FEMA breaks promise on Katrina contracts

Criticism from Sen. Kerry
“The administration has promised to help local and small businesses get contracts to help rebuild the Gulf Coast, but they keep letting them down,” said Sen. John Kerry of Massachusetts, top Democrat on the Committee on Small Business and Entrepreneurship.

On Thursday, Kerry sent a letter to Paulison that called for quicker action in ensuring small businesses get “their fair share of reconstruction contracts.”

FEMA had promised last October to boost the number of contracts given to small and minority businesses, partly by setting aside up to $1.5 billion worth of work to maintain trailers housing Katrina evacuees. It said those contracts would be awarded by Feb. 1.

Yet those 15 contracts — eight of which are designated for minority-owned businesses — have yet to be awarded due to the high volume of applications, according to Widomski. He said the agency hoped to announce the winners by early next month.

Contracts for minority-owned businesses
Since October, the percentage of FEMA contracts given to minority-owned businesses has increased slightly, from 1.5 percent to 2.4 percent of the $5.1 billion awarded. Some 5 percent of federal contracts normally are set aside for minority-owned firms.

“The department must step up to the plate,” said Mississippi Rep. Bennie Thompson, the top Democrat on the House Homeland Security Committee. “It has a long way to go and it should have begun the journey yesterday.”

On Oct. 6, acting FEMA chief Paulison declared he was “no fan of no-bid contracts” and pledged in a congressional hearing to reopen the four deals. But after the firms complained they hadn’t been told, officials with the Homeland Security Department — which oversees FEMA — pushed the timeframe back to February.

Widomski said FEMA now will allow the four major firms to complete their Katrina work. FEMA, meanwhile, has posted advertisements for multiyear contracts for relief work in coming hurricane seasons, with awards expected by June.

Those contracts will not be prioritized for small or minority-owned businesses, but winners of the deals must submit written plans detailing efforts to award 40 percent of their subcontracts to small businesses.

“It makes good sense to get the contracts in place in a well-thought out way,” Widomski said.

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