How A Contract Dispute on a US Base in the Arctic Exposes the Inequality of “Allies”

The Thule Air Force Base—one of the most isolated American military stations—was created in the 1950s due to its key location in terms of detecting and tracking missiles traveling over the North Pole. Located 700 miles north of the Arctic Circle, it hosted 10,000 in its heyday as a strategic bomber base, but is staffed by under a 1,000 personnel today.

The base remains a central component of the American missile defense system due to its location and embedded satellite and missile detection hardware. NASA has also used Thule for annual research operations to monitor Arctic sea ice and ice sheets since 2009. Yet the main significance of the base is tied to the receding Arctic ice—the base’s Northern vantage point allows the United States to monitor the region, its rivals and provides the infrastructure necessary to quickly take action. Russia’s recent focus on naval infrastructure construction along its northern coast only emphasizes the growing importance of the base. The United States has great interest in claiming the new shipping routes and natural resource exploitation possibilities that the melting of the Arctic ice cap is opening up.

Yet, since last autumn, tensions have grown between Denmark, Greenland and the United States. In October 2014 Greenland Contractors, which has been providing maintenance and other facility services to the base since 1971, lost its contract. The loss is augmented by the fact that Greenland Contractors, by being partially owned by the Greenlandic Self-Rule Authority, provides both corporate taxes and direct profits to the Greenlandic government. According to official calculations, the loss of this contract will result in 14.5 million USD annually in lost revenue for Greenland. The new contract has been granted to the American-owned, Danish-registered shell company Exelis A/S.

The original 1951 political agreement between Denmark and the United States that led to the creation of the air base did not require rent for the considerable land mass that Thule and the related satellite and radar stations are built on. Instead a political agreement stated that only Danish and Greenlandic companies would be allowed to submit tenders to operate the base. A 2009 study found that, primarily due to the income tax paid by the Greenlandic employees working at the base, the Thule base contributed $23 million USD annually to Greenland. By registering itself as a Danish company, the Exelis subsidiary is technically compliant with the treaty. Exelis is owned by Vectrus, a company that runs many American bases across the globe, whose headquarters is located in Colorado.

Yet both the Danish and Greenlandic governments feel that the Pentagon’s awarding of the 7-year $411 million USD tender to the Exelis subsidiary clearly violates the spirit of the agreement.

In order to safeguard the Danish and Greenlandic jobs and apprenticeships that are at stake, three consortia, Greenlandic Contractors I/S, Per Aarsleff A/S and Copenhagen Arctic A/S sent a complaint to the US Government Accountability Office (GAO). However, the GAO rejected the complaint, reaffirming Exelis’s right to win the contract on the basis that it complies with the US Air Force’s request for proposals (RFP). The April 2014 RFP stated that bidders “shall not be registered as a subsidiary of a foreign company”, and the GAO ruling concluded that Exelis was not registered as a foreign subsidiary with the Danish government office responsible for business filings. It also notes that the parties could have challenged how corporate ownership was to be judged by the RFP, but that it should have occurred prior to the bid being awarded. The GAO concluded that it would only rule whether the award was proper according to the RFP, not whether it met treaty obligations.

In February, political pressure caused Foreign Minister Morten Lidegaard to officially request the US to suspend the tender process until a solution was found between the three parties—Denmark, Greenland and the US. Since then negotiations have been ongoing, but no final decision have been announced. The Americans have, however, stated that it is not possible to suspend the Exelis contract completely, but it may potentially be limited to one year instead of seven. Given the time required to issue a new RFP and evaluate the bids, the earliest a Danish-Greenlandic company could resume work at the Thule base would be late 2016. However, this is little solace to the Greenlandic government, who feel that the Danish government reacted too slowly and non-transparently, provided insufficient information and inadequately protected Greenlandic interests. Yet, as Lidegaard argues—Denmark cannot force the US to do anything.

The fate of hundreds of workers, the Greenlandic economy and the future of the Thule Air Force Base is dependent on the United States’s and Denmark’s goodwill towards their unequal ally.



Anna-Sofia Yurtaslan, Denmark

About

Anna-Sofia Olesen Yurtaslan, a half-Dane half-Turk, is currently a public housing social worker with Gentofte Municipality in Denmark. Her work involves neighborhood development, community building and fundraising. She holds a Master of Public Policy (M.P.P.) from the Frank Batten School of Leadership & Public Policy and a B.A. in Global Development Studies from the University of Virginia. She is especially interested in South Asia, where she spent the majority of her childhood (Pakistan, Nepal & India)-- she has previously worked at the NGO-Federation of Nepalese Indigenous Nationalities (NGO-FONIN) on the topic of social inclusion of indigenous peoples in post-civil war Nepal. Anna-Sofia is passionate about displacement crises (refugees and IDPs), human rights, social justice and inequality, social inclusion, post-conflict justice mechanisms, European integration, nationalism and multiculturalism.


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