Alaska businesses construct long-term relationship with military.

Defense is Alaska's only enduring statewide industry impacting villages, boroughs and cities for centuries.

Department of Defense funding cycles sustain businesses through booms and busts, providing experience and capital that Alaska businesses need for intermittent commercial projects. Construction, engineering, technical, service and maintenance contracting are expected to increase to accommodate more troops and more elaborate training maneuvers.

Last year, the DOD increased contract awards to $1.26 billion and paid civilians and 23,495 service members $1.4 billion in payroll. These numbers continue to rise, creating opportunities for businesses to develop relationships with service members or their traits in Alaska's North Pacific land-air training center.

SPENDING OFF BASE

Service members are posted for two to three years, long enough to achieve the American dream of home ownership. Service members settle in, relying on nearby businesses that sell hardware, housewares, groceries and vehicles, or provide storage, veterinary care and entertainment services. Elmendorf Air Force Base pays 6,781 airmen and 2000 civilian employees about $450 million annually. Retailers depend on military dollars, attracting service members with discounts and special events. In FY04, the Veterans Administration guaranteed $539 million in Alaska housing loans and this year the average guarantee has produced a $193,670 loan. Realtor Linda Garrison of AAR No. 1 Buyer's Agency advertises to the military in the base Newcomers Guide.

Garrison says 80 percent to 90 percent of her business is from the military. "They definitely have a large impact, not only on the economic health of Anchorage and Alaska, but also I think it transcends that; the majority of them become active members of the community and contribute a lot with their knowledge and diversity." Some manage rental properties or run other small family businesses. The contributions of well-educated, responsible, dedicated workers among active, reserve and discharged service members are incalculable.

CONSTRUCTION DOLLARS

During the Cold War, the Air Force superseded the Navy, capitalizing on Alaska's most valuable military real estate: airspace. Today aerial defense activities gravitate around Elmendorf AFB, which houses the 3rd contracting squadron, the Army Corps of Engineers, and the Alaska Command. Elmendorf will continue its joint venture with the Veterans Administration as expedited construction begins on the adjacent VA clinic next year.

What the Army Corps of Engineers does not build, the military directly contracts out through the responsible post or base. When looking for contracts, Alaska's military advises businesses to first call the local post, base or station to learn what government office or prime contractor should be approached.

Elmendorf AFB says that 74 percent of its contracts are with Alaska businesses. The Army Corps of Engineers handles more than $200 million in construction contracts for the C-17 hangers at Elmendorf and Eielson AFB. C-17s transport Stryker vehicles, thus the construction projects include opportunities to specialize on simulators, road improvements and other base-post integration.

The Army is making itself at home in Alaska, awarding 20 times more construction money in FY04 than in FY01. Last year, the Army awarded $445 million in Fairbanks-area contracts to support 5,000 soldiers and their hardware at Fort Wainwright's massive post and nearby air ranges. The DOD testifies to Alaska's strategic importance with $200 million for a new hospital and brigade unit. Some businesses build military relationships intending to earn future maintenance or service contracts through quality work.

BIG BUDGET

The U.S. Army spent 9 percent of its total FY04 construction budget in Alaska, while the military spends only .0003 percent of its missile and space defense funds in Alaska. Although most Alaska construction and supply businesses earn military money through construction contracts, one Alaska company combined construction and support work for missile defense outside before winning similar contracts inside Alaska.

CEO Barney Uhart led the team that transformed Chugach Alaska from a troubled resource-based business into a billion-dollar service industry ranked by the Department of Defense as its 55th largest prime contractor nationwide. Uhart explains he was hired to diversify Chugach's income. "We were looking at other markets and didn't have a lot of cash. It's relatively inexpensive to get into the services market with the government and there is a reasonable, not excessive, rate of return so it was a logical choice for us."

LONG-TERM CONTRACTS

Chugach's experience and performance record has enabled them to go beyond short-term construction work and obtain long-term contracts supporting key Alaska locations: Eareckson Air Station and Fort Greely. Uhart says: "We are a major subcontractor to Lockheed Martin at the Pacific missile range test facility in the Marshall Islands where they launch the interceptors. We perform all of the engineering services, facilities operation and maintenance, fire protection, aviation and marine operations. We are involved in technology centers for the Navy on their Aegis and Tomahawk programs."

The Indian Incentive Subcontractor Initiatives Program pays a 5 percent bonus to prime defense contractors that subcontract with new Native corporations. As these small, disadvantaged businesses "graduate" into the competitive arena, high-performing Chugach subsidiaries continue to help Chugach retain a presence at all Air Force bases and many posts in Alaska. Uhart says Chugach subcontracts to Alaska businesses that have the "capacity, capabilities and local presence" to provide specialized services.

"Absolutely positively everything we do now is a result of contracting with the military. The DOD is the largest federal market," Uhart says. "Our relationship with the military has always been terrific and we expect it to continue and grow." Though Chugach nets $60 million from six to seven locations in Alaska, service provided to 60 military locations Outside totals nearly a half billion dollars, providing nationwide career opportunities to enrolled Alaska Natives and boosting businesses statewide." Uhart says they are looking for experienced workers. "We look for people who are most familiar with everything from technology to terminology and for those who have had a successful career in the military."

VETERAN HIRE

In addition to hiring some of Alaska's 68,000 experienced veterans, one-third of whom live in rural areas, Chugach and other Native corporations yield dividends to shareholders through military work. The military is at the heart of the state's economy, pumping lifeblood into Alaska's extremities. Through transportation, emergency operations, military incomes and benefits, the military builds a foundation for rural businesses.

COAST GUARD HELPS RETAIL

The Coast Guard's 1,950 members and $98 million payroll breathe life into retail businesses in 17 Southeast and Southwest rural locations, though facilities construction and maintenance are still the bread and butter of small communities. Janet Johnson, president of Tundra Plumbing, moved her business from Anchorage to Kodiak in 1992 for more than $2 million in annual contracts. Johnson says, "We are mechanical contractors. We have worked on nearly every single building on that Coast Guard base. They are constantly remodeling and upgrading. We have done pretty much all the phases of all the housing. They have done two complete renovations of the hangers that had not been done since WWII, the third one is being worked on now."

Johnson says Tundra is working with a Homer-based company on the $2 million renovation of the commissary. "Everyone keeps saying they can't possibly do more work, but there's always millions of dollars in the budget for upgrading," Johnson says.

The National Guard coalesces the active and reserve military components, often pumping payroll dollars into rural businesses. Major Mike Haller tells us, "The National Guard is located in 77 communities across the state so our impact is more personal and widely spread among individuals." There are nearly 4,000 Army Guard, Air Guard and reservists and many guard job openings in Alaska. The retail impact of National Guard payroll will increase as more than 200 full-time Air Guard positions are being created at Elmendorf Air Force Base and Clear Air Force Station to relieve Air Force personnel, while new Guard positions are created on demand from missile defense and the Army's Stryker Brigade.

Guard members are increasingly moving to the full-time military payroll, impacting businesses and customers that sacrifice highly qualified workers. "A lot of our Guard members work for business and industry throughout the state," Haller says. "When they get called up to federal active duty, as we have had several hundred of them who are now in Iraq, that means that those businesses have to make some adjustments back here, because the law requires that they keep those jobs open. But more than that, as Alaskans, we have found that, shoulder-to-shoulder, business people have stepped right up and found a way to support their Guard members and our country. It's not just a matter of good business savvy; it's an act of patriotism ... these are very patriotic Alaskans; they're helping."

FORT GREELY

Delta Junction expects the DOD to continue to invest in the 190 Guard members, 170 civilian workers and 500 contract workers for missile and space defense at Fort Greely's 7,200 acres. "Everything we see indicates it will probably get larger and more stable," said Pete Hallgren, Delta Junction's City Administrator.

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