News From Congresswoman
Nydia M. Velázquez
Representing New York's 12th Congressional District - Brooklyn, Manhattan, Queens
Ranking Democratic Member, House Small Business Committee

For Immediate Release
November 6, 2003

CONTACT: Wendy Belzer, Kate Davis, 202-225-4038

Velázquez: Small Businesses Will Struggle to Win Iraq Reconstruction Contracts
Provision stripped that would help small businesses gain access to Iraq contracts

WASHINGTON - Congresswoman Nydia M. Velázquez (D-N.Y.), Ranking Democratic Member of the House Small Business Committee, spoke out about the latest spending bill for Iraq/Afghanistan - the largest emergency spending bill ever requested by a president - which was signed into law today. The final spending package failed to include a provision that would have ensured small business participation in federal Iraq reconstruction contracts.

"This provision, which was unanimously adopted by the House, would have given small businesses a chance to win federal contracts that have been doled out so far to a handful of politically-connected U.S. corporations on a no-bid basis," Congresswoman Velázquez said. "Unfortunately, the small business language was stripped by the Republican leadership in the final legislation, which is not only bad for small business, but also for the American taxpayer who is ultimately footing the bill. Without opening the process to fair competition and subcontracting, there is no guarantee the company that can do the best work for the lowest price will win the contract."

The Velázquez amendment would have required all large corporations that receive contracts for the Iraq reconstruction to have a subcontracting plan in place on how they will make contracting opportunities available to domestic small businesses. Under current law, large corporations must have a subcontracting plan for contracts performed in the U.S. This amendment would have ensured that Iraq contracts were held to the same standards for small business opportunities as those carried out domestically.

The two federal agencies that would have been most affected by this provision were the U.S. Department of Defense (DOD) and the U.S. Agency for International Development (USAID). The objection to the Velázquez amendment came not from the DOD - the largest agency in terms of procurement volume - but from USAID, a much smaller agency in comparison, which has awarded eleven major contracts for reconstruction work in Iraq so far. In the past four years, USAID has received a failing grade every time in the House Small Business Committee Democrats' Scorecard study, which evaluates federal agencies on how well they meet their small business goals.

Although the Bush administration has publicly sided with small businesses and highlighted the important role they play in federal contracting, it has taken little action to help improve the situation of small firms in gaining access to the federal marketplace, including the billions being spent overseas in Iraq. It has recently been revealed by a Center for Public Integrity report that the winners of the top contracts for work in Iraq and Afghanistan have given over $500 million in campaign contributions to President Bush.

"Unlike their corporate counterparts, most small businesses cannot afford to make large political campaign donations - and therefore appear to have little, if any, leverage with this administration," Congresswoman Velázquez said. "If President Bush was as committed to small businesses as he claims to be, this amendment would have been included in the final legislation. Without it, small businesses will continue their struggle to get a foot in the door of the federal marketplace - and to win a piece of the Iraq reconstruction work being done by the U.S. government - that is currently wide open to large corporations."

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