News From the
Committee on Small Business
Nydia M. Velázquez, Chairwoman

For Immediate Release
August 2, 2007  

CONTACT: Kate Gilman/ Erin Donar,  (202) 225-4038

Nearly Two Years Later, Gulf Coast Small Businesses Continue to Lose Out on Recovery Contracts
Committee presses six agencies on need to work with local entrepreneurs to rebuild the region

WASHINGTON –  It has been nearly two years since Hurricane Katrina, and despite all of the emphasis placed on the need to include local Gulf Coast small businesses in recovery efforts, the House Small Business Committee released figures today showing that the federal government has failed to do so.  The largest buying agencies in the Gulf Coast have had nearly $2 billion dollars to spend on Gulf Coast rebuilding.  However, rather than choosing to do business with the local small firms they have actually taken $55 million away from these businesses since April alone.  In a follow-up to an April field hearing in New Orleans, Members of the committee again questioned, the Department of Homeland Security (DHS), the General Services Administration (GSA), Small Business Administration (SBA), Veterans Administration (VA), and the U.S. Army Corp. or Engineers, on these recent contracting practices, and the impact it is having on the overall economic recovery of the region.

“We heard testimony from these six agency heads in April and each and everyone promised to do more work with the local small firms,” Chairwoman Nydia M. Velázquez said.  “Well here we are, four months later, and it is clear that these agencies still aren’t working with the Gulf Coast small businesses.  Instead, they are actually taking money away from these entrepreneurs, or giving small businesses low dollar work, hindering the region’s ability to fully recover even more.”

Agencies claimed to understand in April that the only way to rebuild the Gulf Coast was to fuel the local economy.  However, the contracting data since then illustrates a different picture. One of the largest buying agencies in the region, GSA, awarded three contracts that represented only .6 percent in contracting dollars toward the local small businesses, well below the statutory goal.  For DHS, over a third of their recent contracts to small businesses actually took money away from the entrepreneurs by modifying the agreement so it ultimately included less work.  To compound the problems, the committee found that all six of the agencies combined gave out $100 million in contracts that were labeled as small business, but were actually awarded to large corporations and ineligible entities.  All of these factors have resulted in lost opportunity for the Gulf Coast small businesses that not only need the work most, but are also the heaviest relied on for the rebuilding of their economy.

“From changing the contracts to take away work and money from the local entrepreneurs, to giving small business contracts to large corporations in the Gulf Coast, we have been seeing it all,” Chairwoman Velázquez said.  “These agencies need to understand that this is not about making it look like they are working with the local small businesses – it is about making the Gulf Coast small firms the centerpiece of this recovery.”

Members pressed the agencies on their failure to work with the local small businesses, and for disproportionately taking away money from the small firms that need it most.   Particular pressure was put on the agencies for incorrectly labeling contracts as small business awards, when they in fact went to large businesses. Chairwoman Velázquez stressed that Members will be holding agencies accountable for doing work with the local small businesses in the Gulf Coast, and that each entity will be required to report back to Congress on their efforts. 

“The bottom line is that unless these agencies include the local businesses – the region’s economy will never make a full recovery,” Chairwoman Velázquez said.  “I can assure you that we will continue to watch these agencies, and enforce the guidelines that they are working under in order to help the Gulf Coast fully rebuild.  Small businesses are not only the main job creators, but they are also the main drivers when it comes to economic recovery and they must be included in this process.”

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