Bush Administration Defends Contracting for Hurricane Recovery Work

The Bush administration on Thursday defended its efforts to award lucrative government contracts to small, Gulf Coast businesses for Hurricane Katrina recovery work, and pledged improvement in the coming months.

In a sometimes testy congressional hearing, officials from five government agencies said they were proud of efforts to award work to small companies. But they acknowledged more could be done for small companies specifically in the Gulf Coast region and pleaded for patience.

"I fully expect the numbers to improve," said Lurita Doan, administrator of the Government Services Administration, noting that significant federal contract spending often occurs at the end of the fiscal year in September.

"I would appreciate the opportunity to come back," she said.

"You will," responded Rep. Nydia Velazquez, D-N.Y., who chairs the House Small Business Committee.

Doan joined officials from Homeland Security, Defense, Veterans Affairs and the Small Business Administration who testified Thursday after the committee released an analysis that showed the agencies had made little progress — and in some cases backtracked — on their pledge to do a better job of helping small, local businesses after the 2005 hurricane.

The committee's review found that small businesses in Louisiana had an overall net loss of $8.9 million in contracting dollars since April, when the agencies reaffirmed their commitment to give smg people on notice."

For many weeks after the 2005 hurricane, small and local companies were shut out of Katrina work in favor of large concerns with extensive government and political ties. Following public criticism, Homeland Security's Federal Emergency Management Agency pledged to rebid four large trailer contracts and give the work to small companies.

FEMA ultimately rebid only portions of the work. Government investigators later found FEMA did not take adequate legal steps to ensure that the new companies were small and locally operated, resulting in a questionable contract award to a large company with ties to the Republican Party.

Since then, Homeland Security has handed out 43 new contracts worth nearly $12 million to large companies or ineligible recipients. In contrast, it modified contracts to small Gulf Coast companies, resulting in a contract loss of $9 million in Louisiana.

In addition, 106 contracts worth $13 million were miscoded by DHS as going to small businesses, when in fact they were not. That's up from 61 contracts found by the committee in April.

The committee findings come amid renewed focus on potential favoritism and abuse in billions of dollars of government contracts — from Katrina to Iraq reconstruction.