WASHINGTON -- Senator John Kerry (D-Mass.) is calling on the Bush Administration to fulfill its commitment to award $1.5 billion in federal contracts to small businesses for cleaning up and rebuilding the Gulf Coast areas devastated by Hurricanes Katrina and Rita. After the Federal Emergency Management Agency (FEMA) awarded several no-bid contracts to firms with close ties to the White House, Kerry raised concerns that small businesses were left out and the Administration promised to re-compete the contracts.


However, at a November 8, 2005, Committee hearing on Katrina, Gregory Rothwell, chief procurement officer for the Department of Homeland Security, said the large no-bid contracts would not be re-competed immediately but that FEMA would award 15 contracts worth $1.5 billion to small, local and small disadvantaged businesses by February 2006. As of today, those contracts still have not been awarded.


“Hundreds of local and small businesses have applied for these contracts, but after five months of empty promises the Bush Administration’s continued incompetence, mismanagement and delay is hanging Gulf Coast businesses out to dry,” said Sen. John Kerry (D-Mass.), Ranking Democrat on the Committee on Small Business and Entrepreneurship. “The Administration is letting red tape and excuses hold up real recovery for the Gulf Coast.”


Also, the Administration has failed to reopen the competition for the no-bid contracts awarded to the four big contractors with White House connections, which it promised to do six months ago.


In a letter to FEMA’s Acting Director David Paulison, Kerry suggested FEMA take the following actions immediately to ensure small business participation in rebuilding the Gulf Coast and helping to rejuvenate the economy:



  • Award the 15 prime contracts of approximately $100 million each to small businesses;
  • Re-compete the $1.5 billion in no-bid contracts awarded to the “big four” contractors and require a substantial small business subcontracting plan; and
  • Hold prime contractors accountable for failing to meet their subcontracting goals by implementing and strongly enforcing a policy which includes the use of liquidated damages.
  • In addition, Kerry wrote, “As billions of dollars flow into the region for debris removal and reconstruction, small and local businesses must receive a greater share of contract awards and dollars. We cannot allow administrative delays to continue to be a barrier to small business development in the region. Excuses don’t help small businesses make payroll.”


    To read the letter Kerry sent to FEMA, please click here.