Government to Redistribute Katrina Contracts The Bush administration is preparing to rebid some contracts awarded after Hurricane Katrina, and offer the work to minority-owned and small businesses. The move comes after complaints that too few federal dollars and jobs are flowing where they are most needed.
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Government to Redistribute Katrina Contracts

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Government to Redistribute Katrina Contracts

Government to Redistribute Katrina Contracts

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STEVE INSKEEP, host:

The Bush administration is preparing to rebid some contracts awarded hastily after Hurricane Katrina and offer the work to minority and small disadvantaged businesses. It's responding to complaints that too few federal dollars and jobs are flowing to the companies and people that need them most. Here's NPR's Kathleen Schalch.

KATHLEEN SCHALCH reporting:

Hattiesburg, Mississippi, is 80 miles inland, but it lay right in Hurricane Katrina's path, and it's still digging out. On 19th Street, a small tractor with a jawlike appendage scoops up a pile of sticks and an ornamental iron railing.

(Soundbite of tractor)

SCHALCH: Andrew Jenkins wishes his company were helping to clean this mess up. He's president of AJA Management and Technical Services based in Jackson, Mississippi. Ever since the hurricane, he's been trying to market his company's services.

Mr. ANDREW JENKINS (President, AJA Management and Technical Services): We've been to Baton Rouge, we've been to New Orleans, we've been to Gulfport, we've been to Hattiesburg, we've been to Laurel. We visited five or six different areas looking for opportunities and just haven't had any luck.

SCHALCH: The big debris removal contract for Mississippi, worth more than a half a billion dollars, went to a Florida-based company called AshBritt. Jenkins registered with them, hoping to land a subcontract but never got a call back. And even if he gets an offer, he's not sure it would be worth it. He says prime contractors often collect $20 to remove a cubic yard of debris. Then they hire a subcontractor who hires another subcontractor.

Mr. JENKINS: And then that guy sometimes subs it out to somebody for $3 a yard. And the $3-a-yard guy is the one doing all the work. Sure, they are, minority contractors getting some work, but when you don't have any profit left in the job, I mean, it's really just a disadvantage, almost like slavery. I mean, they're working for nothing, basically, what it boils down to.

SCHALCH: Jenkins says it's a missed opportunity, not only for businesses like his but for the whole region.

Mr. JENKINS: Because we're local and the local dollar turns over in the economy at least probably 10 times, whereas a company from Florida or from California or someplace like that, it turns over one time in the community and they take the profit and go back to California or go back to Florida or wherever they came from.

SCHALCH: Similar complaints have echoed around the Gulf states and on Capitol Hill. Mississippi Democrat Bennie Thompson says, so far, only 1.8 percent of FEMA's contracts for Mississippi have gone to companies from Mississippi. He says under the Stafford Act, which sets rules for federal assistance after a disaster, this shouldn't happen.

Representative BENNIE THOMPSON (Democrat, Mississippi): The Stafford Act says that, to the extent possible, local businesses are supposed to receive preference.

SCHALCH: Five percent of federal contracts are supposed to go to small, disadvantaged businesses and minority-owned businesses. FEMA's Katrina contracts have missed this target by more than a percentage point. New York Democrat Nydia Velazquez says, in dollar terms, the percentage is far lower.

Representative NYDIA VELAZQUEZ (Democrat, New York): You know, the message is don't even bother to apply because you have no opportunities with the federal government.

SCHALCH: The Bush administration says that message is wrong. Yesterday, senior procurement officer Patricia English told lawmakers that FEMA is preparing to yank $1 1/2 billion worth of contracts awarded to four big companies after the hurricane and rebid them. All that work will be set aside for minority and small disadvantaged businesses.

Ms. PATRICIA ENGLISH (Senior Procurement Officer): We're working on that right now. We hope to have the advertisement out this week.

SCHALCH: And the contracts should be awarded by February. Likewise, Colonel Norbert Doyle said the Army Corps of Engineers plans to hand out more than a billion dollars' worth of demolition contracts.

Colonel NORBERT DOYLE (Army Corps of Engineers): We will include opportunities at the prime level for local disadvantaged companies. We are considering limiting competition to Mississippi companies for the Mississippi aspect of the mission and to Louisiana companies for the Louisiana aspect of the mission.

SCHALCH: The Commerce Department has also opened a new hurricane contracting information center to help small and disadvantaged businesses. Lawmakers urged the Bush administration to press ahead, arguing that helping local businesses is a cost-effective way to create jobs and help people get back on their feet. Kathleen Schalch, NPR News.

INSKEEP: This is MORNING EDITION from NPR News.

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