Swindled.

• Author: O'Donoghue, Brian Patrick
• Position: Court orders Alaska Corps of Engineers to pay Airborne Exploration for subcontract work

It was a subcontractor's worst nightmare. After more than $200,000 worth of work was completed on an Alaska Corps of Engineers cleanup job, the prime contractor fled with everyone's money. Worse, the project was not bonded.

It shouldn't take an act of Congress to get paid. At least three times this decade, however, Alaska subcontractors on federal projects have found no other means of collecting for their work or materials. In each case, an unscrupulous prime contractor pocketed funds and then defaulted - leaving smaller firms howling for justice.

"We are so far in the hole on this it's ridiculous," says Pete Williams, discussing Airborne Exploration's unpaid $99,000 tab from a 1994 soil cleanup at Fort Wainwright. "We paid all our suppliers and vendors within the year. But I had to borrow money from my partner. It got so bad I was heating with wood and sold my chain saw."

The 1999 Defense Department Budget contains $500,000 to settle the claims from Airborne and 17 other subcontractors employed on the Fort Wainwright cleanup. The appropriation is the latest in a series of rescues Alaska's powerful congressional delegation has mounted on behalf of local firms cheated on federal projects.

"It was not fair these subcontractors received no compensation for the work they performed," observed Sen. Frank Murkowski, R-Alaska, announcing passage of the cleanup compensation package in September. "This remedies that problem; hopefully once and for all."

Similar bailouts took place in 1993 when Congress put up $504,000 for subcontractors who went unpaid when the prime contractor, Gittins/PAKAK Joint Venture, folded during construction of a $2.6 million aircraft maintenance facility at Eielson Air Force Base, and again in 1994 when $316,000 was appropriated to compensate subcontractors for losses sustained on a Coast Guard housing project in Ketchikan. Both of those projects dated back to the late 1980s. Both were the subject of lengthy administrative and legal wrangling before Congress finally intervened.

Federal relief, when it did materialize, fell short of fully compensating the local farms bilked in the course of what most had assumed were bond-protected jobs.

"When the Corps was finally given $504,000 to see that we were paid, all of our sums were reduced in order for the Corps to take care of business with others who weren't part of our effort," recalls Richard Tilly, a Fairbanks contractor who also spent four years battling bureaucracy before Sens. Frank Murkowski and Ted Stevens, and Pep. Don Young came to bat for local subs stuck holding bills from the 1989 Eielson project.

"We never got a penny back for the thousands we spend on attorneys," Tilly adds, "or the time it took to get this (the legislation) through."

Agencies involved characterize these disputes as isolated incidents. But any firm bidding on federal projects can draw lessons from Airborne's ongoing collection battle and other similar disputes.

DRILLING A DEEP HOLE

Pete Williams and partner Cliff Everts naively figured Airborne's $99,000 would be forthcoming as soon as the paperwork cleared on change orders, tripling the scope of their company's work on the fall 1994 cleanup.

The expansion stemmed from the discovery of an old, concrete foundation slab overlaying an area targeted for bioremediation treatment. The slab meant more venting was needed...