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Investigating 8(a) contracting

Native company sues reporter, media over 8(a) story

  • Author: Jill Burke
  • Updated: June 30, 2016
  • Published April 20, 2010
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Stephen Nowers illustration

An Alaska Native corporation is suing a California reporter and two media outfits for $24 million, claiming a news story investigating the company's federal contract to replace a rail bridge and train tracks in Napa Valley damaged its reputation.

Suulutaaq, a subsidiary of Kuskokwim Corp., says in its lawsuit that a January story by reporter Lance Williams unfairly takes issue with how the company and chief executive Sam Boyle landed what amounted to one of California's largest stimulus contracts. The $54 million stimulus project involves replacing a bridge used by the "Wine Train" -- a tourist attraction offering upscale dinners in antique railcars as the train winds through 25 miles of Napa Valley.

Williams' story examined Suulutaaq's role in the project, raising questions over the merits of the U.S. Army Corps of Engineers' awarding Suulutaaq the contract without competitive bidding. With no bidding the bridge will cost more, according to one construction contractor cited in Williams' story who had wanted to bid on the project.

While it is true Suulutaaq was awarded the no-bid contract under a special preference through the Small Business Administration's 8(a) program, for which Alaska Native-owned companies qualify, it argues Williams' reporting wrongly implied the company was unqualified to take on the project, subcontracting most of the work and keeping much of the federal funding for itself. Suulutaaq's lawsuit also argues Williams' article made Boyle out to be an incompetent and dishonest businessman who manipulated federal laws and regulations to land the stimulus contract. Suulutaaq is seeking $24 million and Boyle $8 million in damages from Williams, his employer and the media outlets that carried his work -- the Center for Investigative Reporting, California Watch, and the San Francisco Chronicle. (Note: an earlier version of this story incorrectly listed the Center for Public Integrity among the defendants. CPI is not involved in the lawsuit.)

Attorneys for both sides declined to discuss the case, which is filed in federal court in Alaska.

Williams is no stranger to courtroom showdowns. As a reporter for the San Francisco Chronicle, he risked jail time by defying court orders to reveal his source for a series of stories uncovering steroid use by professional athletes. And it appears he won't be shying away from this latest battle, which largely amounts to a war over words.

"California Watch and the Center for Investigative Reporting are standing by the story," states a recent California Watch report.

According to CIR, the lawsuit does not identify any errors made in the reporting of the story; the center maintains that the facts presented are based on multiple sources and public records, including records submitted by Suulutaaq itself.

Hard to prove?

In July 2009, the $54 million project made U.S. Sen. John McCain's list of the top 100 most wasteful projects receiving federal funds under the American Recovery and Reinvestment Act. Known as the Wine Train project, it is part of a larger $400 million flood-control effort for the Napa River that's been under way for years by the Army Corps of Engineers.

With public criticism mounting and a lot of taxpayer money at stake, Williams started looking into it. Suulutaaq was already a contractor on the Wine Train project when the stimulus money was approved by Congress last year. The Army Corps chose Suulutaaq to complete the Wine Train bridge as a way to expedite a project that was already behind schedule, the Army Corps told Williams for his story.

As an Alaska Native-owned company, Suulutaaq did not have to compete for the federal contract. The SBA's 8(a) program provides contracting preferences for economically disadvantaged small businesses. Alaska Native companies get additional preference through access to no-bid contracts of unlimited value. When it comes to federal contracts, Alaska Native companies enjoy a disproportionate share -- 19 percent -- of "all the federal contract dollars awarded to 8(a) firms," according to a 2009 report by the U.S. Senate Subcommittee on Contracting Oversight.

In its lawsuit, Suulutaaq argues that Williams' article implies the company solely landed the contract through a race-based award -- a preference based on affirmative action in the business world, rather than Suulutaaq's reputation and skill to perform the work.

In February, Maver Carey, chief executive of Kuskokwim Corp., commented on William's article in a letter to the editor in The Press Democrat, a Santa Rosa, Calif., newspaper. "The implication that Suulutaaq is reaping $20 million in unearned profit is simply not true," Carey wrote. "Suulutaaq is spending the majority of the contract funds on services, supplies and labor from an area within 50 miles of Napa."

In her letter, Carey defended Boyle and took exception to Williams' scrutiny of Suulutaaq's business affairs:

"While companies owned by California shareholders (and those from other states) regularly earn profits in Alaska, Williams appears to be applying a double standard when he objects to Suulutaaq's operations in California -- an approach that seems designed to keep Native Alaskans trapped in a cycle of poverty. We strongly question the bias inherent in that position."

Suulutaaq and Boyle argue the story hurt their reputations. Suulutaaq wants $6 million in damages, Boyle $2 million. But because they also claim Williams' reporting was "outrageous" and "reckless," conducted with "indifference" and "malice," they're also seeking millions more in punitive damages. Together, they want $32 million.

It may be a difficult case to win.

Although they claim Williams was given and ignored information that showed Boyle -- a former chief executive of a failed Internet company that lost its investors millions -- and Suulutaaq in a better light, they are likely facing an uphill battle, said Sarah Pearson, a fellow at the Center for Internet and Society and Constitutional Law Center at Stanford Law School.

"My initial reaction seems like it will be hard to prove that the reporter knew (the statements) were false," Pearson said, explaining that you can't sue for defamation if something's true or reasonably true.

Fighting over the interpretation and presentation of facts and information, inevitable in cases like this one, doesn't necessarily lead to clarity.

"Those kinds of wishy-washy claims are going to be difficult for the plaintiff to prove," she said.

Contact Jill Burke at jill(at)alaskadispatch.com.

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