Disaster Recovery

This testimony discusses small business participation in Gulf Coast rebuilding after Hurricanes Katrina and Rita. Federal agencies directly awarded $20.5 billion in contracts nationwide between fiscal years 2005 and 2011 for recovery efforts related to these hurricanes. These contracts are subject to federal procurement regulations and, in most cases, are generally subject to certain goals to increase participation by small businesses. This statement is based on a report we issued in July 2010, which discussed the extent to which Gulf Coast small businesses received federal contract funds for recovery efforts, with data on contract funds updated through fiscal year 2011 where possible. More specifically, the statement discusses (1) the amounts that small businesses nationwide and small businesses in four Gulf Coast states received directly from federal agencies through contracts for relief and recovery efforts related to Hurricanes Katrina and Rita; and (2) the extent to which four agencies--the U.S. Army Corps of Engineers (Corps), Department of Homeland Security (DHS), Department of Defense (DOD) excluding the Corps, and General Services Administration (GSA)--monitored subcontracting accomplishment information as required for selected contracts.

Small businesses located in four Gulf Coast states (Alabama, Florida, Louisiana, and Texas) received about $2.7 billion (13.3 percent) of the $20.5 billion federal agencies directly awarded nationwide in contracts for hurricane recovery between fiscal years 2005 and 2011. Small businesses in the rest of the United States received about $2.6 billion (12.9 percent). The Corps and the rest of DOD--two of four agencies that awarded the most in federal contracts for hurricane recovery--could not demonstrate that they consistently were monitoring subcontracting accomplishment data for 13 of the 43 construction contracts for which subcontracting plans were required. We recommended that the Secretary of Defense take steps to ensure that contracting officials with the Corps and other DOD departments consistently comply with requirements to monitor the extent to which contractors were meeting subcontracting plan goals. DOD did not concur with the implication that its contracting personnel did not enforce requirements. We recently received information from both DOD and the Corps that indicates that they have initiated actions to address our recommendation.