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US: Minority Firms Getting Few Katrina Pacts

by Hope YenAssociated Press
October 4th, 2005

Minority-owned businesses say they're paying the price for the decision by Congress and the Bush administration to waive certain rules for Hurricane Katrina recovery contracts.

About 1.5 percent of the $1.6 billion awarded by the Federal Emergency Management Agency has gone to minority businesses, less than a third of the 5 percent normally required.

On Tuesday, Sen. Olympia J. Snowe, R-Maine, and Rep. Donald A. Manzullo, R-Ill., asked the Government Accountability Office to investigate whether small and minority-owned businesses have been given a fair opportunity to compete for Katrina contracts.

Andrew Jenkins doesn't think so.

Once Katrina's destructive waters receded, he began making calls in hopes of a winning a government contract for his Mississippi construction company.

Jenkins, who is black, says he watched in frustration as the contracts went to others, many of them larger, white-owned companies with political ties to Washington.

"That just doesn't smell right," said Jenkins, president of AJA Management and Technical Services Inc. of Jackson, Miss., noting the region has a higher percentage of blacks and minority-owned businesses that other areas of the country.

To speed aid, many requirements normally attached to government contracting were waived by Congress and the administration. The result has been far more no-bid contracts going to businesses that have an existing relationship with the government.

There also was an easing of affirmative action rules for contractors and a suspension of a "prevailing wage" law that black lawmakers and business people believe will hurt the disproportionately large number of black hourly workers in the region.

"It sends a bad message," said Harry Alford, president of the National Black Chamber of Commerce. "What they're basically saying to the minority in New Orleans is, 'We'll make it harder for you to find a job. And if you do, we'll make sure you get paid less.'"
The Department of Homeland Security, whose FEMA division handles most of the contracts, said it is committed to hiring smaller, disadvantaged firms. But many of the no-bid awards were given out to known players who could quickly provide help in an emergency situation, spokesman Larry Orluskie said.

"It was about saving lives, protecting property, and going to who you go to, to get what you need," he said.

The Labor Department also has said its decision to temporarily suspend affirmative action rules for first-time government contractors doing Katrina work was motivated by a need to reduce paperwork to speed emergency aid.

The Army Corps of Engineers has a better record on minority contracts, with roughly 16 percent of the $637 million in Katrina contracts going to minority-owned companies, according to agency records.

Businesses with more than 50 employees typically must have a written affirmative action plan if they are awarded contracts of more than $50,000. But the Bush administration removed that requirement for three months, saying basic anti-discrimination laws would provide adequate protection.

At a recent meeting in Mississippi for minority businesspeople with federal contracting officials, Rep. Bennie Thompson (news, bio, voting record), D-Miss., said many of the 100 owners walked out in anger when told their best chance of getting work was to seek smaller subcontracts from the larger companies.

The larger companies include Kellogg, Brown & Root, a subsidiary of Halliburton Co., which Vice President

Dick Cheney headed from 1995 to 2000; and AshBritt Inc., a Florida company with ties to Mississippi's governor, Haley Barbour, the former chairman of the Republican National Committee.

"The president has talked about small businesses being the engine of our economy, but when the time for sound bites is over his administration still uses the same backroom deals to take care of their friends," said Thompson, a member of the Congressional Black Caucus.

The situation has exacerbated racial sensitivities that already were heightened by the slow initial federal response to the New Orleans flood. Many poor black residents didn't get help for days.

President Bush has met privately with NAACP President Bruce Gordon to discuss the racial component of the disaster. And Alford said he will get a meeting with Bush sometime soon to talk about improving opportunities for minority contractors.

With billions of dollars of new contracts still yet to be awarded, minority leaders say they remain hopeful the Bush administration will begin to provide the same types of opportunities given to large-scale contractors.

In the meantime, Willie Nelson of 33-year-old Nelson Plumbing Inc., continues to wait. He says white-owned firms scurry with work in Mississippi, while his Jackson business sits idle.

"The majority firms are all over the place," Nelson said. "We just want an equal opportunity. But it's been very difficult. They seem to be more interested in taking care of their own while we try to just get a foot in the door."





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