Dermot Cole

The strange saga of the no-bid contract for the so-called “Alaska Development Team,” a deal laundered through the Alaska Industrial Development and Export Authority, is about to enter a new phase.

The governor wants to fund the team for four years with $2.8 million to be taken from an existing loan fund.

The Dunleavy administration gave a no-bid contract last spring to Clark Penney, the grandson of Bob Penney, a man who invested $350,000 in helping Gov. Mike Dunleavy win the 2018 election. The no-bid deal was worth up to $441,000 with extensions, for managing development team efforts to attract new business to Alaska.

An unnamed high-ranking person or persons in the Dunleavy administration decided to give Clark Penney the no-bid deal, refusing to open the process to potential competitors.

The state money for the Penney contract was funneled through AIDEA, probably to obscure the political connection. Tom Boutin, the head of AIDEA, told his board that although he signed the contract with Penney, the work was not part of AIDEA and Boutin wasn’t supervising him.

The “Alaska Development Team” is technically part of the commerce department, according to the limited information available to the public. The state website has almost nothing about its work, even though a development team website has allegedly been in the works for months. Clark Penney is not among the four contacts for the development team on the state website.

About the team, the state website says only this, “To access Alaska Development Team resources and assistance, please contact the commissioner’s office by phone or email. The Alaska Development Team is ready to discuss your existing growth oriented business, your business that desires to enter and expand in Alaska, and your investment ready commercial and industrial projects.”

Under the latest plan, the team would be funded by $2.8 million to be withdrawn from a state loan fund for aviation equipment, a fund that has been housed in the commerce department. The loan program is soon to be shut down.

The proposed Dunleavy budget for would transfer $2.8 million to the team to cover expenses for four fiscal years, 2020-2023, which would end with the creation of a 501©(3) nonprofit organization and “the economic development functions will be outsourced to the private sector.”

“This model has previously been successful in outsourcing tourism marketing to the Alaska Tourism Industry Association,” the state says.

The “unbudgeted reimbursable service agreements” for the team, presumably including Penney’s contract, are now not with commerce, but with the governor’s office, according to this summary in the Dunleavy budget.

“The general fund appropriation and unbudgeted reimbursable service agreements with the Office of the Governor will be replaced by a multi-year appropriation” of $2.8 million, budget documents say.

The money would be diverted from the fund that underlies the soon-to-be-ended Alaska Capstone Avionics Loan Program.

Before approving this proposal, the Legislature needs to examine the origins of the no-bid Penney deal, the reasons why it was laundered through AIDEA and why it is now back in the governor’s office. There is also the question of whether this is duplicating efforts of existing groups in Alaska.

“The Alaska Development Team is responsible for diversifying Alaska’s economy through growing Alaska’s existing industries and attracting new industries and investment to the State of Alaska,” a budget document says.

The team has supposedly been working on ideas that range from the railroad extension to Alberta to gambling and timber. Maybe the recent Tweet from Dunleavy encouraging the building of a Tesla factory reflects another notion to be added to the pile.

During his campaign, Dunleavy promised that as governor he would send a team of Alaskans Outside to meet with distressed gun makers and try to get them to build factories in Alaska.

“We’re a gun-friendly state. We have the third busiest cargo airport out of Anchorage. We have a railroad coming from here to the Anchorage area. You could ship this stuff out,” he said.

Talk is cheap. It’s always going to be harder to attract new industries than it sounds during a campaign or in the pages of a report promising future prosperity.

The 10-year budget outlook released by Dunleavy’s staff claims that the development team is going to be an essential element in creating a stronger economy for Alaska. This is as laughable as the gun factory or the Tesla plant.

The 10-year plan says this about an alleged new approach by the team, which is really nothing more than a few paragraphs of ideology, buzzwords and feel-good phrases that could have come from any chamber of commerce convention:

“The economic development initiatives of the past failed to produce the desired results, largely, because they placed the focus on government dependence rather than collaboration and partnership with the private sector.”

“Instead of subsidizing desirable but unprofitable activities, the ADT is directed to work with Alaska businesses, state and federal agencies and departments, economic development organizations, industry organizations, and chambers of commerce (collectively “Alaska’s Stakeholders”) to identify and facilitate the removal of barriers to doing business in Alaska, to help retain and grow existing industries, to attract new opportunities to Alaska, and to deliver the message to investors and industry participants the benefits of doing business in Alaska.”

“The goals of the ADT are to facilitate investment in Alaska, retain and grow jobs, develop key industrial infrastructure, support entrepreneurship and innovation, and otherwise enable Alaska’s economy to diversify and grow. Projects will attract funding based on their own merit with the ADT acting as a conduit: connecting outside funding to promising commercial and industrial projects and businesses in Alaska.”

The Alaska Development Team still doesn’t seem well-thought-out or set up to actually attract new enterprises. Difficult doesn’t begin to describe the impossible expectations assigned to the team.

Dermot Cole can be reached at

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