Katrina subcontracting plans incomplete, GAO finds

Departments should keep better records of subcontracts going to small businesses during emergency situations, such as in the aftermath of Hurricane Katrina in 2005, the Government Accountability Office said in a new report. GAO also said inspectors general should review recordkeeping practices.

Required information on small business subcontracting is not consistently available in official procurement data systems of the Defense and Homeland Security departments, the General Services Administration, and the U.S. Army Corps of Engineers, GAO found. Specifically, the systems had no information on whether DHS or GSA required subcontracting plans for 70 percent or more of their contracting funds. But when agencies decided the plans were unnecessary, they often gave no explanation, GAO found.

“Incomplete information about subcontracting limits determining the extent to which agencies complied with contracting rules and gave small businesses maximum opportunities to win subcontracts,” the report states.

A subcontracting plan must identify the types of work a prime contractor is likely to award as subcontracts and the percentage of subcontracting dollars it expects to direct to small businesses. It also helps track the business going to small businesses. The Federal Acquisition Regulation mandates that agencies measure small business participation.

Sen. John Kerry (D-Mass.), chairman of the Senate Small Business and Entrepreneurship Committee, commissioned the report to learn whether subcontracting opportunities were readily available to small businesses during the initial phases of Gulf Coast reconstruction efforts after Hurricane Katrina, according to a letter sent March 1 to DOD, DHS, GSA and the engineer corps.

“Obviously, it’s very difficult to complete my oversight responsibilities in determining whether small businesses are receiving meaningful disaster-related subcontracting opportunities where data is incomplete,” Kerry wrote to executives of those departments and agencies.

In his letter, Kerry requests that agency executives send guidance to their procurement offices about better keeping data. He also wants IGs, not agency staff members, to review the offices’ performance.

GSA Administrator Lurita Doan said in an interview today that Kerry’s letter was “like preaching to the choir” about small businesses’ inclusion in government contracting. Doan said she is happy about the increased visibility of the issue.

Nevertheless, Doan said disasters put many competing demands on contracting staff, and there must be a balance between compliance and accountability.

"We don't want to spend so much time on being compliant that we don't get it done," she said.

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