Hurricane Katrina: Agency Contracting Data Should Be More	 
Complete Regarding Subcontracting Opportunities for Small	 
Business (12-APR-07, GAO-07-698T).				 
                                                                 
In response to Hurricane Katrina, the Departments of Homeland	 
Security (DHS) and Defense (DOD), the General Services		 
Administration (GSA), and the U.S. Army Corps of Engineers	 
(Corps) were responsible for over 90 percent of the federal funds
awarded for relief efforts via contracting as of March 2007. GAO 
initiated work and completed a report under the Comptroller	 
General's authority last month describing the extent to which	 
small businesses participated in these contracting opportunities.
This testimony, which summarizes information from that report,	 
discusses (1) the amounts that small and local businesses	 
received directly from contracts with DHS, GSA, DOD, and the	 
Corps for relief and recovery efforts related to Hurricane	 
Katrina and (2) the extent to which small businesses received	 
subcontracts for relief and recovery efforts.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-698T					        
    ACCNO:   A68105						        
  TITLE:     Hurricane Katrina: Agency Contracting Data Should Be More
Complete Regarding Subcontracting Opportunities for Small	 
Business							 
     DATE:   04/12/2007 
  SUBJECT:   Contract administration				 
	     Data collection					 
	     Data integrity					 
	     Federal procurement				 
	     Federal procurement policy 			 
	     Federal regulations				 
	     Government information				 
	     Hurricane Katrina					 
	     Procurement regulations				 
	     Reporting requirements				 
	     Small business					 
	     Small business contractors 			 
	     Small business contracts				 
	     Subcontractors					 

******************************************************************
** This file contains an ASCII representation of the text of a  **
** GAO Product.                                                 **
**                                                              **
** No attempt has been made to display graphic images, although **
** figure captions are reproduced.  Tables are included, but    **
** may not resemble those in the printed version.               **
**                                                              **
** Please see the PDF (Portable Document Format) file, when     **
** available, for a complete electronic file of the printed     **
** document's contents.                                         **
**                                                              **
******************************************************************
GAO-07-698T

   

     * [1]Background
     * [2]Small Businesses Received Varied Amounts of the Contracting
     * [3]Information on Subcontracting Accomplishments and Plans Was

          * [4]Subcontracting Accomplishment Information Was Not Consistent
          * [5]Information on Subcontracting Plan Requirements Was Missing

     * [6]Contacts and Acknowledgments
     * [7]GAO's Mission
     * [8]Obtaining Copies of GAO Reports and Testimony

          * [9]Order by Mail or Phone

     * [10]To Report Fraud, Waste, and Abuse in Federal Programs
     * [11]Congressional Relations
     * [12]Public Affairs

Testimony

Before the Committee on Small Business, House of Representatives

United States Government Accountability Office

GAO

For Release on Delivery Expected at 2:00 p.m. CDT
Thursday, April 12, 2007

HURRICANE KATRINA

Agency Contracting Data Should Be More Complete Regarding Subcontracting
Opportunities for Small Businesses

Statement of William B. Shear, Director, Financial Markets and Community
Investment

GAO-07-698T

Madam Chairwoman and Members of the Committee:

I am pleased to be here in New Orleans to discuss small business
participation in the rebuilding of the Gulf Coast in the aftermath of
Hurricane Katrina. As of March 2007, the Departments of Homeland Security
(DHS) and Defense (DOD), the U.S. Army Corps of Engineers (Corps), and the
General Services Administration (GSA) accounted for over 90 percent of the
federal funds awarded for relief efforts through contracting.^1 The
agencies were to use the funds to, among other things, award contracts for
a range of services related to hurricane relief and recovery.

My statement today is based on a report we issued in March 2007, which
discussed the amounts that small businesses received through prime
contracts and subcontracts related to Hurricane Katrina.^2 In my
testimony, I will discuss (1) the amounts that small and local businesses
received directly from federal agencies through contracts for relief and
recovery efforts related to Hurricane Katrina, and (2) the extent of
subcontracting by selected large prime contractors and the lack of
required information in official procurement data systems on
subcontracting accomplishments and plans.

To address these objectives, we analyzed data on contracts awarded or used
by DHS, GSA, DOD, and the Corps for Katrina-related projects overall, and,
specifically for projects in Alabama, Louisiana, and Mississippi from
August 1, 2005, through June 30, 2006. We identified contracts that were
used for activities related to Hurricane Katrina and that required
subcontracting plans. We also interviewed officials from each of the four
agencies, the Small Business Administration (SBA), and the Office of
Management and Budget (OMB). We conducted our work between March 2006 and
February 2007 in accordance with generally accepted government auditing
standards.

^1We are reporting on the Corps and the rest of DOD separately because, of
the four supplemental appropriations measures for Department of Defense
activities relating to Hurricane Katrina relief (Pub. L. Nos. 109-61,
109-62, 109-148, and 109-234), the latter three specifically directed
certain funds to the Corps for its disaster relief activities.

^2GAO, Hurricane Katrina: Agency Contracting Data Should Be More Complete
Regarding Subcontracting Opportunities for Small Businesses,
[13]GAO-07-205 (Washington, D.C., Mar. 1, 2007).

In summary:

Small businesses received 28 percent of the $11 billion in contracting
dollars DHS, GSA, DOD, and the Corps awarded directly for relief and
recovery from Hurricane Katrina. DHS awarded the highest dollar amount to
small businesses (about $1.6 billion), and GSA awarded the highest
percentage of its Katrina-related contracting dollars directly to small
businesses (72 percent of about $658 million). Small businesses received
approximately 66 percent of the $1.9 billion awarded by the four agencies
to businesses in Alabama, Mississippi, and Louisiana.

Information on whether DHS and GSA required subcontracting plans was
generally not available in the federal government's official procurement
database for more than 70 percent of the contracting dollars each agency
awarded for activities related to Hurricane Katrina. This database should
have contained information on whether or not the agencies required
subcontracting plans in these instances. When the database did contain
information on whether or not agencies required the plans, we found
additional information about them that was incomplete. Specifically, the
four agencies we reviewed varied in their determinations that
subcontracting plans were not required from their large prime contractors,
ranging from 12 percent (GSA) to 77 percent (DOD) of their Katrina-related
contracting dollars. Information on the agencies' reasons for not
requiring these plans, which should have been readily available, was
incomplete.

In order to more transparently disclose the extent to which subcontracting
opportunities are available to small businesses, we recommended that DHS,
GSA, and DOD (1) issue guidance reinforcing the need for agencies to
document in publicly available sources their decisions regarding
subcontracting plan requirements, and (2) consider asking their Inspectors
General to conduct reviews to ensure that this guidance and related
requirements are being followed. The agencies generally agreed with our
recommendations and described various steps they are taking to implement
them. We plan to follow up with the agencies on their efforts to implement
these recommendations.

Background

When the President declares a state of emergency after a natural or other
major disaster, the declaration gives the federal government the authority
to engage in various emergency response activities, many of which federal
agencies provide through contracts with private businesses.^3 Such
activities include debris removal, temporary housing assistance,
reconstruction, and the provision of supplies. These contracts are subject
to federal procurement regulations and to the Stafford Act, which, among
other things, sets forth requirements for the federal response to
presidentially declared disasters. A provision of the Stafford Act
requires federal agencies to give contracting preferences, to the extent
feasible and practicable, to organizations, firms, and individuals
residing or doing business primarily in the area affected by a major
disaster or emergency.^4

Federal agencies' contracts with private businesses, whether made in the
normal course of agency operations or specifically related to a natural
disaster declaration, are, in most cases, subject to certain goals to
increase participation by various types of small businesses. The Small
Business Act, as amended, defines a small business generally as one that
is "independently owned and operated and that is not dominant in its field
of operation."^5 In addition, a business must meet the size standards
published by SBA to be considered "small." The act sets a governmentwide
goal for small business participation of not less than 23 percent of the
total value of all prime contract awards--contracts that are awarded
directly by an agency--for each fiscal year.^6

The general rules governing procurement are set out in federal procurement
statutes and in the Federal Acquisition Regulation (FAR). Among other
things, these rules require that any business receiving a prime contract
for more than the simplified acquisition threshold^7 must agree to give
small business the "maximum practicable opportunity" to participate in the
contract.^8 Additionally, for contracts (or modifications to contracts)
that (1) are individually expected to exceed $500,000 ($1 million for
construction contracts) and (2) have subcontracting possibilities, the
prime contractor generally must have in place a subcontracting plan.^9
This plan must identify the types of work the prime contractor believes it
is likely to award as subcontracts and the percentage of subcontracting
dollars it expects to direct to the specific categories of small
businesses for which the Small Business Act sets specific goals.^10

3See Robert T. Stafford Disaster Relief and Emergency Assistance Act
(Stafford Act), Pub. L. No. 93-288, as amended, 42 U.S.C. SS 5121 - 5204c.

^442 U.S.C. S 5150.

^5Public Law 85-536, as amended, 15 U.S.C. S 632(a).

^615 U.S.C. S 644(g).

^7FAR section 201.1 defines "simplified acquisition threshold" to mean
$100,000, except when the acquisition of supplies or services is used to
support a contingency operation or facilitate defense against nuclear,
biological, chemical, or radiological attack. In those instances, the term
means $250,000 for contracts to be awarded and performed inside the United
States and $1 million for contracts to be awarded and performed outside
the United States.

When they award contracts, federal agencies collect and store procurement
data in their own internal systems--typically called contract writing
systems. The FAR requires federal agencies to report the information about
procurements directly to the Federal Procurement Data System-Next
Generation (FPDS-NG), GSA's governmentwide contracting database, which
collects, processes, and disseminates official statistical data on all
federal contracting activities of more than $2,500.^11 This system
automatically obtains from other systems or online resources additional
information that is important to the procurement, such as the contractor's
location. According to GSA, nearly all civilian agencies have directly
linked their contract writing systems to FPDS-NG so that information about
their contracting activities is available in "real time." DOD also reports
its contracting information to FPDS-NG via its system, DD-350, but GSA
does not publicly reveal these data for 90 days due to security
considerations.

^8FAR S 19.702.

^9Id. The dollar threshold was changed to $550,000 on September 28, 2006.
71 Fed. Reg. 57363 (Sept. 28, 2006).

^10These and other aspects of the small business subcontracting plan
requirement are set forth at FAR Part 19.7.

^11The FPDS-NG reporting threshold in FAR 4.602(c) was raised from $2,500
to $3,000. 71 Fed. Reg. 57,364 (Sept. 28, 2006).

Small Businesses Received Varied Amounts of the Contracting Dollars That DHS,
GSA, DOD, and the Corps Awarded

Our March 2007 report identified the extent to which DHS, GSA, DOD, and
the Corps awarded funds directly to small businesses; the extent to which
different types of small businesses received funds; and, the extent to
which small businesses located in Alabama, Mississippi, and Louisiana
received funds for Katrina-related projects. We found that small
businesses received 28 percent of the $11 billion that DHS, GSA, DOD, and
the Corps awarded for Katrina-related projects, but the percentages varied
among the four agencies (fig. 1).^12 Assessed individually, DHS awarded
the highest dollar amount to small businesses--about $1.6 billion
dollars--and GSA awarded the highest percentage of its dollars to small
businesses--72 percent of about $658 million.

Figure 1: Amount and Percentage of Katrina-Related Contract Dollars
Awarded to Businesses by DHS, GSA, DOD, and the Corps

Note: Dollars are rounded to the nearest hundred thousand and percentages
were calculated from unrounded numbers.

Among categories of small businesses, small disadvantaged businesses
received 24 percent of the approximately $3 billion that the four agencies
awarded to small businesses. Other categories of small businesses,
including women- and veteran-owned businesses and businesses located in
historically underutilized business zones (HUBZones)^13, received from 2
to 16 percent (fig. 2). Contracting dollars awarded directly to businesses
can be counted in more than one category, so the dollars awarded to
various types of small businesses are not mutually exclusive.

^12Each of the agencies we reviewed establishes annual goals for small
business participation. Among the agencies, these goals ranged from 23 to
45 percent in fiscal years 2005 and 2006.

Figure 2: Dollar Amount of Katrina-Related Prime Contracts Awarded to
Small Businesses by Socioeconomic Group

Note: Percentages cannot be totaled across columns because under SBA
Guidelines, contracting dollars awarded directly to businesses can be
counted in more than one category--for example, a small disadvantaged
business owned by a woman can be counted as both disadvantaged and
women-owned. Dollars are rounded to the nearest hundred thousand and
percentages were calculated from unrounded numbers.

^aThe service-disabled category is a subset of the veteran-owned business
category.

Small businesses in Alabama, Mississippi, and Louisiana received 66
percent of the $1.9 billion in Katrina-related contracting dollars awarded
to local businesses by the four agencies we reviewed. Among the three
states, the proportion of Katrina-related contracting dollars awarded to
small businesses was largest in Mississippi (75 percent), followed by
Alabama and Louisiana at 65 percent and 62 percent, respectively, of the
dollars awarded (table 1). While small businesses in Louisiana received
the smallest proportion of these Katrina-related dollars, the actual
amount the businesses received was nearly double what small businesses
received in Mississippi. In general, these small local businesses received
contracting dollars directly from the four agencies to provide trailers,
administrative and service buildings, restoration activities, and other
supportive services.

^13HUBZones are economically distressed metropolitan or nonmetropolitan
areas--that is, areas with low-income levels or high unemployment
rates--and must employ some staff who live in those zones. See 15 U.S.C. S
632.

Table 1: Small Businesses Received the Majority of Contracting Dollars
Awarded Directly to Local Businesses

Dollars in                                                                             
millions                                                                               
                Alabama                   Louisiana                 Mississippi
          All         Small          All         Small          All         Small
       businesses   businesses    businesses   businesses    businesses   businesses
           Dollar Dollar              Dollar Dollar              Dollar Dollar         
Agency     amount amount Percent      amount amount Percent      amount amount Percent 
DHS^a        $160   $119     75%        $460   $345     75%        $138   $138    100% 
GSA            77     72      92          48     26      54         210    194      92 
DOD            10     10      98           7      6      89          45      9      20 
Corps          84     16      19         609    320      53         114     42      36 
Total        $331   $217     65%      $1,124   $697     62%        $508   $383     75% 

Source: FPDS-NG and DD-350 data on contract actions awarded between August
1, 2005 and June 30, 2006.

Note: Dollars are rounded to the nearest million and percentages were
calculated from unrounded numbers.

^aDHS data are missing information on the contractor's state for 3.5
percent of its records. Where possible, GAO used available information on
the contractor's city and place of performance to identify the state in
which the contractor was located.

Information on Subcontracting Accomplishments and Plans Was Incomplete

Our March 2007 report also included information on the extent to which
small businesses received subcontracts from DHS and GSA prime contractors,
and selected military prime contractors, that were awarded Katrina-related
contracts. The report described the accomplishments that these prime
contractors reported, identified certain instances where accomplishment
data was not available because contractors had not submitted it, and also
identified two key ways in which necessary information on subcontracting
plan requirements was incomplete.

Subcontracting Accomplishment Information Was Not Consistently Available for
Some DHS and GSA Contracts Related to Hurricane Katrina

Contractors that have individual subcontracting plans are generally
required to report on their subcontracting goals and accomplishments twice
a year to the federal government. However, we found that this information
was not consistently available for some DHS and GSA contracts. For the
military contracts we analyzed, accomplishment data were available.

For DHS, in response to our inquiries, agency officials researched
contracts that appeared to meet the regulatory criteria for requiring a
subcontracting plan (i.e., awarded to a large business for over $500,000
or $1,000,000 for construction) but which FPDS-NG indicated either did not
require a subcontracting plan or the system was missing information on a
plan requirement altogether. For every contract that an agency awards, the
agency is required to indicate in FPDS-NG whether a subcontracting plan is
required. These officials found that subcontracting plans were, in fact,
required for seven contracts, but that this had not been entered into
FPDS-NG. DHS officials determined that subcontracting accomplishment
information was available on four of the seven contracts.^14 For these
four contracts, the contractors reported awarding from 14 to 83 percent of
their subcontracting dollars, which ranged from $154 to $520 million, to
small businesses as of March 31, 2006. For the remaining three contracts,
subcontracting information was not available either because the prime
contractor had not, as required, reported subcontracting accomplishment
information to the electronic subcontracting reporting system (eSRS) as of
March 31, 2006, or the contractor was not required to report on individual
contracts.^15

For GSA, information was generally unavailable on the subcontracting
accomplishments associated with the 11 contracts (worth a total of about
$9.6 million) that the agency awarded to large businesses for
Katrina-related activities and that included subcontracting plans.
According to agency officials, subcontracting accomplishment information
was not available because contractors had failed to report it, the data
had not been finalized, or, in one case, the contractor had reported
aggregated figures for both Katrina-related and other subcontracts.

^14The FPDS-NG data for DHS initially showed that a subcontracting plan
was required for two contracts the department awarded for Katrina-related
activities which we could not find in eSRS. DHS officials subsequently
researched these contracts and determined that neither required a
subcontracting plan--one was an award to a small business (for which the
requirement does not apply) and the other indicated that there were no
subcontracting possibilities.

^15One of the contracts DHS awarded was for a commercial item. For
commercial item contracts, contractors are only required to annually
report on their subcontracting activities for all of their government
contracts. These annual reports do not identify subcontracting activities
by individual contracts.

We reviewed 4 of the top 10 recipients of prime contracting dollars from
DOD and the Corps for projects related to Hurricane Katrina.^16 Together,
these 10 contractors accounted for 60 percent of these agencies' prime
contracting dollars. Of these top 10 recipients, only 4 received contracts
that were strictly for Hurricane Katrina-related projects and were
required to submit small business subcontracting plans for these
projects.^17 These 4 contractors were large businesses and received eight
contracts from the Corps that accounted for $928 million of the Corps'
contracting dollars as of March 31, 2006.^18 In accordance with federal
requirements for reporting of subcontracting information, the contractors
reported the amounts they subcontracted to businesses by business size and
type. According to the reports submitted for the period ending March 31,
2006, these 4 contractors awarded from 88 to 100 percent of their
subcontracting dollars to small businesses, or from about $11,000 to $201
million.^19 According to their subcontracting plans, the 4 contractors we
reviewed intended to use subcontractors to assist with a variety of
clean-up and repair activities, including excavation, debris removal, and
temporary roofing installation.

^16Because DOD does not electronically aggregate information on the
subcontracting accomplishments of all military contractors, we chose to
look at the top 10 military contractors.

^17Four prime contractors were not required to identify subcontracting
opportunities because they were small businesses or the contract lacked
subcontracting possibilities. Under FAR, a contract is not required to
have a subcontracting plan if, among other things, the contract is with a
small business or if no subcontracting possibilities exist. See FAR SS
19.702(b)(1), 19.705-2(b). Of the remaining six contractors, two had
contracts for both Katrina and other activities, and we excluded these
contractors from our analysis because we could not isolate only the
Katrina-related subcontracting accomplishments using the information that
was available.

^18The four contractors received a total of 15 contracts from the Corps,
but we excluded 7 from our analysis because they either had
non-Katrina-related actions against them or were not required to include
subcontracting plans.

^19We analyzed subcontracting awards to small businesses as of a specific
point in time. However, these contracts may extend past March 31, 2006.
Subcontracting accomplishments may vary over time if the amount prime
contractors award to all businesses, and small businesses specifically,
changes over the life of a contract.

Information on Subcontracting Plan Requirements Was Missing or Incomplete

In two respects, key information on small business subcontracting plans
was not consistently available in official procurement data systems for
the four agencies. First, primarily with respect to DHS and GSA contract
actions, the official procurement data system had no information at all on
whether or not they required subcontracting plans for 70 percent or more
of their contracting funds. For DOD and the Corps, this system lacked
information on whether they required subcontracting plans for one percent
of their contracting funds. Table 2 shows the total amounts each agency
awarded to large businesses for contracts valued over $500,000 and the
extent to which no information was available in the official procurement
data system on whether the agencies required subcontracting plans for
those contracts (column 6).

Table 2: Subcontracting Plan Requirements by Dollar Amount Awarded

  Dollars in millions                                                   
                                                                    Percent of
                                                    Percent of     total amount
              Total   Percent of     Percent of    total amount    awarded and
             amount  total amount   total amount    awarded and   dollar amount
         awarded to  awarded and    awarded and    dollar amount     with no
              large dollar amount  dollar amount  reported as not information on
         businesses  requiring a      with no       requiring a   subcontracting
               over subcontracting subcontracting subcontracting       plan
  Agency $500,000^a      plan      possibilities       plan        requirements
  DHS      $4,866.2   1%     $27.2    0%    $16.3    29% $1,406.0   70% $3,416.7 
  GSA         127.1    7       8.9     4      4.7     12     15.1    77     98.4 
  DOD         631.2   22     141.4     0       77  483.6        1   6.2          
  Corps    $2,468.7  76%  $1,880.1    0%      23% $574.5       1% $14.1          

Source: GAO analysis of FPDS-NG and DD-350 data for contract actions
awarded between August 1, 2005, and June 30, 2006.

Note: Dollars are rounded to the nearest hundred thousand and percentages
were calculated from unrounded numbers.

^aOne million dollars for construction.

Second, the four agencies' systems showed that the agencies had determined
that subcontracting plans were not required for contracts representing 12
to 77 percent of the dollars they awarded to large businesses for
Katrina-related projects. Agencies are required to document their reasons
for these determinations. However, information on the four agencies'
reasons for not requiring these plans, which should have been readily
available, was incomplete.

Overall, procurement officials from the four agencies were able to explain
some of the missing or incomplete subcontracting plan information by, for
example, identifying data entry errors or providing evidence of reasons
for not requiring the subcontracting plans. For example, DHS officials
determined that $545 million of the DHS contracting funds the procurement
data system showed as not requiring a plan had been miscoded and should
have been entered in the procurement system under a different category,
showing that the contracts offered "no subcontracting possibilities." In
another instance, GSA officials did not require a subcontracting plan for
a $26 million contract for ice because they believed the urgency of the
situation required buying and shipping the ice faster than normal
procedures would allow. Nonetheless, at the time we issued our report
contracting dollars remained for each agency with incomplete
subcontracting plan information and which agency officials had not been
able to explain. These amounts ranged from $3.3 million for DOD (excluding
the Corps) to $861 million for DHS.

In our report, we concluded there was little doubt that Hurricane Katrina
posed challenges to the agencies to award contracts quickly while still
following government procurement rules, especially those regarding
subcontracting plans. Certain choices, such as documenting compliance with
these requirements at a later date (something GSA and DOD officials
indicated was the case), might have been understandable. Nonetheless, more
than a year after the hurricane, we reported that a substantial amount of
information about the four agencies' subcontracting requirements remained
incomplete. Conclusively demonstrating compliance with the rules about
subcontracting plans is important for reasons beyond just documentation.
By requiring these plans, agencies commit prime contractors to specific
goals for providing opportunities to small businesses and give themselves
tools--incentives as well as sanctions--that they can use to ensure the
contractors engage in good faith efforts to meet their small business
subcontracting goals. In doing so, the agencies ensure compliance with
federal procurement regulations and that small businesses have all of the
practical opportunities to participate in federal contracts that they are
supposed to have. Because so much key information about subcontracting
plans was incomplete in federal procurement data systems and, at the
conclusion of our review, remained unresolved, we cannot tell the extent
to which the agencies are complying with the regulations. Furthermore, the
lack of transparency surrounding much of the agencies' subcontracting
data--missing information on plans when contracts appear to meet the
criteria for having them--may lead to unwarranted perceptions about how
the federal procurement system is working, particularly in terms of the
government's stated preference for contracting with small businesses.

Therefore, to ensure compliance with federal contracting regulations and
more transparently disclose the availability of subcontracting
opportunities for small businesses, we recommended that the Secretaries of
Homeland Security and Defense and the Administrator of General Services
issue guidance reinforcing, among other things, the necessity for
documenting in publicly available sources the agencies' decisions,
particularly in instances when the agencies decided not to require
subcontracting plans. Moreover, we recommended that the agencies consider
asking their respective Inspectors General to conduct a review to ensure
that this guidance and related requirements were being followed.

The agencies generally agreed with our recommendations and are taking
steps to address them. For example, GSA officials recently told us the
agency's Chief Acquisition Officer will soon issue two "acquisition
alerts" reminding contracting officers of the importance of subcontracting
plan requirements as well as the documentation associated with complying
with the requirements. Army Corps of Engineers officials told us they are
currently developing a new training module on these topics and expect to
deliver it to their contracting officers this summer.

Madam Chairwoman, this concludes my prepared statement. I would be happy
to answer any questions at this time.

Contacts and Acknowledgments

For further information on this testimony, please contact William B. Shear
at (202) 512-8678 or [email protected] . Individuals making key
contributions to this testimony included Bill MacBlane, Assistant
Director; Emily Chalmers; Julia Kennon; Tarek Mahmassani; Lisa Moore; Paul
Thompson; and, Bill Woods.

This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed in
its entirety without further permission from GAO. However, because this
work may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this material
separately.

GAO's Mission

The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting its
constitutional responsibilities and to help improve the performance and
accountability of the federal government for the American people. GAO
examines the use of public funds; evaluates federal programs and policies;
and provides analyses, recommendations, and other assistance to help
Congress make informed oversight, policy, and funding decisions. GAO's
commitment to good government is reflected in its core values of
accountability, integrity, and reliability.

Obtaining Copies of GAO Reports and Testimony

The fastest and easiest way to obtain copies of GAO documents at no cost
is through GAO's Web site ( www.gao.gov ). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site. To
have GAO e-mail you a list of newly posted products every afternoon, go to
www.gao.gov and select "Subscribe to Updates."

Order by Mail or Phone

The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent of
Documents. GAO also accepts VISA and Mastercard. Orders for 100 or more
copies mailed to a single address are discounted 25 percent. Orders should
be sent to:

U.S. Government Accountability Office 441 G Street NW, Room LM Washington,
D.C. 20548

To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061

To Report Fraud, Waste, and Abuse in Federal Programs

Contact:

Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail:
[email protected] Automated answering system: (800) 424-5454 or (202)
512-7470

Congressional Relations

Gloria Jarmon, Managing Director, [email protected] (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125 Washington,
D.C. 20548

Public Affairs

Paul Anderson, Managing Director, [email protected] (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548

www.gao.gov/cgi-bin/getrpt?GAO-07-698T.

To view the full product, including the scope
and methodology, click on the link above.

For more information, contact William B. Shear at (202) 512-8678 or
[email protected].

Highlights of GAO-07-698T, a testimony before the Committee on Small
Business, House of Representatives

April12, 2007

HURRICANE KATRINA

Agency Contracting Data Should Be More Complete Regarding Subcontracting
Opportunities for Small Businesses

In response to Hurricane Katrina, the Departments of Homeland Security
(DHS) and Defense (DOD), the General Services Administration (GSA), and
the U.S. Army Corps of Engineers (Corps) were responsible for over 90
percent of the federal funds awarded for relief efforts via contracting as
of March 2007.

GAO initiated work and completed a report under the Comptroller General's
authority last month describing the extent to which small businesses
participated in these contracting opportunities. This testimony, which
summarizes information from that report, discusses (1) the amounts that
small and local businesses received directly from contracts with DHS, GSA,
DOD, and the Corps for relief and recovery efforts related to Hurricane
Katrina and (2) the extent to which small businesses received subcontracts
for relief and recovery efforts.

[21]What GAO Recommends

GAO recommended in its March 2007 report that DHS, GSA, and DOD take steps
designed to ensure compliance with federal contracting regulations and
more transparently disclose the extent to which subcontracting
opportunities are available to small businesses. These agencies generally
agreed with GAO's recommendations.

Small businesses received a total of 28 percent of the $11 billion in
contracting dollars that DHS, GSA, DOD, and the Corps directly awarded in
response to Hurricane Katrina between August 2005 and June 2006 (see fig.
below). DHS awarded the highest dollar amount to small businesses (about
$1.6 billion) and GSA awarded the highest percentage of its
Katrina-related contracting dollars directly to small businesses (72
percent of about $658 million). Small businesses in Alabama, Mississippi,
and Louisiana received 66 percent of the $1.9 billion awarded to
businesses in these states.

Required information on small business subcontracting was not consistently
available in official procurement data systems for the four agencies we
reviewed. For example, the systems had no information on whether DHS or
GSA required small business subcontracting plans for 70 percent or more of
their contracting funds. In addition, the four agencies often did not
provide or document reasons for their determinations that plans were not
required, even though federal rules require such documentation when prime
contracts meet criteria for having these plans. Incomplete information
about subcontracting limited GAO's ability to determine the extent to
which agencies complied with contracting rules and gave small businesses
maximum opportunities to win subcontracts.

Percentage of Katrina-Related Contract Dollars Awarded to Small
Businesses, by DHS, GSA, DOD, and the U.S. Army Corps of Engineers

References

Visible links
  13. http://www.gao.gov/cgi-bin/getrpt?GAO-07-205
  14. file:///home/webmaster/infomgt/d07698t.htm#mailto:[email protected]
  15. http://www.gao.gov/
  16. http://www.gao.gov/
  17. http://www.gao.gov/fraudnet/fraudnet.htm
  18. file:///home/webmaster/infomgt/d07698t.htm#mailto:[email protected]
  19. file:///home/webmaster/infomgt/d07698t.htm#mailto:[email protected]
  20. file:///home/webmaster/infomgt/d07698t.htm#mailto:[email protected]
*** End of document. ***