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FBI probes science contracts to firm with ties to Alaska senator
Anchorage Daily News


August 16, 2007

WASHINGTON -- The FBI is investigating the National Science Foundation's award of up to $170 million in contracts to the oil-field-services company that oversaw renovations on U.S. Sen. Ted Stevens' home.

The firm, Veco Corp., captured a lucrative five-year NSF contract in 1999 to provide logistics and support for polar research, although it had no previous experience in that field. During the same time period, Veco's top executive managed renovations that doubled the size of the longtime Republican senator's Girdwood, Alaska, home -- the scene of a July 30 FBI raid.

NSF spokesman Dana Cruikshank told McClatchy Newspapers that the FBI has made inquiries into the 1999 award, worth up to $70 million, and a 2004 follow-up contract for as many as seven years that the company values at up to $100 million. Justice Department spokesman Bryan Sierra and spokeswoman Deborah Weierman of the FBI's Washington field office, which is leading the investigation, declined comment on the NSF contracts.

Veco's founder and CEO, Bill Allen, pleaded guilty this spring to making $400,000 in illegal payments to Alaska lawmakers, including Stevens' son, Ben, who until last year was president of the Alaska Senate. Allen is cooperating in a sweeping FBI corruption investigation that also has led to the conviction of a former Alaska state representative and guilty pleas from a second Veco executive and a prison-industry lobbyist.

Three other state lawmakers are awaiting trial on bribery charges. Ben Stevens has not been charged.

The disclosure provides further evidence of the degree to which the investigation of public corruption in the Alaska Legislature has widened to include at least two of the state's three members of Congress. Alaska's sole congressman, U.S. Rep. Don Young, a Republican, is also under investigation for his ties to Veco.

Until now, there has been little hint as to how Veco might have benefited from the close relationship that its CEO had with the elder Stevens, who served for several years as the powerful chairman of the Senate Appropriations Committee. Stevens also had oversight of the National Science Foundation in his senior role on the Senate Commerce Committee.

No evidence has surfaced that Stevens directly steered the contract to Veco, but his aggressive support for increased funding for Arctic research coincided with the company's sudden emergence as a major player in providing logistics for polar scientists. Under the contract, Veco helps transport researchers to remote Arctic regions for more than 150 scientific projects, feeds them, houses them and provides equipment and communications during their stays.

Stevens would not comment on any aspect of the investigation and has refused to talk about the FBI raid on his house. A spokesman said that the 83-year-old senator has long had an interest in seeing more money spent on Arctic research.

As far back as 1994, as a member of the Senate Commerce Committee, Stevens championed putting more Arctic research money into the NSF budget. In 1997, when a government advisory group overseeing Arctic research issued a report detailing disparities in research between the Arctic and Antarctica, Stevens became a standard-bearer for the cause.

"I know that Sen. Stevens was very strongly taken with what we had uncovered in the study," said George Newton, a research engineer and former U.S. Navy submarine captain who served for 12 years as chairman of the panel, the Arctic Research Commission. He said Stevens cited the study as a basis for appropriating more money for Arctic research.

Unsolicited, Stevens put $25 million into the commission's budget without ever explaining why an advisory panel instead of the National Science Foundation would get the money. The funds were later shifted to the NSF.

Newton said that when it came time in 1999 to award a polar-logistics contract, it was believed within the NSF and in polar-research circles that Veco's relationship to Stevens' son might give the company an advantage.

In Allen's plea, he admitted paying fees to the younger Stevens' consulting firm beginning in 1995 -- six years before he was appointed to the state Senate. From 2002 to 2006 when he was a state senator, Stevens was paid $243,250 by Veco mainly for "giving advice, lobbying colleagues and taking official acts in matters before the legislature," Allen admitted in court filings. Allen also offered to make Stevens a Veco executive, the filings say.

"The thought was going around, that as the competition was going on within NSF, there was always this talk that Sen. Stevens' son was connected to Veco," Newton said.

One losing bidder questioned the fairness of Veco's initial award in 1999 and said it should "bear further scrutiny."

Marijane Hancock, who submitted a proposal on behalf of the University of Nebraska's Polar Ice Coring Office in partnership with a Canadian company, said she could not imagine Veco gearing up to submit a competitive proposal within a three-month bidding deadline unless company officials somehow had a head start.

The University of Nebraska project held the contract for polar-research logistics and support from 1974 to 1989, lost it for five years to the University of Alaska, then won it back for the period from 1994 to 2000, earning $17 million over the final six years.

Hancock, now a University of Nebraska assistant vice president for academic affairs, said she drafted a protest letter when Veco won the contract, but her bosses decided not to send it.

Among other things, she complained that Simon Stephenson, the National Science Foundation's contract manager, "had developed long-term personal relationships" with the former Antarctica field workers who were hired by Veco.

The NSF declined to make Stephenson or anyone else available for an interview.


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