. The other aspect of the learning curve is the long lead times for government contracts. If you start a government contracting subsidiary today, it could be one to two years or more before you are able to receive your first contract. That can require a significant investment for the startup timeframe. Often individuals or companies can become frustrated because they don’t see sales for an extended period of time, but unfortunately that is how the process works. It is not a fast process.”

However, the benefits of these contracts are that they tend to be stable, last multiple years, and “the government typically pays their bills on time,” Luchtefeld notes.

Specialized Departments
Doyon Government Group (DGG) and Doyon Utilities handle the government contracting line of business for Doyon; DGG focuses on construction and information technology.

“DGG’s construction companies operate across the United States and employ comprehensive, time-tested protocols and procedures to manage diverse construction activities. Each project performance is marked by strong management and skilled craftspeople who are committed to safety, constructability, quality, budget, and schedule adherence,” Doyon President and CEO Aaron Schutt says.

“DGG’s information technology companies, Arctic Information Technology and designDATA, provide advanced computer support, network solutions, IT support, cloud computing services, financial management software, and comprehensive support for Microsoft and HP products, among others. Additionally, their teams offer network infrastructure support, managed services, deployment, and maintenance of computer networks, and other IT infrastructure solutions.”

The National Park Service (NPS) awarded Arctic IT a five-year contract in 2018 to implement a new recreation business management system at every National Park in the United States, Schutt explains.

“The contract covers 165 parks with the NPS throughout the United States, Puerto Rico, and the US Virgin Islands. Arctic IT provides point-of-sale hardware and a Microsoft-based solution to the NPS to collect, reconcile, and report on recreational fee revenue,” Schutt says. “The new system will standardize processes across the NPS systems to increase efficiency and effectiveness.”

Doyon Utilities landed the largest utility privatization contract ever awarded by the US military in 2008, Schutt confirms.

“The contract term is fifty years and covers twelve utility systems on the three Army bases in Alaska—Fort Wainwright, Fort Richardson, and Fort Greely. Doyon Utilities continues to safely provide reliable utility services,” Schutt says. “These services include central heat, power plant heat distribution system and utilidors, electrical distribution system, water distribution system and treatment, wastewater collection system and treatment plant, and natural gas distribution system.”

Cape Fox’s government contracts are primarily outside of Alaska, though it currently has three contracts for which all or some of the work is done in-state, Luchtefeld says.

“We really like to perform work in Alaska, but to significantly grow the company, we have to pursue work outside of Alaska,” Luchtefeld explains. “The dollar amounts can vary significantly. We have contracts that range from $50,000 per year to $20 million per year. Contracts are usually awarded for multiple years. Common award timeframes are usually three, four, or five years: some of the largest ANCs have contracts that can be hundreds of millions of dollars in value over five years.”

The key, of course, is landing such contracts.

Securing Government Contracts 101
“The contracting process can vary a lot, but there are some general steps that we usually see. When the government has a requirement, the government contracting office works with the government end customer to develop the terms of the requirement. This results in a document that is usually called a Performance Work Statement [PWS] or a Statement of Work [SOW],” says Luchtefeld. “This is the technical document that describes in detail the type of work the government wants a contractor to perform. From there, the government will often issue a Request for Information or Sources Sought or a similar type of notice.”
Mark Alexander | iStock
Bluejayphoto | iStock
The National Park Service awarded Arctic IT a five-year contract in 2018 to implement a new recreation business management system throughout the National Park Services’ 165 parks.
Dennisvdw | iStock
Dennisvdw | iStock
The National Park Service awarded Arctic IT a five-year contract in 2018 to implement a new recreation business management system throughout the National Park Services’ 165 parks.
“There are some unique government contracting skillsets that are needed to be successful. For example, individuals need to understand government security procedures, government contracting laws, government compliance, and other aspects not found in typical commercial companies.”
Chris Luchtefeld
CEO
Cape Fox Corporation
The technical document is then sent out to determine contractors’ ability to do the work, as well as their interest level. The feedback the government entity gets from contractors can help it determine how viable the work is, Luchtefeld explains.

“From there, the government usually issues an RFP. The RFP contains the PWS or SOW along with all of the typical government acquisition/procurement regulations and instructions for contractors to respond to the request. A typical response comes in the form of a proposal to the government from the contractor. The government is very specific in its requirements for the response,” Luchtefeld says.

“A common response has a technical volume where the contractor describes how they will perform the work being requested, a pricing volume where the contractor provides a detailed breakdown of the pricing to perform the work, and a contracting volume where the contractor provides government required certifications, registration information, and other information needed by the government to confirm the contractor is eligible to receive a contract from the government. The government evaluates the responses from the contractors and selects a winner.”

Luchtefeld reiterates that there are significant differences between government contracts and the private sector, from timelines to compliance.

It can take anywhere from three months to three years for a government agency to award a contract depending on the size and scope of the project, he says.

“The government closely controls and monitors the process and the government works on its own timeline. With the private sector, a salesperson may be able to offer a special limited time deal to entice a customer to accelerate their procurement process or pressure the customer into making a purchase,” Luchtefeld says.

“These tactics do not typically work in the government contracting environment. The compliance aspect is the other big difference… The security, contracting, legal, and general compliance aspects in government contracting are different from private sector businesses.”

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