Bush administration defends storm contracts

By HOPE YEN
THE ASSOCIATED PRESS
Posted on Fri, Aug. 03, 2007

Excerpt . . .

the review found the five agencies had claimed falsely that 259 contracts were awarded to small businesses when in fact they went to large companies or ineligible recipients. That created the false impression that more than $95 million in contracts was awarded to small companies, when the money actually went elsewhere.

WASHINGTON --
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.

"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.

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 smaller companies a share of the work. The loss was due in part to a decision at the Homeland Security Department to modify several existing agreements instead of awarding significant new contracts.

In addition, the review found the five agencies had claimed falsely that 259 contracts were awarded to small businesses when in fact they went to large companies or ineligible recipients. That created the false impression that more than $95 million in contracts was awarded to small companies, when the money actually went elsewhere.

Overall, about 7.4 percent of Katrina contracts so far have gone to small businesses in Louisiana, down from 12.5 percent in April, according to the committee.

"At this point, I would expect less lip service and more action," Velazquez said. "The testimony does not focus on specific and measurable ways to include these local small businesses in the rebuilding effort."

Paul Schneider, DHS undersecretary for management, said the department in the coming months planned to award new contracts to small or local businesses for trailer work in Louisiana and Mississippi; forklift and heavy equipment rental in disaster affected areas in Alabama and Mississippi; and public water and sewer infrastructure in New Orleans.

He also contended that small businesses in Louisiana actually did not lose $8.9 million in contracting dollars since April due to contract modifications. He explained the initial contracts were for maximum dollar values, and DHS ended the contracts early once the work was done.

That drew an impatient response from Rep. Charlie Gonzalez, D-Tex., who said DHS tries to have it both ways. Officials often tout they have awarded contracts to small business with figures based on the maximum dollar amount, only to quietly reduce the payments later.

Don't misrepresent, Gonzales warned: "We're putting 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 whttp://www.blogger.com/img/gl.link.gifere 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.

Read original article here.

Return to A.M. in the Morning! Home