Hurricane Katrina: Agency Contracting Data Should Be More Complete Regarding Subcontracting Opportunities for Small Businesses
Published: 2007-03-01T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: 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.
section_title: What GAO Found
paragraphs: 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. 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.

section_title: Letter
paragraphs: Hurricane Katrina caused billions of dollars in damage and affected about  1.5 million people in Alabama, Louisiana, and Mississippi. 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. 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) 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  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.
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.
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.
subsections: section_title: Background
paragraphs: 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. 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.
subsections: section_title: Federal Goals for Contracts with Small and Local Businesses
paragraphs: 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.” 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  than 23 percent of the total value of all prime contract awards—contracts  that are awarded directly by an agency—for each fiscal year. 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. 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). The  Small Business Act 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,  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.
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.
section_title: Federal Rules for Contracts with Businesses
paragraphs: 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  acquisition threshold must agree to give small business the “maximum  practicable opportunity” to participate in the contract “consistent with its  efficient performance.” 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. 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. 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.
section_title: Agency and Governmentwide Contract Data
paragraphs: 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. This system  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.
section_title: DOT’s Disadvantaged Business Enterprise Program
paragraphs: The Disadvantaged Business Enterprise Program (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 discrimination and (2) when  appropriate and as needed to meet the annual goal for the year, contract- specific 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 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. 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.
section_title: Small Businesses Received Varied Amounts of the Contracting Dollars Awarded by Four Agencies
paragraphs: 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. 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.
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). 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.
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.
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).
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.
The remaining 82 percent of the approximately $11 billion awarded by the  four agencies went to businesses throughout the United States (including  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.
section_title: Selected Corps Contractors Awarded Most Subcontracting Dollars to Small Businesses, but Information on Subcontracting Plans for All Four Agencies Was Incomplete
paragraphs: 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.” 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.
subsections: section_title: Corps Contractors Reported Awarding the Majority of their Subcontracting Dollars to Small Businesses
paragraphs: We reviewed 4 of the top 10 recipients of prime contracting dollars from  DOD and the Corps for projects related to Hurricane Katrina. 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. 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. 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).  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.
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. 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. We  compared the amounts each of the four selected Corps contractors  subcontracted to small businesses through eight Katrina-related 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.
section_title: Subcontracting Accomplishment Information Is Not Consistently Available for the DHS and GSA Contracts Related to Hurricane Katrina That Required Subcontracting Plans
paragraphs: 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.
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 FPDS- NG. DHS officials determined that subcontracting accomplishment  information was available on four of the seven contracts. 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.
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 Katrina- related 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 GSA- awarded contracts because the contractors had not submitted data into  eSRS, and on 1 other contract because the data were still in “draft” form in  eSRS. While subcontracting information was available on 1 of the GSA- awarded 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.
section_title: Incomplete Agency Information on Subcontracting Plan Requirements Raises Concerns about Compliance with Contracting Rules and Opportunities for Small Businesses
paragraphs: 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.
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. 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. 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. We also note that the FAR requires  that federal agencies have readily accessible information on each of the  contracts that they have awarded. Finally, under the FAR, a contractor is  not required to submit a subcontracting plan if the contracting officer  determines that no subcontracting possibilities exist. The contracting  officer’s determination must be approved at a level above the contracting  officer and documented in the contract file. 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.
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. DHS officials were unable to  explain the lack of information on subcontracting plan requirements  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.  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. 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,  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.
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.
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.
section_title: Disadvantaged Business Enterprises Participated in FHWA– and FAA– Funded Contracts and Subcontracts Related to Hurricane Katrina
paragraphs: 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. 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. FTA officials said that FTA did not fund  any grants to transit agencies for Katrina-related recovery projects.
subsections: section_title: DBEs Received about 4 Percent of FHWA Dollars for Katrina-Related Contracts in Mississippi, Alabama, and Louisiana
paragraphs: DBEs were awarded about 4 percent of the total dollar value of Katrina- related 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.
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 FHWA- funded, 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.
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, Katrina- related contracts. Two contracts accounted for the nearly $3 million and  two DBEs were subcontractors on one of the contracts. 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.
section_title: DBEs Received About 10 Percent of the FAA Dollars Awarded for Katrina- Related Contracts
paragraphs: DBEs were awarded about $2.4 million of the nearly $24 million in Katrina- related 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.
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.
section_title: Conclusions
paragraphs: 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  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.
section_title: Recommendations for Executive Action
paragraphs: 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:  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.
section_title: Agency Comments and Our Evaluation
paragraphs: 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:  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  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  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.
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  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.
section_title: Appendix I: Scope and Methodology
paragraphs: 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. 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. 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  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 Katrina- related 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. 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  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. 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.
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.
section_title: Appendix II: Comments from the Department of Homeland Security
section_title: Appendix III: Comments from the General Services Administration
section_title: Appendix IV: Comments from the Department of Defense
section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: 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.