In his September address from New Orleans, President Bush
stressed the importance of entrepreneurship following the worst
natural disaster to hit the U.S. in a century. "We will take
the side of entrepreneurs as they lead the economic revival of the
Gulf region," he said.
But entrepreneurs could end up feeling sidestepped as new
legislation dilutes federal contracting rules, and billions of
dollars in emergency no-bid reconstruction contracts are awarded to
big companies like Halliburton. "Small businesses are going to
be pushed out," predicts Scott Amey, general counsel for the
Project on Government Oversight, a Washington, DC, government
watchdog group.
One potential barrier for small companies relates to
"micropurchases," traditionally federal contracts under
$2,500 that are exempt from transparency and competitive
requirements. In September, Congress raised the cap on
micropurchases related to Katrina relief efforts to $250,000.
"Businesses will be competing in essentially a lawless
environment for contracts up to $250,000," says Christopher
Yukins, a professor of government contracts law at the George
Washington University Law School in Washington, DC. Contracting
consulting firm Eagle Eye estimates 65 percent of federal contracts
are under $250,000.
Content Continues Below
Allegra McCullough of the SBA counters that billions of dollars
will be spent on subcontracting, and small businesses that provide
roofing, debris removal and environmental tasks will be in demand.
"It's going to depend on what they do," she says,
"and how well they [research] the information out
there."
Big companies, however, aren't posting Katrina-related
subcontracting jobs on their websites, and FedBizOpps.gov, a
database frequently used by small-business owners to find
government contracts, isn't listing them, either. "I
don't even know if small businesses are going to find out about
opportunities to perform either on a prime contract with the
government or on a subcontract," Amey says.
The Project on Government Oversight estimates half of the $315
billion in federal contract awards aren't open for bidding.
Entrepreneurs will have to know the prime contractors and contract
officers on a first-name basis. "When the market is no longer
based on formal competition, it becomes a market of
relationships," Yukins says. "That's the
reality."
Watch out for more changes--on September 15, Reps. Tom Davis
(R-VA) and Kenny Marchant (R-TX) introduced H.R. 3766, a bill that
would let federal agencies award contracts on a no-bid basis and
stop government audits of contractor purchases in times of national
emergency or disaster. H.R. 3766 could be an amendment in an
upcoming Hurricane Katrina relief bill.