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Louis Jacobson
By Louis Jacobson January 15, 2013

Local firms doing better in contracting, but unclear if administration deserves credit

During the 2008 presidential campaign, Barack Obama drew a distinction with President George W. Bush on how he would handle the recovery from Hurricane Katrina. Among other things, Obama promised to "fight to ensure more Katrina-related recovery or reconstruction activities can be done by local residents."

This promise emerged from concerns that big, out-of-state companies were swooping in to take federal contracts that otherwise could have supported the employment of the many local workers who suddenly found themselves jobless due to the storm.

The flak reached almost ridiculous heights when, just weeks after the storm, a Department of Homeland Security official resigned after he was rebuffed in his efforts to line up a group of Louisiana chefs and restaurants to provide 26,000 meals a day to distressed residents. Instead, they were provided mass-produced military MREs, or meals-ready-to-eat. "Louisiana makes the best food in the world," Doug Doan, the DHS business liaison who resigned, told USA Today. "To be bringing in beanie weenies from Florida or peanut butter sandwiches from Ohio at a greater cost ... is an outrage."

Around that time, federal agencies began to increase their efforts to target more of their dollars at local companies.

The most recent data we could find comes from a Government Accountability Office report that covers fiscal years 2005 through 2011. The report does not break down the data by presidential administration.

According to GAO, federal agencies directly awarded $20.5 billion in contracts over that seven-year period for recovery efforts related to the Gulf Coast hurricanes. Of that, about 13.3 percent went to small businesses in Alabama, Florida, Louisiana and Texas. Meanwhile, of the $2.7 billion that went to small businesses in those four states, about 29 percent went to firms that were classified as "small, disadvantaged businesses."

In the New Orleans area, the number of out-of-state contractors that were competing with local firms and workers for construction jobs have continued to diminish since 2010, said Elizabeth Fussell, a Washington State University sociologist who taught at Tulane University during the Katrina and post-Katrina period and who has written extensively about the storm's aftermath.

"The construction jobs around town now are large-scale jobs mostly being done by local construction firms that have a great deal of experience repairing the street car lines, underground drainage pipes and roads," she said. "The workers now are experienced and local union workers." However, it's not clear what impact local or federal laws had on this trend, she added.

In general, the federal contracting outlook for local Gulf Coast companies appears to have improved significantly since the early days of the recovery, and the administration deserves credit for making sure that one dollar of every $7.50 in federal contract money for the Gulf Coast recovery continues to go to small, local businesses. On the other hand, the situation started to improve under Bush, and it's not clear whether local employment prospects have increased under Obama -- or, if they did, whether policies adopted by the administration caused the increase. Due to this uncertainty, we rate this promise a Compromise.

Our Sources

Government Accountability Office, "Federal Contracting in the Aftermath of Hurricanes Katrina and Rita" (testimony), Sept. 15, 2011

Federal Emergency Management Agency, "FEMA Solicits Small, Local And Minority-Owned Businesses For Katrina-Related Contracts," Oct. 8, 2005

Federal Emergency Management Agency, "FEMA, Small Business Administration Work Together to Award Hurricane Katrina Recovery Contracts to Small and Minority-Owned Businesses," Nov. 3, 2005

Department of Homeland Security, FEMA contracts awarded for Hurricane Katrina Recovery, accessed Jan. 15, 2013

Hilda Solis, Katrina anniversary blog post, Aug. 27, 2010

USA Today, "Louisianans get few post-Katrina contracts," Oct. 12, 2005

Email interview with Jan Moller, director of the Louisiana Budget Project, Jan. 15, 2013

Email interview with Elizabeth Fussell, Washington State University sociologist, Jan. 15, 2013

Robert Farley
By Robert Farley January 12, 2010

New Orleans council passes ordinance setting goal for reconstruction jobs to go to local businesses

On June 18, 2009, the New Orleans City Council unanimously passed an ordinance establishing an overall goal that locally owned businesses would get 50 percent of all public spending or private projects that use public funding or incentives for reconstruction.

"Small businesses are the backbone of any strong economy, especially socially and economically disadvantaged small businesses," Council President Arnie Fielkow said. "If this city is to reach its full potential, we have to lift up all communities, all cultures, all races. "

Said council member Cynthia Hedge-Morrell: "This measure is long overdue. Supporting our local and disadvantaged businesses will allow taxpayer dollars to remain in the community, where it can circulate and maximize the positive economic impact. By ensuring our public dollars go to our neighbors, we can continue to foster growth in our strong local economy."

The ordinance essentially codifies a set of goals first adopted by New Orleans Mayor Ray Nagin in September 2006.

Despite the ordinance, however, some local officials say the real test will be how vigorously the city enforces them. Under Nagin's executive order, the New Orleans Times-Picayune reported, enforcement was spotty.

Asked about this promise, Obama administration officials pointed to the economic stimulus package championed by Obama, which has funded 65 transportation projects in Louisiana – including 42 highway construction projects – obligating nearly $299 million to jump-start "shovel ready" projects. In Orleans Parish, 22 highway and transit projects have been approved, obligating more than $50 million to fund highway and transit projects. While these projects have surely created jobs, we could find no evidence of efforts to ensure those projects are related to reconstruction from the hurricanes, or that they be done by local or small businesses.

Still, the New Orleans City Council ordinances is a step in that direction. It's unclear what, if any, influence the Obama administration had on that ordinance. And some have expressed concern about enforcement of the law. But we think there enough to move this Promise to In the Works.

Our Sources

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