United States Government Accountability Office

GAO Report to Congressional Addressees

HURRICANE 

KATRINA 

Agency Contracting 

Data Should Be More 

Complete Regarding 

Subcontracting 

Opportunities for 

Small Businesses 

March 2007 

 

GAO-07-205 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

March 2007

HURRICANE KATRINA

Agency Contracting Data Should Be More 

Complete Regarding Subcontracting 

Opportunities for Small Businesses 

Highlights of GAO-07-205, a report to 

congressional addressees

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 (see fig.). Local businesses of all sizes in 

Alabama, Louisiana, and Mississippi received 18 percent, or $1.9 billion of 

these funds. Small businesses received 66 percent of the $1.9 billion 

awarded in these states. 

Required information on small business subcontracting is not consistently 

available in official procurement data systems for the four agencies. The 

systems had no information on whether DHS or GSA required 

subcontracting plans for 70 percent or more of their contracting funds. In 

addition, when data showed agencies determined that the plans were not 

required, the four agencies often did not document a reason for their 

determinations, even though federal rules require such documentation when 

prime contracts meet criteria for having these plans. Incomplete

information about subcontracting limits determining the extent to which 

agencies complied with contracting rules and gave small businesses 

maximum opportunities to win subcontracts. 

DBEs were awarded about 4 percent, or about $53 million, of the almost $1.3 

billion the Department of Transportation’s Federal Highway Administration 

funded for Katrina-related contracts in Alabama, Louisiana, and Mississippi 

between August 1, 2005, and June 30, 2006. These contracts were awarded 

by the three state departments of transportation. DBEs also received about 

10 percent of $24 million that airports in the three states awarded using 

Federal Aviation Administration funds for Katrina-related contracts. 

Percentage of Katrina-Related Contracts Awarded to Small Businesses, by DHS, GSA, DOD, 

and the U.S. Army Corps of Engineers 

DHS

GSA

Corps

DOD

Total

$1,559.9

474.7

332.7

728.2

3,095.6

24%

72%

34%

23%

28%

76%

28%

66%

77%

72%

$4,858.6

183.0

653.9

2,381.7

8,077.2

$6,418.5

657.8

986.6

3,109.9

11,172.8

Small Large Total

Dollars (in millions) by business size

Small businesses

Large businesses

Source: GAO analysis of FPDS-NG and DD-350 data on contracting actions awarded from August 1, 2005, to June 30, 2006. 

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 94 percent of 

the federal funds awarded for relief 

efforts via contracting as of May

2006. This report, which GAO 

conducted under the Comptroller 

General’s Authority, describes (1)

the amounts that small businesses 

received from prime contracts with

these agencies, (2) the extent of 

subcontracting, (3) and the extent 

to which Disadvantaged Business 

Enterprises (DBEs) received 

Department of Transportation 

funds for Katrina-related projects. 

In conducting this study, GAO 

analyzed agency contract data,

reviewed federal acquisition 

regulations, and interviewed 

agency procurement officials. 

What GAO Recommends

GAO recommends that DOD, DHS,

and GSA (1) issue guidance to key

personnel reinforcing the 

importance of subcontracting plan

requirements and (2) consider

requesting that their Inspectors 

General review their compliance

with this guidance. 

The agencies generally agreed with

GAO’s recommendations and are 

taking steps to implement them. 

www.gao.gov/cgi-bin/getrpt?GAO-07-205.

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 shearw@gao.gov. 
Contents 

Letter 1

Results in Brief 3

Background 5

Small Businesses Received Varied Amounts of the Contracting 

Dollars Awarded by Four Agencies 10 

Selected Corps Contractors Awarded Most Subcontracting Dollars 

to Small Businesses, but Information on Subcontracting Plans 

for All Four Agencies Was Incomplete 16 

Disadvantaged Business Enterprises Participated in FHWA– and 

FAA–Funded Contracts and Subcontracts Related to Hurricane 

Katrina 28

Conclusions 31

Recommendations for Executive Action 32 

Agency Comments and Our Evaluation 33 

Appendix I Scope and Methodology 39 

Appendix II Comments from the Department of Homeland Security 43 

Appendix III Comments from the General Services Administration 46 

Appendix IV Comments from the Department of Defense 53 

Appendix V GAO Contact and Staff Acknowledgments 56 

Tables 

Table 1: Dollar Amount of Katrina-Related Contracts Awarded 

Directly to Businesses in All States and in States Primarily 

Affected by Hurricane Katrina 13 

Table 2: Small Businesses Received the Majority of Contracting 

Dollars Awarded Directly to Local Businesses 14 

Page i GAO-07-205 Katrina Small Business Contracts
Table 3: Awards of Selected Corps Contractors to Small Businesses 

as a Percent of the Subcontracting Dollars Awarded to All 

Businesses 18

Table 4: Amounts Small Businesses Received as Subcontractors as 

a Percent of Total Dollars Obligated for Selected KatrinaRelated Contracts 19 

Table 5: Subcontracting Plan Requirements by Dollar Amount 

Awarded 24

Table 6: DBE Participation in Katrina-Related State DOT Contracts 

Awarded With FHWA Funds 29 

Table 7: DBE Participation in Contracts Awarded by Airports with 

FAA Grants 30 

Figures 

Figure 1: Amount and Percentage of Katrina-Related Contract 

Dollars Awarded to Businesses by DHS, GSA, DOD, and 

the Corps 11 

Figure 2: Number of Katrina-Related Contract Actions Awarded 

Directly to Businesses by Business Size 12 

Figure 3: Dollar Amount of Katrina-Related Contracts Awarded 

Directly to Small Businesses, by Type of Businesses 13 

Figure 4: Katrina-Related Contracting Dollars by Location 15 

Page ii GAO-07-205 Katrina Small Business Contracts
Abbreviations 

Corps U.S. Army Corps of Engineers 

DBE Disadvantaged Business Enterprise 

DCMA Defense Contract Management Agency 

DHS Department of Homeland Security 

DOD Department of Defense 

DOT Department of Transportation 

eSRS Electronic Subcontracting Reporting System 

FAA Federal Aviation Administration 

FAR Federal Acquisition Regulation 

FHWA Federal Highway Administration 

FPDS-NG Federal Procurement Data System—Next Generation 

FTA Federal Transit Administration 

HUBZone Historically Underutilized Business Zone 

MOU Memorandum of Understanding 

GSA General Services Administration 

SBA Small Business Administration 

SDB Small Disadvantaged Business 

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Page iii GAO-07-205 Katrina Small Business Contracts
United States Government Accountability Office

Washington, DC 20548 

March 1, 2007

Congressional Addressees 

Hurricane Katrina caused billions of dollars in damage and affected about

1.5 million people in Alabama, Louisiana, and Mississippi.1

 In response to 

the widespread destruction, Congress provided emergency supplemental 

disaster appropriations totaling about $88 billion to 23 different federal 

agencies. As of May 2006, these 23 agencies had awarded nearly $11 billion

for Katrina-related relief and recovery contracts, with the Departments of 

Homeland Security (DHS) and Defense (DOD) as well as the U.S. Army 

Corps of Engineers (Corps) and General Services Administration (GSA) 

accounting for 94 percent of these dollars, according to official 

governmentwide procurement data.2

 The agencies were to use the funds 

to, among other things, award contracts for a range of services related to 

hurricane relief and recovery. Some in Congress have raised concerns 

about how much access small businesses had to these contracting 

opportunities, especially small businesses in the areas that were affected

by the hurricane. In addition, because of substantial damage to the 

region’s transportation networks and the role of the Department of 

Transportation (DOT) in assisting the states with their rebuilding, there 

has been congressional interest regarding the extent to which

Disadvantaged Business Enterprises (DBE)

3

 received funds from DOT for 

projects related to Hurricane Katrina.

We have prepared this report under the Comptroller General’s authority to

conduct evaluations on his own initiative as part of a continuing effort to 

assist Congress in reviewing federal activities related to Hurricane Katrina. 

Specifically, this report discusses (1) the amounts that small and local 

 1

GAO, Disaster Relief: Governmentwide Framework Needed to Collect and Consolidate

Information to Report on Billions in Federal Funding for the 2005 Gulf Coast

Hurricanes, GAO-06-834 (Washington, D.C.: Sept. 6, 2006). 

2

We 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. 

3

The definition of a DBE is set forth in DOT Regulation 49 C.F.R. § 26.5. In general terms, 

DBEs are small businesses owned and controlled by socially and economically 

disadvantaged individuals. 

Page 1 GAO-07-205 Katrina Small Business Contracts
businesses received directly from federal agencies through contracts for 

relief and recovery efforts related to Hurricane Katrina, (2) the extent to

which selected large prime contractors subcontracted with small 

businesses for relief and recovery efforts, and (3) the extent to which 

DBEs received funds through DOT for transportation projects related to 

reconstruction and recovery from Hurricane Katrina.4

To describe the amounts that small and local businesses received directly

from federal contracts, we analyzed data on contracts awarded or used by

DHS, GSA, DOD, and the Corps for Katrina-related projects in Alabama, 

Louisiana, and Mississippi from August 1, 2005, through June 30, 2006. Our 

analysis included contract data from the Federal Procurement Data 

System-Next Generation (FPDS-NG), the governmentwide database of 

contracting activity, and DD-350, the Department of Defense database that

contains data on individual contracting actions. Although we could not 

independently verify the reliability of these data, we reviewed system 

documentation, conducted electronic data testing for inconsistency errors 

and completeness and compared it with supporting documentation when 

available, and interviewed agency officials about each of the systems. On 

the basis of these efforts, we determined the data on amounts received 

directly from federal contracts to be sufficiently reliable for the purposes 

of this report. To describe the extent to which prime contractors 

subcontracted with small businesses, we identified contracts that were 

awarded or used between August 1, 2005, and June 30, 2006, for activities

related to Hurricane Katrina and that required subcontracting plans. We 

obtained and analyzed documentation of subcontracting awards for 

selected DOD and Corps contractors that received the most dollars from 

Katrina-related contracts from August 1, 2005, through June 30, 2006. For 

those DHS and GSA contracts with subcontracting plan requirements, we 

looked for documentation of prime contractors’ March 31, 2006, 

subcontracting awards report in the Electronic Subcontracting Reporting

System (eSRS), a governmentwide database for capturing this information. 

In addition, we interviewed officials from each of the four agencies to 

gather additional information relating to the use of subcontracting plans. 

 4

For the purposes of this report, we refer to “contract dollars” that agencies have awarded

when, to be precise, agencies do not award dollars but instead award contracts or enter 

into contract actions that are either valued at certain dollar amounts or which, for example, 

might have a range of possible values, depending on how much work the contractor 

ultimately performs. We discuss the agencies’ activities in terms of contract dollars 

because the dollar amount or value of contract actions is one of the key factors in deciding

whether agencies must require a subcontracting plan and also is the measure used to gauge

small business participation in federal procurement. 

Page 2 GAO-07-205 Katrina Small Business Contracts
To describe the extent to which DBEs received funds for DOT-assisted 

transportation projects related to reconstruction and recovery from 

Hurricane Katrina, we obtained and analyzed data on Federal Highway 

Administration (FHWA) and Federal Aviation Administration (FAA) 

contracts awarded for Katrina-related projects from August 1, 2005, 

through June 30, 2006 (only FHWA and FAA awarded DOT funds to which 

DBE requirements applied). A more detailed description of our scope and 

methodology is presented in appendix I. We conducted our work in 

Washington, D.C., between March 2006 and February 2007 in accordance 

with generally accepted government auditing standards. 

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). Of the contracting dollars 

that the four agencies awarded directly to small businesses, those 

classified as disadvantaged businesses received 24 percent of the 

approximately $3 billion that the four agencies awarded to small 

businesses. Local businesses, or businesses located in the states primarily 

affected by Hurricane Katrina (Alabama, Louisiana, and Mississippi), 

received 18 percent, or $1.9 billion, of the $11 billion the four agencies 

awarded overall. Small businesses received approximately 66 percent of 

the $1.9 billion awarded to all local businesses. Outside of this area, 

businesses in California and Florida received 17 and 15 percent, 

respectively, of the Katrina-related contracting dollars the four agencies 

awarded. 

Results in Brief 

For the military agencies, 4 of the top 10 recipients—all large businesses—

of prime contracting dollars for projects related to Hurricane Katrina 

reported awarding from 88 to 100 percent of their subcontracting dollars 

to small businesses. The amounts subcontracted ranged from $11,000 to 

$201 million. These 4 prime contractors received their contracting dollars

from the Corps. For the other 6 recipients of contract dollars from DOD 

and the Corps, subcontracting plan requirements did not apply or 

contracting activities related to Hurricane Katrina could not be separated 

from unrelated activities. Information on subcontracting accomplishments 

associated with 4 of 7 DHS contracts shows that small businesses received 

from 14 to 83 percent of the dollars awarded through subcontracts as of 

March 31, 2006. Information on subcontracting accomplishments for the 

remaining DHS contracts and all 11 GSA contracts awarded to large 

Page 3 GAO-07-205 Katrina Small Business Contracts
businesses was generally not available because contractors had not 

reported the data, the agencies had not finalized the data, or the available

data included both Katrina-related and other contract activities. While we 

could document this information, additional key information about small 

business subcontracting plans was not consistently available in official 

procurement data systems for the four agencies. These plans, which detail

goals for subcontracting to small businesses, are generally required for 

acquisitions by executive agencies of more than $500,000.5

 For DHS and 

GSA, information on whether the two agencies required subcontracting 

plans is generally not available in the data systems for nearly three-fourths 

of the contracting dollars each agency awarded. DHS officials could not 

explain the lack of subcontracting information on $861 million in agency 

contracting dollars; DOD officials were unable to explain the lack of 

subcontracting information on $3.3 million in agency contracting dollars. 

Also, according to official procurement data systems, the four agencies 

determined that subcontracting plans were not required from their large 

prime contractors for 12 percent (GSA) to 77 percent (DOD) of their 

contracting dollars. However, information on the agencies’ reasons for not 

requiring these plans, which should be readily available, is incomplete. The 

lack of information on the four agencies’ compliance with subcontracting 

plan requirements limits determining the extent to which they followed 

federal contracting rules designed to give small businesses maximum 

opportunities to participate in their contracts.6

To ensure compliance with federal contracting regulations and to more 

transparently disclose the extent to which subcontracting opportunities 

were available to small businesses, we recommend that the Secretary of 

Homeland Security, the Secretary of Defense, and the Administrator of 

General Services issue guidance to the appropriate procurement offices 

and personnel reinforcing, among other things, the necessity for 

documenting in publicly available sources the agencies’ decisions 

regarding subcontracting plan requirements. The Secretaries of DHS and 

DOD along with the GSA Administrator should also consider asking their 

Inspectors General to conduct a review at an appropriate future date to 

 5

For acquisitions related to construction, the amount is $1 million unless a statutory

exception applies. See Federal Acquisition Regulation (FAR) § 19.702(a). 

6

Under FAR § 19.702, a contractor receiving a contract for more than the simplified 

acquisition threshold (generally $100,000 for contracts in the United States) must agree to

give small businesses “the maximum practicable opportunity to participate in contract

performance consistent with (the contract’s) efficient performance.” 

Page 4 GAO-07-205 Katrina Small Business Contracts
ensure that this guidance and related requirements are being followed. In 

written comments on a draft of this report, the agencies generally agreed

with our recommendations and described various steps they are taking to 

implement them (see appendixes II, III, and IV). 

DBEs were awarded about 4 percent, or about $53 million, of the 

approximately $1.3 billion that FHWA funded for Katrina-related contracts 

in Alabama, Louisiana, and Mississippi between August 1, 2005, and June 

30, 2006. The Mississippi DOT awarded about 64 percent of the FHWA 

dollars that DBEs were awarded. DBEs also were awarded about 10 

percent, or about $2.4 million, of the $24 million that FAA awarded for 

Katrina-related contracts and subcontracts at airports in the three states 

between August 1, 2005, and June 30, 2006. 

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 the 

agencies provide through contracts with private businesses.7

 Such

activities include, among other things, debris removal, temporary housing 

assistance, reconstruction, and the provision of supplies. These contracts 

are subject to federal procurement regulations. 

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.”8

 In addition, a business must meet the size standards published 

by SBA to be considered “small”; these standards use businesses’ annual 

revenue or their number of employees as criteria for determining size. The 

act sets a governmentwide goal for small business participation of not less

Background 

Federal Goals for 

Contracts with Small and 

Local Businesses 

 7

The Robert T. Stafford Disaster Relief and Emergency Assistance Act, Pub. L. 93-288, as 

amended, defines an emergency as “any occasion or instance for which, in the 

determination of the President, federal assistance is needed to supplement State and local 

efforts and capabilities to save lives and to protect property and public health and safety, 

or to lessen or avert the threat of a catastrophe in any part of the United States.” 42 U.S.C. §

5122(1). 

8

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

Page 5 GAO-07-205 Katrina Small Business Contracts
than 23 percent of the total value of all prime contract awards—contracts 

that are awarded directly by an agency—for each fiscal year.9

 The Small 

Business Administration (SBA) is responsible for reporting annually to the 

President and Congress on agencies’ achievements relative to the goals. 

Because some agencies’ activities lend themselves to contracting 

opportunities more than others, SBA negotiates goals in annual 

procurement with federal executive agencies to achieve the 23 percent 

governmentwide goal for contract dollars awarded directly by a federal 

agency.

10 As a result, some agencies have goals higher than 23 percent, 

while others may have goals that are lower than or just at 23 percent. For

example, the agencies we reviewed had different goals for awarding 

contract dollars directly to small businesses in fiscal years 2005 and 2006.

DHS’s goals were 23 and 30 percent for 2005 and 2006, respectively. GSA’s

goals were 43 and 45 percent, respectively, and DOD’s (including the 

Corps) goal was 23 percent for both years. The Small Business Act also 

sets annual prime contract dollar goals for participation by five specific 

types of small businesses: small businesses (23 percent); small 

disadvantaged businesses (5 percent); women-owned or service-disabled, 

veteran-owned, (5 and 3 percent, respectively); and businesses located in

historically underutilized business zones (HUBZones, 3 percent).11 The 

Small Business Act12 defines these businesses as follows: 

• Small businesses are those that are independently owned and operated, 

and are not dominant in their field of operations.

• Small disadvantaged businesses must be owned and controlled by socially

and economically disadvantaged individuals, such as African Americans, 

 9

15 U.S.C. § 644(g). Under this provision, the President must annually establish 

governmentwide goals for, among other things, procurement contracts awarded to small 

business concerns. The governmentwide goal for participation by small business concerns

must be not less than 23 percent of the total value of all prime contract awards for each

fiscal year. As stipulated in the Small Business Act, procurement goals are established as a 

percentage of the total value of all contracts directly awarded by the federal government in 

a fiscal year. 

10See Goaling Guidelines for the Small Business Preference Programs For Prime and

Subcontract Federal Procurement Goals and Achievements, SBA Office of Government

Contracting (July 3, 2003) (SBA Goaling Guidelines). 

1115 U.S.C. § 644(g). 

12The small business regulations implementing the Small Business Act further define these 

businesses. See 13 C.F.R. §§ 121.401 – 121.413. 

Page 6 GAO-07-205 Katrina Small Business Contracts
Hispanic Americans, Asian Pacific Americans, Subcontinent Asian 

Americans, or Native Americans. These owners must have at least a 51

percent stake in the business. 

• Women-owned small businesses must have at least 51 percent female 

ownership. For publicly owned businesses, one or more women must hold 

at least 51 percent of the stock and control both management and daily 

business operations. 

• Service-disabled, veteran-owned small businesses must be owned—also at 

least 51 percent—by one or more veterans with a service-related disability. 

In addition, the management and daily operations of the business must be

controlled by one or more veterans with a service-related disability. 

• HUBZone small businesses must have their principal offices physically 

located in these historically underutilized business zones, which 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 these zones.13

Finally, the Stafford Act sets forth requirements for the federal response to 

presidentially declared disasters. It 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.14

The general rules governing procurement for executive agencies are set 

out in federal procurement statutes and in the Federal Acquisition 

Regulation (FAR). Individual agencies may also have additional acquisition 

regulations to supplement the FAR. The FAR requires agencies to measure 

small business participation in their acquisition programs. A small 

business may participate via contracts that are awarded directly by a

federal agency or through subcontracts with the businesses that receive 

contracts directly from a federal agency. Any business receiving a contract 

directly from a federal executive agency for more than the simplified 

Federal Rules for 

Contracts with Businesses 

 13These classifications are set forth at 15 U.S.C. § 632. 

1442 U.S.C. § 5150. In this report we do not assess agency compliance with Stafford Act 

requirements. 

Page 7 GAO-07-205 Katrina Small Business Contracts
acquisition threshold15 must agree to give small business the “maximum 

practicable opportunity” to participate in the contract “consistent with its 

efficient performance.”16 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.17 The 

subcontracting plan must identify the types of work the prime contractor 

believes it is likely to award as subcontracts as well as 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.18 For 

contracts that have individual subcontracting plans, prime contractors 

must semiannually and at project completion report on their progress 

toward reaching the goals in their subcontracting plans. Contractors that 

meet or exceed their goals may receive monetary incentives if the contract 

included such incentives. Contractors that fail to meet their 

subcontracting goals may be assessed damages if the contracting officer 

for the contract (i.e., the agency official responsible for awarding and 

monitoring the contract) determines that the contractor failed to make a 

good-faith effort to comply with a subcontracting plan. 

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.

19 This system 

Agency and 

Governmentwide Contract 

Data 

 15FAR 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. 

16FAR §§ 19.702, 2.101. 

17Id. The dollar threshold was changed to $550,000 on September 28, 2006. 71 Fed. Reg. 

57363 (Sept. 28, 2006). 

18These and other aspects of the small business subcontracting plan requirement are set 

forth at FAR Part 19.7.

19The 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). 

Page 8 GAO-07-205 Katrina Small Business Contracts
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. 

The Disadvantaged Business Enterprise Program20 (DBE Program) of DOT 

was enacted to help ensure nondiscrimination in the award and 

administration of DOT-assisted contracts in the department’s highway, 

transit, and airport financial assistance programs. State DOTs, transit 

authorities, and airports receiving DOT funding for transportation projects 

are to have a goal-oriented program for small businesses owned and 

controlled by socially and economically disadvantaged individuals to 

participate on DOT-assisted contracts. The objectives of the DBE Program 

are to ensure that these businesses have an equitable opportunity to 

participate in contracts awarded by the recipients of DOT financial 

assistance, and that they receive a share of the resulting contract awards. 

Within DOT, the three major operating administrations—FHWA, FAA, and 

the Federal Transit Administration (FTA)—oversee the DBE Program. 

DOT requires that the state and local transportation agencies and airports 

that receive its funds set two kinds of goals for DBE participation: (1) 

annual goals for the percentage of dollars that DBEs would be expected to

receive through contract and subcontract awards of all DOT-assisted 

contracts for the year absent the effects of discrimination21 and (2) when 

appropriate and as needed to meet the annual goal for the year, contractspecific goals for DBE participation as subcontractors on prime contracts 

that have subcontracting possibilities. According to DOT officials, there 

were no overall DBE goals set for Katrina-related contracts as a whole. 

DOT’s Disadvantaged 

Business Enterprise 

Program 

 20DOT Regulation 49 C.F.R. § 26.1. Congress most recently reauthorized the DBE Program

under the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy For 

Users, Pub. L. No. 109-59 § 1101(b) (2005). 

21For fiscal years 2005 and 2006, the state DOTs of Alabama, Louisiana, and Mississippi set 

annual DBE goals at about 10 percent for contracts awarded with FHWA dollars. For the 

same fiscal years, airports across the three states that set an annual DBE goal and awarded 

contracts that we reviewed had goals that ranged from about 7 percent to 20 percent. 

Page 9 GAO-07-205 Katrina Small Business Contracts
DOT also requires that the state and local agencies certify the eligibility of 

the DBE firms participating in DOT-assisted contracts through on-site 

visits, personal interviews, and reviews of business licenses and stock 

ownership. The purpose of certification is to ensure that the firms that 

state and local agencies certify as DBEs are owned and controlled by 

individuals who are socially and economically disadvantaged as the statute 

and implementing regulations define those terms.22 SBA’s Small 

Disadvantaged Business Program (SDB) and DOT’s DBE Program share 

many common certification requirements. According to DOT officials, a

memorandum of understanding (MOU) is presently under consideration 

for renewal that establishes processes and procedures to streamline the 

certification of firms certified under DOT rules in SBA programs and 

participation of firms certified under SBA rules in DOT programs.23

Overall, 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.24 These four agencies awarded about 

$3 billion of their Katrina-related contracting dollars directly to small 

businesses and over $8 billion to large businesses between August 1, 2005, 

and June 30, 2006 (fig. 1). 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. 

Small Businesses 

Received Varied 

Amounts of the 

Contracting Dollars 

Awarded by Four 

Agencies 

 22See C.F.R. Parts 23, 26. 

23While the MOU between DOT and SBA has expired, according to DOT officials, DOT’s

regulations, specifically 49 CFR §26.84 and §26.85, prescribe the same requirements as 

contained in the MOU. Among other requirements, DOT recipients must accept SBA

certification applications in lieu of requiring an applicant to complete their own application 

documents. 

24Each 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, as we note in the background section of this report. The agencies, and SBA,

track their progress in meeting these goals on an annual (federal fiscal year) basis—that is, 

in terms of all of an agency’s contract actions in a year rather than on a case-by-case basis. 

Because of this, and because the agencies did not set Katrina-specific small business 

participation goals, the data we report in this section should not be used to assess the 

agencies’ accomplishments with respect to their fiscal years 2005 or 2006 small business 

participation goals. 

Page 10 GAO-07-205 Katrina Small Business Contracts
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. 

While small businesses received 28 percent of the funds that DHS, GSA, 

DOD, and the Corps awarded, they received 55 percent of contract actions

for activities related to Hurricane Katrina, awarded directly by these 

agencies (fig. 2).25 Individually, the agencies awarded from 41 to 68 percent

of their contract actions to small businesses, with DHS awarding the 

lowest percentage and GSA awarding the highest. In relation to Hurricane 

Katrina, small businesses have received contracts directly from the four 

agencies to provide a variety of products, such as trailers and sewage 

treatment equipment, and services, such as construction, data entry, and

housing. 

DHS

GSA

Corps

DOD

Total

$1,559.9

474.7

332.7

728.2

3,095.6

24%

72%

34%

23%

28%

76%

28%

66%

77%

72%

$4,858.6

183.0

653.9

2,381.7

8,077.2

$6,418.5

657.8

986.6

3,109.9

11,172.8

Small Large Total

Dollars (in millions) by business size

Small businesses

Large businesses

Source: GAO analysis of FPDS-NG and DD-350 data on contracting actions awarded from August 1, 2005, to June 30, 2006. 

 25Contract actions include actions resulting in a new contract, as well as actions for 

additional supplies or services. We excluded contract modifications that were

administrative, or did not adjust the dollar amount of the contract in order to focus our 

analysis on modifications of dollar values. 

Page 11 GAO-07-205 Katrina Small Business Contracts
Figure 2: Number of Katrina-Related Contract Actions Awarded Directly to

Businesses by Business Size 

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 HubZones, received from 2 to 16 percent (fig. 3). 

Individually, the agencies we reviewed awarded different percentages of 

their contracting dollars directly to various types of small businesses. For 

example, DHS, DOD, and the Corps awarded more than 10 percent of their 

contracting dollars directly to HUBZone and women-owned businesses, 

and from 23 percent to 29 percent to disadvantaged businesses. GSA 

awarded 3 percent to HubZone businesses, 12 percent to women-owned 

businesses, and 8 percent to disadvantaged businesses. 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. 

DHS

GSA

Corps

DOD

Total

891

1,323

1,118

1,141

4,473

41%

68%

54%

59%

55%

59%

32%

46%

41%

45%

1,257

610

935

801

3,603

2,148

1,933

2,053

1,942

8,076

Contract actions by business size

Small Large Total

Small businesses

Large businesses

Source: GAO analysis of FPDS-NG and DD-350 data on contracting actions awarded from August 1, 2005, to June 30, 2006. 

Page 12 GAO-07-205 Katrina Small Business Contracts
Figure 3: Dollar Amount of Katrina-Related Contracts Awarded Directly to Small Businesses, by Type of Businesses 

DHS

GSA

Corps

DOD

Total

$1,559.9

474.7

332.7

728.2

3,095.6

8%

2%

3%

8%

7%

14%

3%

11%

15%

12%

26%

8%

23%

29%

24%

16%

12%

14%

12%

14%

$222.7

14.0

36.8

106.2

379.7

$127.9

9.0

11.0

61.8

209.7

$409.0

37.7

76.9

207.6

731.3

$243.7

58.1

45.8

84.7

432.3

Dollar amount (in millions) and percentage of small business total awarded to socioeconomic group

Veteran-owned

$1.0

.6

.8

.8

3.2

Servicedisabled 

Total

awarded

to small 

businesses

(dollars

in millions)

HubZone Women-owned

All a

Disadvantaged

Source: GAO analysis of FPDS-NG and DD-350 data on contracting actions awarded from August 1, 2005, to June 30, 2006.

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. 

a

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

Local businesses, or businesses of all sizes located in the states primarily 

affected by Hurricane Katrina—Alabama, Louisiana, and Mississippi—

received 18 percent, or $1.9 billion, of the $11 billion in contracting dollars

that the four agencies directly awarded between August 1, 2005, and June

30, 2006. Louisiana businesses received the most contracting dollars—

about $1 billion, or 10 percent of the total amount of dollars the four 

agencies awarded during this time period (see table 1). 

Table 1: Dollar Amount of Katrina-Related Contracts Awarded Directly to Businesses in All States and in States Primarily 

Affected by Hurricane Katrina 

Dollars in millions

All statesa Alabama Louisiana Mississippi

Agency 

Dollar 

 amount Percent

Dollar 

amount Percent

Dollar 

amount Percent

Dollar

 amount Percent

DHSb $6,418 100% $160 2% $460 7% $138 2%

GSA 658 100 77 12 48 7 210 32

DOD 987 100 10 1 7 1 45 5

Corps 3,110 100 84 3 609 20 114 4

Total

a $11,173 100% $331 3 $1,124 10 $508 5

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

Page 13 GAO-07-205 Katrina Small Business Contracts
Note: Dollars are rounded to the nearest hundred thousand, and percentages were calculated from 

unrounded numbers. 

a

The total includes dollars awarded to businesses in all states and the District of Columbia as well as 

businesses located outside of the United States. 

b

DHS 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. 

Small businesses in these states 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, Mississippi saw the largest 

proportion (75 percent) of Katrina-related contracting dollars awarded to 

small businesses (see table 2). Although small businesses in Louisiana 

received the smallest proportion of Katrina-related contracting dollars (62 

percent) awarded directly by the four agencies, the actual amount these 

businesses received was nearly double what small businesses received in 

Mississippi, and more than three times what they were awarded in 

Alabama. 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. 

Table 2: Small Businesses Received the Majority of Contracting Dollars Awarded Directly to Local Businesses 

Dollalrs in millions 

Alabama Louisiana Mississippi

All 

businesses Small businesses 

All 

businesses Small businesses 

All 

businesses Small businesses 

Agency 

Dollar 

amount 

Dollar 

amount Percent 

Dollar 

amount 

Dollar 

amount Percent

Dollar 

amount 

Dollar 

amount Percent

DHSa $160 $119 75% $460 $345 75% $138 $138 100%

GSA 77 72 92 48 26 54 210 194 92

DOD 10 10 27 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 hundred thousand and percentages were calculated from 

unrounded numbers. 

a

DHS 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. 

The remaining 82 percent of the approximately $11 billion awarded by the 

four agencies went to businesses throughout the United States (including 

Page 14 GAO-07-205 Katrina Small Business Contracts
Puerto Rico and the U.S. Virgin Islands) and Canada. For example, the 

agencies directly awarded 17 percent of their Katrina-related contracting 

dollars, or almost $1.9 billion, to businesses located in California, and 15 

percent, or approximately $1.7 billion, to businesses located in Florida 

(fig. 4). Businesses located in Virginia received about 9 percent of the 

funds the four agencies awarded, or about $996 million. 

Figure 4: Katrina-Related Contracting Dollars by Location

California

Florida

Virginia $996.40

1,702.60

1,876.40

Alabama, Louisiana,

and Mississippi 1,963.30

4,634.10

$11,172.80

Othera

Total:

15%

9%

17%

18%

41%

Source: GAO analysis of FPDS-NG and DD-350 data on contracting actions awarded from August 1, 2005, to June 30, 2006.

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

unrounded numbers. 

a

“Other” includes other states, the U.S. Virgin Islands, Puerto Rico, and Canada. 

Page 15 GAO-07-205 Katrina Small Business Contracts
We found that the four Corps contractors that we reviewed awarded the 

majority of their Katrina-related subcontracting dollars to small 

businesses. However, viewed in terms of the total amounts obligated, we 

found that the selected Corps contractors awarded from less than 1 

percent in one case to over half of the total amounts obligated as of March 

31, 2006, to small businesses. In addition, subcontracting accomplishment 

information was not consistently available for the DHS and GSA contracts 

that were awarded to large businesses, and that, according to agency 

officials or FPDS-NG, required subcontracting plans. This information was 

not consistently available because contractors failed to submit it, agencies 

had not finalized the data, or the information could not be isolated from 

non-Katrina activities. Also, key information about small business 

subcontracting plans was not consistently available in official 

procurement data systems even though federal contracting rules state that 

the information should be documented there. Specifically, for significant 

amounts of contracting dollars, primarily at DHS and GSA, the systems 

had no information at all on whether or not the agencies required these 

plans. Also, at all four agencies, when they did not require subcontracting 

plans, to varying degrees there was no information on the reason for the 

agencies’ decision even though the FAR requires that contract files contain 

“justifications and approvals, determinations and findings, and associated 

documents.”26 The incomplete information on subcontracting plan 

requirements limits determining the extent to which agencies complied 

with contracting rules designed to give small businesses maximum 

opportunities to win subcontracts. 

Selected Corps 

Contractors Awarded 

Most Subcontracting 

Dollars to Small 

Businesses, but 

Information on 

Subcontracting Plans 

for All Four Agencies 

Was Incomplete 

 26FAR § 4.803 (a)(2), (14). 

Page 16 GAO-07-205 Katrina Small Business Contracts
We reviewed 4 of the top 10 recipients of prime contracting dollars from 

DOD and the Corps for projects related to Hurricane Katrina.27 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.28 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, 2006.29 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 (table 3).30

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. 

Corps Contractors 

Reported Awarding the 

Majority of their 

Subcontracting Dollars to 

Small Businesses 

 27Because DOD does not electronically aggregate information on the subcontracting 

accomplishments of all military contractors, we chose to look at the top 10 military 

contractors. This is a nonprobability sample of military contractors because we did not

consider including contractors other than the top 10. 

28Four 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 §§ 

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. 

29The 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.

30We 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. 

Page 17 GAO-07-205 Katrina Small Business Contracts
Table 3: Awards of Selected Corps Contractors to Small Businesses as a Percent of

the Subcontracting Dollars Awarded to All Businesses 

Dollars in millions 

Prime 

contractor

Contract 

number

Amount 

contractor

awarded to all 

subcontractors 

Amount 

contractor

awarded to small 

subcontractors Percent

a

Contractor A A-1 $228 $201 88%

Contractor B B-1 3 3 100

 B-2 0.6 0.6 100

 B-3 1 1 100

 B-4 0.4 0.4 100

 B-5 0.01 0.01 100

Contractor C C-1 24 23 95

Contractor D D-1 $212 $188 89%

Source: Individual subcontracting reports as of March 31, 2006. 

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

unrounded numbers. 

a

The percent of all subcontracting dollars awarded that were awarded to small businesses. 

We also conducted additional analysis on the four selected Corps 

contractors. This analysis shows that the percentages of contracting 

dollars that small businesses received through subcontracts from the four 

Corps contractors are smaller when analyzed in broader terms than those 

used for federal reporting requirements. The federal government requires 

that, when subcontracting plan requirements apply, contractors must 

agree to report the percentages and amounts of the total subcontracting 

dollars that small businesses receive, and the four contractors we analyzed

met this reporting requirement.31 However, as we have previously reported,

because a contractor could decide to subcontract only a small amount of

its total federal contract, the portion of subcontracted dollars going to 

small businesses—if reported as a percentage of total subcontracted 

dollars rather than of total contract dollars—could appear to be large.32 We

compared the amounts each of the four selected Corps contractors 

subcontracted to small businesses through eight Katrina-related contracts 

 31See, e.g., FAR §§ 19.704(a)(10), 52.219-9(d); see also GSA Form 294. 

32GAO, Department of Energy: Improved Oversight Could Better Ensure Opportunities 

for Small Business Subcontracting, GAO-05-459 (Washington, D.C.: May 13, 2005). 

Page 18 GAO-07-205 Katrina Small Business Contracts
as of March 31, 2006, with the total amount obligated for each contract as 

of March 31, 2006 (table 4). This comparison, using the total amounts 

obligated, showed that the contractors awarded small businesses from less

than 1 to 54 percent of the total amounts obligated. As we have noted, 

these percentages could change over time if the contractors award 

additional dollars to small businesses over the life of the contracts and if

the total amounts obligated change.

Table 4: Amounts Small Businesses Received as Subcontractors as a Percent of 

Total Dollars Obligated for Selected Katrina-Related Contracts 

Dollars in millions

Prime 

contractor

Contract 

number Total obligateda

 

Amount each 

prime contractor 

awarded to small 

business Percent

b

Contractor A A-1 $447,025,736 $201 45%

Contractor B B-1 7,130,002 3 39

 B-2 15,189,862 0.6 4

 B-3 28,283,410 1 4

 B-4 8,662,500 0.4 4

 B-5 14,817,225 0.01 0.08

Contractor C C-1 60,000,000 23 38

Contractor D D-1 $347,390,830 $188 54%

Source: Individual subcontracting report as of March 31, 2006, DD-350, and Corps data. 

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

unrounded numbers. 

a

This total amount obligated as of March 31, 2006.

b

The percent of the total amount obligated that was awarded to small businesses. 

Subcontracting 

Accomplishment 

Information Is Not 

Consistently Available for 

the DHS and GSA 

Contracts Related to 

Hurricane Katrina That 

Required Subcontracting 

Plans 

Subcontracting accomplishment information is not consistently available 

for the DHS and GSA contracts that were awarded to large businesses for 

activities related to Hurricane Katrina, and that, according to agency 

officials or FPDS-NG, required subcontracting plans. Contractors that have

individual subcontracting plans are generally required to report on their 

subcontracting goals and accomplishments twice a year to the federal 

government through eSRS. Furthermore, the agencies’ contracting officers 

are responsible for monitoring the prime contractors’ activities and 

ensuring, among other things, that they submit complete and timely 

information in accordance with the terms of their federal contract. 

Page 19 GAO-07-205 Katrina Small Business Contracts
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 one 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 FPDSNG. DHS officials determined that subcontracting accomplishment 

information was available on four of the seven contracts.33 For the 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.34

For GSA, information is generally unavailable on the subcontracting 

activities associated with the 11 contracts the agency awarded to large 

businesses for Katrina-related activities and which included 

subcontracting plans. According to FPDS-NG, GSA awarded 11 Katrinarelated contracts (worth a total of about $9.6 million) for which 

subcontracting 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. Specifically, information was unavailable on 9 GSAawarded contracts because the contractors had not submitted data into 

eSRS, and on 1 other contract because the data were still in “draft” form in 

 33The 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. 

34One 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. 

Page 20 GAO-07-205 Katrina Small Business Contracts
eSRS.35 While subcontracting information was available on 1 of the GSAawarded contracts related to Hurricane Katrina, we could not isolate data

related solely to that disaster, as the contract had been used for other 

unrelated activities and the available subcontracting information was 

reported for the entire contract. Because subcontracting accomplishments 

were reported for the contract as a whole, and not for individual contract

actions, it is not possible, with available data, to disaggregate Katrina and 

non-Katrina-related subcontracting accomplishments. 

Agency officials could not entirely explain what caused certain DHS and 

GSA prime contractors, whose contracts did include subcontracting plans, 

to fail to submit the required documentation of their activities and 

accomplishments into eSRS for the period ending March 31, 2006. 

However, one possible reason may have to do with the effect that 

incomplete information about prime contracts in FPDS-NG can have when

it carries over into eSRS. Specifically, eSRS only allows contractors to 

submit information on their subcontracting activities when contracts are 

correctly coded in FPDS-NG as requiring a subcontracting plan. As a 

result, if a contract is not in FPDS-NG or has not been entered correctly as 

requiring a subcontracting plan, the contractor will not be able to submit 

information about subcontracting activities into eSRS. Without timely and 

complete information on the extent to which contractors are 

subcontracting with small businesses, the eSRS is less useful as a tool for 

providing transparency on the extent to which small businesses are, as 

intended, receiving opportunities to participate in federal contracts. In 

addition, the ability of eSRS to accurately produce reports on 

subcontracting achievements is compromised. 

 35Data in eSRS that are in “draft” form means that a contractor has started creating a 

subcontracting accomplishment report, but has not yet submitted it to the government. 

Page 21 GAO-07-205 Katrina Small Business Contracts
As was the case with certain agency data on subcontracting 

accomplishments, in two respects, key information on small business 

subcontracting plans was not consistently available in official 

procurement data systems for the four agencies. First, the official 

procurement data system, primarily for DHS and GSA, had no information 

at all on whether or not they required subcontracting plans for 70 percent 

or more of their contracting funds. DHS and GSA officials were, to varying 

degrees, unable to explain the lack of information on subcontracting plan 

requirements associated with their Katrina-related contracting dollars. 

Second, the four agencies, according to procurement data systems, 

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 that appeared to meet the criteria

for including such plans. Data on the four agencies’ reasons for their 

determinations about not requiring these plans, which should be in the 

data systems or readily available, were incomplete. 

Incomplete Agency 

Information on 

Subcontracting Plan 

Requirements Raises 

Concerns about 

Compliance with 

Contracting Rules and 

Opportunities for Small 

Businesses 

For the types of contracts we reviewed, executive agencies generally must 

require subcontracting plans when they award federal contracts of more 

than $500,000 to large businesses.36 According to the FAR, agencies must 

make the maximum practical opportunities available for small businesses 

to participate in federal procurements and agencies must take steps to 

ensure that prime contractors play a role in ensuring those opportunities 

are made available.37 Additionally, the FAR requires that federal executive 

agencies must maintain public files of data on their procurement activities, 

such as whether or not they have required prime contractors to submit 

and report on subcontracting plans.38 We also note that the FAR requires 

that federal agencies have readily accessible information on each of the

 36As we previously noted, the dollar threshold was changed to $550,000 on September 28, 

2006. 71 Fed. Reg. 57363 (Sept. 28, 2006). 

37In July 2006, the Civilian Agency Acquisition Council and the Defense Acquisition 

Regulations Council published, with a request for comments, interim rules establishing Part 

18 of FAR, which are intended “to provide a single reference to acquisition flexibilities that 

may be used to facilitate and expedite acquisitions of supplies and services during

emergency situations.” 71 Fed. Reg. 38247 (July 5, 2006). According to GSA officials, these 

interim rules do not specifically address the subcontracting plan requirements discussed in 

this report. The FAR is available at http://acquisition.gov/far/index.html. 

38See FAR § 4.601(a); see also FPDS-NG User’s Manual, SBA Goaling Guidelines.

Page 22 GAO-07-205 Katrina Small Business Contracts
contracts that they have awarded.39 Finally, under the FAR, a contractor is 

not required to submit a subcontracting plan if the contracting officer 

determines that no subcontracting possibilities exist.40 The contracting 

officer’s determination must be approved at a level above the contracting 

officer and documented in the contract file.41 This information is to be 

captured in FPDS-NG for civilian agencies and in its military counterpart, 

DD-350, for military agencies. By capturing the reason for decisions about 

forgoing subcontracting plans, such as the lack of subcontracting 

possibilities, these systems provide transparency into a process intended 

to ensure maximum opportunities for small businesses to participate in 

federal procurements. 

As we noted, information about whether the four agencies met the criteria

for requiring subcontracting plans and, when they did not require a plan,

their reasons for doing so were incomplete. Specifically, for contracts 

representing the majority of the dollars that DHS and GSA awarded to 

large businesses for contracts valued over $500,000, no information was 

available in FPDS-NG on whether the two agencies required 

subcontracting plans or had waived this requirement (see table 5, column 

6). Also, for contracts representing 12 to 77 percent of the funds they 

awarded to large businesses through contracts for over $500,000, the 

procurement system showed that the agencies determined that 

subcontracting plans were not required (table 5, column 5). Agency

officials were unable to explain why subcontracting plans were not 

required for contract dollars ranging from at least $16 million to $861 

million. 

 39The FAR states that agencies must transmit procurement information into FPDS-NG in 

accordance with the system’s procedures. The FPDS-NG User Guide states that contracting

officers shall submit complete and accurate data on contract actions to FPDS-NG within 3 

business days after contract award. Moreover, under FAR subpart 4.8, agency contract files

are to contain specified information about the contract and agencies should be able to

locate them promptly. See FAR §§ 4.801 – 4.803. 

40FAR § 19.705-2. According to the FAR, in determining whether subcontracting 

possibilities exist, a contracting officer must determine relevant factors such as: (1) 

whether firms engaged in the business of furnishing the types of items to be acquired 

customarily contract for performance of part of the work or maintain sufficient in-house

capability to perform the work; and (2) whether there are likely to be product 

prequalification requirements (a qualification requirement means a requirement for testing 

or other quality assurance demonstration that must be completed before award of a

contract). 

41Id. 

Page 23 GAO-07-205 Katrina Small Business Contracts
Table 5: Subcontracting Plan Requirements by Dollar Amount Awarded 

Dollars in millions 

Agency 

Total

amount 

awarded to

large 

businesses 

over 

$500,000a

Percent of total amount 

awarded and dollar amount

requiring a subcontracting

plan

Percent of total 

amount awarded

and dollar amount 

with no 

subcontracting

possibilities 

Percent of total 

amount awarded and 

dollar amount reported 

as not requiring a

subcontracting plan

Percent of total amount 

awarded and dollar 

amount with no

information on

subcontracting 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. 

a

One million dollars for construction. 

Overall, procurement officials from the four agencies were able to explain

some of the missing or incomplete subcontracting plan information, for 

example, by identifying data entry errors or providing evidence of 

additional justification for not requiring the subcontracting plans. 

Nonetheless, for each agency, there remain contracting dollars for which 

the subcontracting plan information is incomplete and which agency

officials have not been able to explain. Specifically: 

• For DHS, table 5 shows that $3.4 billion in contracting dollars lacked any 

information on whether a subcontracting plan was required. DHS officials 

stated that information was missing for $3.2 billion of these dollars due to

data entry errors. For example, for nearly $3 billion of these dollars, 

subcontracting plans were in fact required.42 DHS officials were unable to 

explain the lack of information on subcontracting plan requirements 

 42Of the other dollars for which information was missing, DHS stated that some were 

awarded through purchase orders, to small businesses, or had no subcontracting 

opportunities—all of which would exclude the contracts from subcontracting plan

requirements. As noted previously in this report, FAR does not require subcontracting 

plans for contracts with small businesses and when no subcontracting possibilities exist. 

FAR does not contain an explicit exception for purchase orders. Under FAR, a purchase

order is a type of contract that, by definition, involves the use of simplified acquisition 

procedures. See FAR § 2.101 (definitions of “Contract” and “Purchase Order”). The

simplified acquisition procedures apply where the contract amount does not exceed the

simplified acquisition threshold. See FAR § 13.000. 

Page 24 GAO-07-205 Katrina Small Business Contracts
associated with the remaining $191 million of the dollars for which 

subcontracting plan requirement information is missing. Table 5 also 

shows that DHS did not require subcontracting plans for $1.4 billion of the 

funds it awarded. DHS officials indicated $545 million of these funds were 

miscoded and should have been entered in FPDS-NG as having “no 

subcontracting possibilities.” DHS officials were unable to explain why the 

remaining $861 million were not required to have subcontracting plans.

• According to GSA officials, contracting officers did not require 

subcontracting plans for the Katrina-related contracts awarded to large 

businesses for over $500,000 in some cases because of a temporary 

increase (to $10 million) in the threshold for requiring these plans and in 

other cases because the emergency nature of the situation required a

faster response than normal contracting procedures would have allowed.43

Table 5 shows that GSA awarded a total of almost $114 million through 

acquisitions that were coded in FPDS-NG as either not requiring a 

subcontracting plan or for which there was no information on whether a 

subcontracting plan was required (columns 5 and 6 of table 5, which round 

to $114 million); of this amount, GSA officials indicated that $72 million 

was awarded at amounts below the $10 million threshold.44 Of the 

remaining $42 million, GSA determined that a subcontracting plan was not 

required for a $26 million contract for ice because the urgent nature of the 

situation required procuring and delivering the ice faster than normal 

contracting procedures would have allowed. According to GSA officials, 

 43Additionally, according to GSA officials, data entry errors explain some of the information

missing from their procurement systems. Specifically, GSA reported that about $18 million 

were awarded through purchase agreements, against existing contracts, and to a small 

business that was miscoded as a large business—and therefore were not required to have 

subcontracting plans. 

44According to GSA officials, under GSA Acquisition Letter V-05-17 (effective September 9,

2005) certain contracts for amounts not exceeding $10 million were subject to simplified 

acquisition procedures that did not require submission of a subcontracting plan. They 

referred to the following paragraph in the Sept. 9 letter: 

In accordance with section 101(1) of Pub. L. 109-62, the threshold in FAR 13.500(e) ($10

million) is applicable to procurements in support of Hurricane Katrina rescue and relief 

operations. In addition, under section 101(2), the micro-purchase threshold for actions in 

support of Hurricane Katrina rescue and relief efforts is $250,000. 

The GSA officials did not provide a clear explanation of the extent to which GSA relied on 

the threshold amount. One official stated that subcontracting plans were not required for 

acquisitions of commercial items in which the contract amount was $10 million or less. 

Subsequently, another official indicated that GSA relied on the threshold amount for

Katrina-related contracts generally, without referring specifically to contracts for 

commercial items.

Page 25 GAO-07-205 Katrina Small Business Contracts
contracts such as this and others for which GSA did not require 

subcontracting plans, such as one for ambulance services to transport 

people from nursing homes, illustrate their point about the need to 

expedite contracting in an emergency situation. The ambulance services 

contract they cited was valued high enough that they ordinarily would 

have had to include a subcontracting plan which, in the normal course of 

operations, would require review by the SBA’s Procurement Center 

Representatives for advisory purposes as well as a certain amount of 

market research to determine if subcontracting possibilities existed for 

potential prime contractors. In the judgment of the GSA contracting 

officials, the urgency of the situation requiring the ambulances was 

sufficient justification for forgoing the subcontracting plan requirements 

and procedures. GSA officials were unable to explain the lack of 

information on subcontracting plan requirements associated with the 

remaining $16 million.45

• Table 5 shows that DOD’s data system, DD-350, had no information at all

on subcontracting plan requirements for $6.2 million of its Katrina-related 

contracts. Based on our queries, DOD officials determined that these 

contracts actually did require such plans. The system lacked this 

information because the DFARS instructions do not require this 

information for orders under a supply schedule contract. Of the $483.6 

million that table 5 shows as not requiring a subcontracting plan, based on 

our inquiries, DOD officials determined that $475.9 million of these 

contract actions represented data entry errors and did, in fact, require 

such plans or should have been coded as having “no subcontracting 

possibilities.” Moreover, DOD officials stated that about $4.4 million in 

contract actions were correctly coded as not requiring subcontracting 

plans because they were awarded as blanket purchase agreements, 

purchase orders, or were awarded to a small business. DOD officials were 

unable to explain why the remaining $3.3 million in contracting dollars 

coded as not requiring subcontracting plans were not required to have

such plans.

 45The dollar amount for which it is unclear why GSA did not require subcontracting plans 

may be greater than $16 million. As we indicated earlier, GSA officials were unclear 

whether its increase in the threshold for requiring the plans applied to all contract actions

under the $10 million or just those involving commercial items. If the threshold increase 

applied to all contract actions, $16 million in GSA contract dollars remains unexplained. If 

the threshold increase only applied to commercial items (a subset of all contract actions), 

then the dollar amount for which we do not have information on why GSA did not require a 

subcontracting plan is likely greater than $16 million. 

Page 26 GAO-07-205 Katrina Small Business Contracts
• For the Corps, table 5 shows $14 million for which DD-350 contained no 

information on subcontracting plan requirements. Corps officials 

determined that these were orders against existing GSA federal supply 

schedule contracts and for which, according to these officials, the FAR 

does not require subcontracting plans. Table 5 also shows $574.5 million 

for which the Corps determined that subcontracting plans were not 

required; according to Corps officials, data entry errors explain $437.2 

million of these funds—some small businesses (which do not have to have 

subcontracting plans) were miscoded as large, some contracts were 

miscoded as not requiring a subcontracting plan when they actually did,

and some should have been coded as having “no subcontracting 

possibilities.” Corps officials were unable to explain why subcontracting 

plans were not required for the remaining $102 million in contracting 

dollars that were coded as not requiring a subcontracting plan. 

More than 1 year after Hurricane Katrina, key information about 

subcontracting plan requirements remains incomplete, as we show in table 

5. As we noted in reporting on the agencies’ efforts to respond to our 

inquiries, data entry errors explain some of what we found. Additionally, 

officials from GSA and DOD stated that in the emergency situation that 

Hurricane Katrina presented, they placed priority on awarding contracts

for vital supplies with the expectation that data entry would be completed

at a later time. However, as we noted, these agencies were still unable to 

explain why data were missing on subcontracting plan requirements, or 

why subcontracting plans were not required for from $3.3 million to $861 

million in contract dollars. The incomplete information limits using the 

agencies’ procurement data systems and publicly reported contracting 

data to tell the extent to which agencies complied with federal contracting

rules designed to give small businesses the maximum practical 

opportunity to participate in federal contracts. 

Page 27 GAO-07-205 Katrina Small Business Contracts
Through contracts and subcontracts, DBEs were awarded about 4 percent 

of almost $1.3 billion of FHWA funding for Katrina-related contracts 

awarded between August 1, 2005, and June 30, 2006, in the three states 

primarily affected by Hurricane Katrina.46 The Mississippi Department of 

Transportation awarded the majority of the FHWA dollars DBEs received 

in these three states. DBEs were awarded about 10 percent of FAA dollars 

that airports in these three states awarded for Katrina-related contracts 

during the same period of time.47 FTA officials said that FTA did not fund 

any grants to transit agencies for Katrina-related recovery projects.48

DBEs were awarded about 4 percent of the total dollar value of Katrinarelated contracting dollars awarded by three state transportation agencies

through contracts and subcontracts between August 1, 2005, and June 30,

2006. The DOTs in the three states primarily affected by Katrina (Alabama, 

Louisiana, and Mississippi) awarded 76 FHWA-funded, Katrina-related 

contracts, totaling about $1.3 billion (table 6). DBEs were awarded 

approximately $53 million of this amount as prime contractors and 

subcontractors. Specifically, DBEs were prime contractors on 2 and 

subcontractors on 10 of the 76 contracts awarded. 

Disadvantaged 

Business Enterprises 

Participated in 

FHWA– and FAA–

Funded Contracts and 

Subcontracts Related 

to Hurricane Katrina 

DBEs Received about 4 

Percent of FHWA Dollars 

for Katrina-Related 

Contracts in Mississippi, 

Alabama, and Louisiana 

 46The state DOTs of Alabama, Louisiana, and Mississippi set annual goals for DBE

participation in FHWA-assisted contracts at about 10 percent for fiscal years 2005 and 2006, 

as we note in the background section of this report. Because these goals are based on DBE 

participation on an annual basis using data from all FHWA-assisted contracts in each state, 

and because DOT did not set Katrina-specific overall DBE participation goals, the data we 

present in this section do not represent noncompliance or the failure of any of the states to

meet annual DBE participation goals. 

47Airports receiving FAA funds set annual DBE participation goals. The airports’ FAAassisted contracts that we reviewed had goals that ranged from about 7 percent to 20 

percent, as we note in the background section of this report. Because these goals are based

on DBE participation on an annual basis using data from all FAA-assisted contracts, and

because DOT did not set Katrina-specific DBE participation goals, the data we present in 

this section do not represent noncompliance or the failure of any of the airports to meet 

annual DBE participation goals.

48Repairs to transit for damage caused by Hurricane Katrina have been paid for with FEMA

funds that were administered by FTA. According to FTA officials, DBE participation 

requirements do not apply to the funds they provided transit agencies in the affected states 

because the funds were FEMA’s, not FTA’s. 

Page 28 GAO-07-205 Katrina Small Business Contracts
Table 6: DBE Participation in Katrina-Related State DOT Contracts Awarded With

FHWA Funds

Dollars in millions 

State 

Total dollar value of

contracts awarded

Total dollars 

 awarded to DBEsa

Percentage of total 

dollar value of

contracts awarded to

DBEs

Mississippi $790.0 $34.2 4.3%

Louisiana 490.0 18.8 3.8

Alabama 2.9 0.1 4.0

Total $1,282.9 $53.1 4.1%

Source: GAO analysis of Mississippi, Louisiana, and Alabama DOT data for contracts 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. 

a

Includes amount paid to DBEs for completed projects and amount committed to DBEs for ongoing 

projects through prime contracts and subcontracts.

In Mississippi, DBEs were awarded a total of about $34 million, or 4.3 

percent of the $790 million that the Mississippi DOT awarded in FHWAfunded, Katrina-related contracts. The Mississippi DOT awarded the $790 

million through 55 contracts. DBEs were the prime contractor on 2 of 

these contracts, which totaled about $2 million, and subcontractors on 6 

others. Almost all of the 8 contracts that DBEs participated in were for 

debris removal and work on U.S. Highway 90, which runs along the 

Mississippi coast and received substantial damage from the hurricane. As 

of October 2006, of the approximately $34 million awarded to DBEs in 

Mississippi, about $3 million had been paid for completed work and $31 

million is committed for work in progress. 

DBEs were awarded a total of about $19 million, or 3.8 percent of the $490 

million that the Louisiana DOT awarded in FHWA-funded, Katrina-related 

contracts. The Louisiana DOT awarded a total of 19 contracts, and DBEs 

were subcontractors on 3 of them. The 3 subcontracts included work for 

bridge repair and work on Interstate Highway 10, which received 

significant damage from Hurricane Katrina between New Orleans and 

Slidell, Louisiana. As of October 2006, of the approximately $19 million 

awarded to DBEs, approximately $700,000 had been paid for completed 

work, and a little more than $18 million had been committed for work in 

progress. 

Page 29 GAO-07-205 Katrina Small Business Contracts
DBEs were awarded a total of about $100,000, or 4 percent, of the nearly 

$3 million that the Alabama DOT awarded in FHWA-funded, Katrinarelated contracts. Two contracts accounted for the nearly $3 million and 

two DBEs were subcontractors on one of the contracts.49 As of October 

2006, the two DBEs had received over half of their awarded amounts, and 

the remainder was committed for the rest of the project, which was 

designed to repair a ramp on a section of Interstate Highway 10. 

DBEs were awarded about $2.4 million of the nearly $24 million in Katrinarelated contracts that airports in Alabama, Louisiana, and Mississippi 

awarded with FAA funds for Katrina-related contracts during the period of

our analysis (table 7). This $24 million was awarded by airports through 44 

contracts, and DBEs participated in 1 contract as a prime contractor and

in 10 contracts as subcontractors. 

Table 7: DBE Participation in Contracts Awarded by Airports with FAA Grants 

DBEs Received About 10 

Percent of the FAA Dollars 

Awarded for KatrinaRelated Contracts 

Dollars in millions 

State 

Total dollar value of

all contracts 

awarded

Total dollar value

awarded to DBEsa

Percentage of total 

dollar value of

contracts awarded

to DBEs

Airports in 

Mississippi $21.1 $2.3 11.0%

Airports in 

Louisiana 2.6 0.1 4.1

Airports in Alabama 0.3 —-b —-b

Total $24.0 $2.4 10.1%

Source: GAO analysis of FAA data for contracts awarded by airports between August 1, 2005 and June 30, 2006. 

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

unrounded numbers. 

a

Includes amount paid to DBEs for completed projects and amount committed to DBEs for ongoing 

projects through prime contracts and subcontracts.

 49According to an Alabama DOT official, the Alabama DOT indirectly awarded 11 additional 

Katrina-related contracts totaling about $800,000 through various counties in the state. The 

counties awarded the contracts and the Alabama DOT reimbursed them. DBE information

was not readily available on these 11 contracts and we excluded them from our analysis. 

Page 30 GAO-07-205 Katrina Small Business Contracts
b

Airports in Alabama awarded a total of nearly $300,000 in three FAA-funded, Katrina-related 

contracts, and DBEs participated in one of the three contracts. For contracts awarded with FHWA or 

FAA funds, we determined that contract values were sufficiently reliable to report aggregated contract 

amounts rounded to the nearest $100,000. Because the dollar value awarded to DBEs in Alabama 

was less than $50,000 and rounding this figure would require reporting it as zero, we chose not to 

report on the amount or percentage of total dollars DBEs received in Alabama. See the detailed 

discussion of our methodology in appendix I for more information. 

DBEs were awarded approximately $2.3 million (11 percent) of about $21 

million that airports in Mississippi awarded in FAA-funded, Katrina-related 

contracts. DBEs participated in 8 out of 27 contracts awarded by airports 

in Mississippi. The contracts included repair work for terminal areas and 

runway lighting, as well as construction of a new cargo building. 

DBEs were awarded a total of about $100,000, all through subcontracts, of

nearly $2.6 million that airports in Louisiana awarded in FAA-funded, 

Katrina-related contracts. The $100,000 DBEs received accounted for 

approximately 4 percent of the $2.6 million that the Louisiana airports 

awarded. Overall, DBEs participated in 2 of 14 contracts that included 

work to update one airport’s master plan and consulting services provided 

to another airport. 

There is little doubt that Hurricane Katrina posed challenges to federal 

agencies to award contracts expeditiously while adhering to federal 

acquisition regulations, including those governing subcontracting plans. 

We recognize that the response to Katrina was unprecedented for most 

agencies and that complying with certain requirements, such as 

negotiating subcontracting plans and documenting compliance with 

subcontracting requirements, may have understandably been deferred to a 

later time, as GSA and DOD officials said was the case. Nonetheless, a 

substantial amount of information about the four agencies’ subcontracting 

requirements remains incomplete over a year after the hurricane. 

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, remains unresolved, we cannot tell the extent to 

which the agencies are complying with the regulations. Furthermore, the 

Conclusions 

Page 31 GAO-07-205 Katrina Small Business Contracts
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. 

For their Katrina-related relief contracts, until DHS, GSA, DOD, and the 

Corps improve documentation of (1) the status of whether subcontracting 

plan requirements are in place and (2) their decisions on whether 

subcontracting plans were required, the agencies will lack the ability to 

provide assurance they offered small businesses the maximum practical 

opportunity to do business with them. However, it is questionable whether 

the benefit from clearing up the agencies’ incomplete subcontracting 

information would outweigh the costs of doing so for Katrina-related 

contracts. Consequently, the agencies’ best course of action in response to 

what we found may be to improve documentation for all future contracts 

and reinforce to all of its contracting officers and others involved in the 

procurement process the importance of adhering to subcontracting plan

requirements and ensuring that publicly available information—such as 

what the agencies report in FPDS-NG—accurately reflects the extent to 

which the agency made subcontracting opportunities available to small 

businesses. 

To ensure compliance with federal contracting regulations and to more 

transparently disclose the extent to which subcontracting opportunities 

are available to small businesses, we recommend that the Secretaries of 

Homeland Security and Defense and the Administrator of General Services 

take the following two actions: 

Recommendations for 

Executive Action 

• Issue guidance to the appropriate procurement offices and personnel 

reinforcing (1) the reasons for subcontracting plan requirements and the 

importance of complying with them; (2) the necessity for documenting in 

publicly available sources the agencies’ decisions, particularly in instances

when they determine not to require subcontracting plans; and (3) where 

subcontracting plans are in place, the need to adhere to the requirement 

for all prime contractors to report on their small business subcontracting 

accomplishments. 

• Consider asking their respective Inspectors General to conduct a review at 

an appropriate future date to ensure that this guidance and related 

requirements are being followed. 

Page 32 GAO-07-205 Katrina Small Business Contracts
We provided a draft of this report to DHS, GSA, DOD, DOT, and the SBA

for their review and comment. Officials from DOT and SBA provided 

technical clarifications, which we incorporated as appropriate. Through 

written comments, DHS, GSA, and DOD—the agencies to which our 

recommendations are addressed—concurred with our recommendations. 

Their comments are reprinted in appendixes II, III, and IV. 

In written comments from the Director of DHS’s Departmental GAO/OIG 

Liaison Office (app. II), DHS noted actions that it plans to take to 

implement the recommendations within the Federal Emergency 

Management Agency (which was responsible for the vast majority of the 

agency’s Katrina-related contracting) and stated that it plans to apply them

as best practices across all of the department. Specifically, the agency 

plans to: 

Agency Comments 

and Our Evaluation 

• issue guidance to all acquisition offices reinforcing previously issued 

guidance regarding the importance of awarding all appropriate contracts 

to small businesses and encouraging large businesses to subcontract all 

appropriate work to small businesses; 

• have an acquisition oversight team within the agency’s Office of the Chief 

Procurement Officer review DHS acquisition offices’ compliance with 

federal and DHS acquisition regulations, policies, and procedures; and, 

• pursue a review by the Defense Contract Management Agency (DCMA) to 

benchmark the agency’s contract administration efforts, including its 

subcontracting plan administration, against DCMA practices and 

procedures. 

In commenting on our presentation of subcontracting accomplishments, 

DHS stated that many of the DHS contracts did not require contractors to 

enter subcontracting accomplishment data into the electronic 

subcontracting reporting system (eSRS), and that inputting subcontracting 

accomplishment information into eSRS was voluntary in fiscal year 2006. 

However, we note that according to a November 2005 memo to Chief 

Acquisition Officers from the Office of Management and Budget, all

contractors for civilian agencies were required to use eSRS as of fiscal 

year 2005. 

DHS also stated that we could have emphasized the agency’s 

administration of four key contracts with large businesses that had 

subcontracting plans, noting that these businesses provided 

Page 33 GAO-07-205 Katrina Small Business Contracts
subcontracting information weekly. While we were aware that DHS was 

obtaining weekly subcontracting accomplishment information from 

selected contractors, our methodology for DHS (and the other agencies) 

was to obtain and analyze the subcontracting accomplishment information 

that federal regulations required the agency to collect and report 

(semiannually, in this case, as of March 31, 2006).

DHS also offered comments regarding the report’s presentation of 

contracts awarded directly to small businesses. Specifically, DHS stated 

that work under two contracts that were awarded directly to large 

businesses was transferred to multiple small businesses. As we note in the 

report, DHS awarded $1.6 billion in Katrina-related contracting dollars 

directly to small businesses. To the extent that DHS accurately indicated 

in FPDS-NG that the contracting dollars were awarded directly to small 

and not large businesses, our report reflects this activity. 

GSA’s Administrator generally concurred with our recommendations (see 

app. III). The agency’s Office of the Chief Acquisition Officer will, among 

other things, take steps such as: 

• distribute an acquisition alert reminding the acquisition community of the 

importance of subcontracting plan requirements, and the need to 

document decisions, including those regarding subcontracting plan 

requirements; 

• remind contracting officers of their responsibility to ensure that 

contractors properly report their subcontracting accomplishments as 

required; and, 

• include compliance with the guidance about subcontracting plan 

requirements in its regularly scheduled Procurement Management 

Reviews as well as the special reviews it conducts during major 

catastrophes in order to ensure procurement statutes, regulations, and 

guidance are being met; when appropriate, GSA indicated it will seek the 

assistance of the agency’s Inspector General to support these reviews. 

GSA emphasized—during the course of our review as well as in its 

comments on our draft report—that during catastrophic situations, time is 

of the essence in getting goods and services to a disaster area immediately. 

While its contracting officers and personnel worked to comply with all 

contracting requirements, including the subcontracting plan requirement, 

GSA stated that the latter proved to be impossible given the urgency of the 

Page 34 GAO-07-205 Katrina Small Business Contracts
needs resulting from the hurricane. GSA also noted that the

subcontracting plan requirement is one it did not address when it waived 

certain procurement rules in early September 2005 during the emergency

response. One reason GSA did not extend these waivers to the 

requirement for subcontracting plans is that, in the judgment of GSA 

procurement officials, there are no provisions or flexibility in the Federal 

Acquisition Regulation (FAR) that would have given them the authority, 

even in an emergency situation such as the response to Hurricane Katrina, 

to deviate from subcontracting plan requirements. We agree with GSA’s 

conclusion that the FAR currently does not specifically permit agencies to 

waive the requirement for an approved subcontracting plan prior to 

contract award. This is because the FAR requirement is based on the Small 

Business Act, which does not provide for an agency to waive the 

subcontracting plan requirement or allow deferral of it until after the 

agency has awarded a contract. As a result of our findings and the lack of

flexibility GSA determined the FAR has on subcontracting plan 

requirements, GSA plans to raise the issue of emergency processes with 

the FAR Council. 50 

DOD’s Director, Defense Procurement and Acquisition Policy, in the Office 

of the Under Secretary of Defense for Acquisition, Technology, and 

Logistics, concurred with our recommendations (see app. IV) and noted 

that the department plans to issue a policy memorandum in 2007 

containing the guidance we recommend. Additionally, DOD indicated it

would direct review officials for each of its military departments and other 

defense agencies to include subcontracting guidance and compliance as a 

special interest item in the periodic oversight reviews they conduct of the 

organizations within each department or agency. Moreover, DOD will ask 

the military departments’ Offices of Inspectors General as well as the DOD 

Inspector General to review the adequacy of departmental and agency 

oversight and management review processes. 

We are sending copies of this report to appropriate congressional 

committees, the Secretary of Homeland Security, the Administrator of 

 50The FAR Council oversees the development and maintenance of the FAR. Its chair is the

Administrator of OMB’s Office of Federal Procurement Policy, who is responsible for

providing overall direction for governmentwide procurement policies, regulations, and 

procedures. The Council’s members also include the DOD Director of Defense 

Procurement and Acquisition Policy and the GSA Chief Acquisition Officer. The Office of

Federal Procurement Policy chairs quarterly meetings to discuss and resolve significant or

controversial FAR changes. 

Page 35 GAO-07-205 Katrina Small Business Contracts
General Services, the Secretary of Defense, the Secretary of 

Transportation, and the Administrator of the Small Business 

Administration. We will also make copies available to others upon request. 

In addition, the report will be available at no charge on the GAO Web site 

at http://www.gao.gov.

If you or your staff have any questions regarding this report, please call me 

at (202) 512-8678 or shearw@gao.gov. Contact points for our Offices of 

Congressional Relations and Public Affairs may be found on the last page 

of this report. GAO staff who made major contributions to this report are 

listed in appendix V. 

William B. Shear 

Director, Financial Markets 

 and Community Investment 

Page 36 GAO-07-205 Katrina Small Business Contracts
List of Congressional Addressees 

The Honorable John F. Kerry 

Chairman 

The Honorable Olympia J. Snowe 

Ranking Member 

Committee on Small Business and Entrepreneurship 

United States Senate 

The Honorable Joseph I. Lieberman 

Chairman 

The Honorable Susan M. Collins 

Ranking Member 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

The Honorable Richard J. Durbin 

Chairman 

The Honorable Sam Brownback 

Ranking Minority Member 

Subcommittee on Financial Services and General Government 

Committee on Appropriations 

United States Senate 

The Honorable Nydia M. Velázquez 

Chair 

The Honorable Steve Chabot 

Ranking Member 

Committee on Small Business 

House of Representatives 

The Honorable Henry A. Waxman 

Chairman 

The Honorable Tom Davis 

Ranking Member 

Committee on Oversight and Government Reform 

House of Representatives 

Page 37 GAO-07-205 Katrina Small Business Contracts
The Honorable José E. Serrano 

Chairman 

The Honorable Ralph Regula 

Ranking Minority Member 

Subcommittee on Financial Services

Committee on Appropriations 

House of Representatives 

The Honorable Donald A. Manzullo 

House of Representatives 

Page 38 GAO-07-205 Katrina Small Business Contracts
Appendix I: Scope and Methodology Appendix I: Scope and Methodology 

To identify the amounts that small and local businesses received through 

direct contracts from the four federal agencies for relief and recovery 

efforts related to Hurricane Katrina, we identified the agencies that had 

received the largest supplemental appropriations for Katrina-related relief 

and recovery work, and then analyzed data from the Federal Procurement 

Data System-Next Generation (FPDS-NG), the governmentwide database 

of contracting activity, and DD-350, the Department of Defense (DOD) 

database that contains data on individual contracting actions, to identify 

federal agencies that had directly awarded the most contracting dollars as

of May 2006. This analysis showed that the Department of Homeland 

Security (DHS), DOD, and the U.S. Army Corps of Engineers (Corps) had

received the largest supplemental appropriations and that these three 

agencies plus the General Services Administration (GSA) had awarded 86 

percent of all funds for Katrina-related contracts as of May 2006. Our 

analysis focused on these agencies.1

 For consistency, we decided to 

analyze all Katrina-related obligations from August 1, 2005, to June 30, 

2006, in order to capture contracting actions that occurred in preparation 

for Hurricane Katrina, and because June 30th was the most current data 

available at the time we began data analysis.2

 In addition, this time frame 

allowed for analysis of nearly 1 year’s worth of contracting activities. 

To identify and obtain information on the Katrina-related contracting 

dollars awarded by DHS and GSA between August 1, 2005, and June 30,

2006, we analyzed data in FPDS-NG on new contracts, contract 

modifications, and task orders against existing contracts. We excluded

contract modifications that were administrative or that did not change the 

dollar value of the contract. We analyzed data that were reported into 

FPDS-NG as of October 23, 2006. Although we could not independently 

verify the reliability of all of these data, we conducted electronic data 

testing for inconsistency errors and completeness, and interviewed agency

officials. For DHS, we also assessed the reliability of contract information 

in FPDS-NG by comparing these data to information that the agency

maintained on Katrina-related contracts in an ad hoc spreadsheet that it

developed in the early days after the hurricane; DHS used this spreadsheet 

 1

We are reporting DOD and the Corps separately because three of the four supplemental 

appropriations specifically directed certain funds to the Corps for its disaster relief 

activities. 

2

A Katrina-related action is one that had the National Interest Action code of “H05K” or for 

DOD the System Code of “ZHK” or had some variation of the name “Katrina” in the 

Description of Requirement field or the Major Program field.

Page 39 GAO-07-205 Katrina Small Business Contracts
Appendix I: Scope and Methodology 

to collect and maintain Katrina-related contract information from late 

September 2005 through the present in order to be able to provide timely 

information to the White House. Subsequently DHS used this spreadsheet

to check the Katrina-related contract information in FPDS-NG, and 

investigate any anomalies. We determined the data to be sufficiently 

reliable for the purposes of this report. 

To identify and obtain information on the Katrina-related contracting 

dollars awarded by DOD and the Corps between August 1, 2005, and June 

30, 2006, we analyzed data in DD-350 on new contracts, contract 

modifications, and task orders against existing contracts. We excluded

contract modifications that were administrative or that did not change the 

dollar value of the contract. We analyzed data for DOD and the Corps that 

were reported into DD-350 as of October 26, 2006, and FPDS-NG as of 

November 13, 2006. Although we could not independently verify the 

reliability of all of these data, we conducted electronic data testing for 

inconsistency errors and completeness, and interviewed agency officials. 

For the Corps, we also assessed the reliability of contract information in 

DD-350 by comparing these data to information that the Corps maintained 

on Katrina-related contracts in an ad hoc spreadsheet that it developed 

following the hurricane; the Corps used this spreadsheet to collect and

maintain current Katrina-related contract information from late in 

September 2005 through the present in order to be able to report timely 

information to the White House. Subsequently the Corps used this 

spreadsheet as a check on the accuracy and completeness of Katrinarelated contract information in DD-350. Based on these efforts, we 

determined the data to be sufficiently reliable for the purposes of this 

report. 

To describe the extent to which prime contractors subcontracted with 

small businesses, we used different approaches for military and civilian 

agencies. For DOD and the Corps, we obtained information on the top 10 

contractors because data on the extent to which military contractors 

awarded subcontracts to various types of small businesses are not 

electronically aggregated.

3

 To identify the 10 contractors that cumulatively 

had received the most funds for Katrina-related contracts from DOD and 

the Corps between August 1, 2005, and June 30, 2006, we analyzed 

information from DD-350 and FPDS-NG. Of these 10 contractors, 4 

 3

Identifying the top 10 contractors is a nonprobability sample because we did not consider 

including contractors other than the top 10. 

Page 40 GAO-07-205 Katrina Small Business Contracts
Appendix I: Scope and Methodology 

received contracts for strictly Katrina-related projects from the Corps, and 

were required to submit subcontracting plans for these contracts. These 4 

contractors were all large, and received a total of eight contracts. For each 

of the eight contracts, we obtained and reviewed the subcontracting plans 

and the individual subcontracting reports as of March 31, 2006. We also 

interviewed contractors about their subcontracting activities. We 

compared the amounts each of the 4 contractors awarded to small 

businesses to the total amounts obligated as of March 31, 2006. 

To identify the extent to which contractors for DHS and GSA 

subcontracted with small businesses to do Katrina-related relief and 

recovery work, we used FPDS-NG to identify those contractors that 

received prime contracting dollars between August 1, 2005, and June 30,

2006, for activities that were coded as being related to Hurricane Katrina,

and were required to submit a subcontracting plan. For those contracts 

that required a subcontracting plan, we searched for documentation of 

subcontracting awards in the electronic subcontracting reporting system 

(eSRS) as of March 31, 2006. 

In addition, for all four agencies, we assessed the extent to which the 

agencies required subcontracting plans for Katrina-related contracting 

actions to large businesses for over $500,000.4

 According to federal 

acquisition regulations, contracts or contract modifications to large 

business valued at over $500,000 ($1 million for construction) and which 

have subcontracting possibilities, are required to submit subcontracting 

plans. For each of the four agencies, we identified Katrina-related 

contracting actions that occurred between August 1, 2005, and June 30,

2006, that met this criteria. We asked each agency to explain why 

subcontracting plans were not required for those contracting activities 

that met these criteria, but for which the data showed they had not been 

required to submit subcontracting plans. We also contacted, where 

appropriate, the procurement and legal officials at each agency to 

determine any basis upon which agencies may have determined not to 

require subcontracting plans for any contracts that otherwise appeared to

have met the criteria for them. 

 4

During the period of our analysis, each solicitation of offers to perform a contract or 

contract modification over $500,000 ($1 million for construction) and that had 

subcontracting possibilities required the contractor to submit a subcontracting plan. The

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

28, 2006). 

Page 41 GAO-07-205 Katrina Small Business Contracts
Appendix I: Scope and Methodology 

To obtain information on the extent to which Disadvantaged Business 

Enterprises (DBEs) received federal funds for transportation projects that

relate to reconstruction or recovery from Hurricane Katrina, we analyzed

data on contracts awarded between August 1, 2005, and June 30, 2006, 

with Department of Transportation funds in the states of Alabama, 

Louisiana, and Mississippi. Specifically, we obtained data on contracts 

awarded through funds from two of the three operating administrations of 

the DBE program—the Federal Highway Administration (FHWA) and the 

Federal Aviation Administration (FAA). The third operating 

administration, the Federal Transit Administration (FTA), did not provide 

us with any data since FTA funds were not used to award contracts related 

to Katrina reconstruction or recovery projects during the time frame that 

we examined. For contracts awarded with FHWA funds, we obtained 

contract data from each state department of transportation. For contracts 

awarded with FAA funds, we obtained contract data from FAA’s Southern 

and Southwestern regional offices, which compiled data from the various

airports in the three states. The contract data we obtained for contracts 

funded with FHWA and FAA funds included information on DBE 

participation as either prime contractors or subcontractors, and the 

amounts awarded to DBEs, among other data fields. Overall, we obtained

data on 120 contracts awarded with FHWA and FAA funds. To assess the 

reliability of the data we collected, we contacted a simple random sample 

of 29 contractors and verified specific fields used in this report. We 

verified specific fields for each of the contracts in the sample—contract 

award date, contract amount, DBE participation, and amount awarded to 

DBEs. We determined the data for contract award date and DBE 

participation to be sufficiently reliable for the purposes of this report. We 

identified 3 contracts award amounts in the sample that contained minor 

discrepancies. We estimated, at the 95 percent confidence level, that these

discrepancies would not exceed $50,000 in total error in the population of

120 contracts. Based on this estimate we determined the data to be 

sufficiently reliable to report aggregated information rounded to the 

nearest $100,000. We chose to not report any figure below $50,000. To

obtain background information on the DBE program, we interviewed DOT 

headquarters officials from each of the three operating administrations. 

We also obtained documentation on the DBE program goals, DBE 

certification procedures, and information on the overall administration of 

the program. 

Page 42 GAO-07-205 Katrina Small Business Contracts
Appendix II: Comments from the Department Appendix II: Comments from the Department of Homeland Security

of Homeland Security 

Page 43 GAO-07-205 Katrina Small Business Contracts
Appendix II: Comments from the Department 

of Homeland Security

Page 44 GAO-07-205 Katrina Small Business Contracts
Appendix II: Comments from the Department 

of Homeland Security

Page 45 GAO-07-205 Katrina Small Business Contracts
Appendix III: Comments from the General Appendix III: Comments from the General Services Administration 

Services Administration 

Page 46 GAO-07-205 Katrina Small Business Contracts
Appendix III: Comments from the General 

Services Administration 

Page 47 GAO-07-205 Katrina Small Business Contracts
Appendix III: Comments from the General 

Services Administration 

Page 48 GAO-07-205 Katrina Small Business Contracts
Appendix III: Comments from the General 

Services Administration 

Page 49 GAO-07-205 Katrina Small Business Contracts
Appendix III: Comments from the General 

Services Administration 

Page 50 GAO-07-205 Katrina Small Business Contracts
Appendix III: Comments from the General 

Services Administration 

Page 51 GAO-07-205 Katrina Small Business Contracts
Appendix III: Comments from the General 

Services Administration 

Page 52 GAO-07-205 Katrina Small Business Contracts
Appendix IV: Comments from the Department Appendix IV of Defense : Comments from the 

Department of Defense 

Page 53 GAO-07-205 Katrina Small Business Contracts
Appendix IV: Comments from the Department 

of Defense 

Page 54 GAO-07-205 Katrina Small Business Contracts
Appendix IV: Comments from the Department 

of Defense 

Page 55 GAO-07-205 Katrina Small Business Contracts
Appendix V: 

A

GAO Contact and Staff 

cknowledgments 

Page 56 GAO-07-205

Appendix V: GAO Contact and Staff 

Acknowledgments 

GAO Contact William B. Shear, (202) 512-8678, shearw@gao.gov

In addition to the individual named above, Bill MacBlane, Assistant 

Director; Jim Ashley; Emily Chalmers; Julia Kennon; Tarek Mahmassani; 

Alison Martin; Marc Molino; Lisa Moore; Rhonda Rose; Paul Thompson; 

and Myra Watts-Butler made key contributions to this report. 

Katrina Small Business Contracts

Staff 

Acknowledgments 

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