Ed Driscoll

The Napa Valley Wine Train Stimulus Scam

I rode the Napa Valley Wine Train three or four times in the late ’90s and early naughts, and had thought about going back some time when I’m up north again. For an operation aimed squarely at tourists, I found the food (and needless to say the wines) served on the train to be surprisingly palatable. There’s a photo of me taken onboard in 1999 on my old blog, and I wrote an article about the train a few years later for the very early days of Blogcritics. So I was rather disappointed to read this in Zombie’s latest post:

A Walnut Creek construction executive whose firm built a previous phase of the flood-control project said the government probably overspent by millions when it negotiated a contract with Suulutaaq rather than seeking competitive bids.Meanwhile, investors aggrieved over the bankruptcy of the South Carolina dot-com Sailnet said they were surprised to learn of former CEO Samuel Boyle’s new job as CEO of Suulutaaq. Boyle did not mention having construction experience or ties to Alaska tribes, they told California Watch. Some said Boyle’s involvement in Suulutaaq boded ill for the Alaska firm.

Suulutaaq is one of dozens of Alaska Native corporations that have emerged as players in federal contracting via measures crafted in the 1980s and 1990s by former Sen. Ted Stevens, R-Alaska, a powerful lawmaker whose career ended with a contracting scandal.

For decades, the U.S. Small Business Administration has run a preferential contracting program to aid disadvantaged businesses. Qualifying firms can get federal contracts worth up to $5.5 million by negotiation, rather than competitive bidding.

The Stevens measures gave corporations that were set up by Alaska Natives special access – with no cap on the size of contracts they can obtain.

“Alaska Native corporations don’t have to prove that they’re socially or economically disadvantaged,” Sen. Claire McCaskill, D-Mo., said at a 2009 hearing. “They don’t have to be small businesses. And they can receive no-bid contracts worth billions of dollars.”

The companies employ few Alaska Natives and “rely heavily on non-native managers,” she said.

McCaskill also contended that some of the companies “may also be passing through work to their subcontractors.” In those cases, the companies were collecting a profit simply because they had special access to federal contracts, she said.

McCaskill proposed putting a cap on the no-bid contracts, but the measure stalled in the face of intense lobbying by tribal corporations.

The price tag might have been significantly lower but for the Wine Train, a private rail line established by the late Vincent DeDomenico, the wealthy creator of Rice-A-Roni pasta. Sixteen times each week, according to the Wine Train’s Web site, the train transports tourists from Napa to St. Helena aboard restored dining cars. A champagne dinner on the Vista Dome car costs $129 per person. About 125,000 people ride the Wine Train each year.

Brosamer, the Walnut Creek contractor, said the public was paying a premium for the Wine Train project, saying, “It would have been a hell of a lot cheaper if they had put it out to bid.”

But the quality of the construction is first rate, Brosamer said, because Suulutaaq subcontracted much of the job to the giant Peter Kiewit Sons Inc. engineering firm, which also is a contractor on the Bay Bridge.

“The reality is, Suulutaaq isn’t doing much,” Brosamer said.

Federal records show that Suulutaaq is paying Kiewit $28.1 million – 53 percent of the total stimulus contract. Suulutaaq is keeping about $20.4 million, or 38 percent of the total. The rest, about $4.7 million, goes to other subcontractors, all from the lower 48 states.

The wine train is basically a chance to enjoy reasonably fine dining and vino while on a trip to nowhere and back, and maybe that added appeal to the Alaskan interests. But then, as Zombie writes, “One has the suspicion that the entire ‘Stimulus’ is nothing but countless Wine Train-style deals bundled together and given an uplifting name to disguise that fact that it’s little more than a thousand unnecessary crooked backroom scams with essentially no oversight.”

Hey, that’s the Chicago way. Be thankful we don’t have prohibition preventing us from drowning our sorrows.