Minority-Owned Businesses to Receive AEC Subcontracts

Minority-Owned Businesses to Receive AEC Subcontracts

An estimated $42 billion in federal funds for Hurricane Katrina relief efforts are anticipated to be dispersed through subcontract opportunities to Architecture, Engineering, and Construction (AEC) vendors, according to a report released by INPUT, an authority on government business. Furthermore, nearly $21 billion of these subcontract opportunities will be earmarked for small, disadvantaged, and minority-owned businesses.

Over $60 billion has already been approved by Congress for reconstruction projects of the Gulf States and long-term forecasts are reaching $100 to 200 billion. The United State Army Corps of Engineers (USACE) and the Federal Emergency Management Agency (FEMA) have already awarded over $2 billion to four top prime contractors, primarily for the purpose of Emergency Housing Management.

“Initial contracts were awarded with little or no competition, leading to further criticism of federal disaster response,” said Timothy Brett, manager, federal AEC opportunities at INPUT. “This intense scrutiny has caused the government to shift their procurement approach from a focus on quick response to a more traditional process. Now we are seeing government agencies require that not only are small businesses considered, but that the businesses are located within the affected areas as the move forward with new contract awards.”

Of the $1.6 billion awarded by FEMA through mid-October, only one and a half percent of the funds were allotted to minority-owned businesses, far below the five percent normally mandated by federal law. In an effort to combat additional criticism, future procurements will take one of two forms: set-aside awards to small and disadvantaged businesses in the affected areas or full and open competitions with national prime contractors that are required to meet significant small business and subcontracting goals.

“The sheer number and value of opportunities available related to Katrina will have material and permanent impact on small and large AEC firms alike,” added Brett. “Billions of dollars will be spent over the long-term providing significant business opportunities for small, disadvantaged, and minority-owned companies. Because subcontracting will be the major tool used by government and prime contractors, vendors need to stay aware of awarded opportunities to major primes, as well as subcontract opportunities advertised by FEMA and USACE.”