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Written Statement of Associate Administrator Albert Sligh, Jr., Federal Emergency Management Agency, before the Senate Committee on Small Business and Entrepreneurship, "Disaster Recovery: Evaluating the Role of America's Small Business in Rebuilding Their Communities"

Release Date: 
September 29, 2011

Russell Senate Office Building

Good morning Chairwoman Landrieu, Ranking Member Snowe, and members of the committee. My name is Al Sligh, Jr., and I am the Associate Administrator for the Mission Support Bureau at the Department of Homeland Security's (DHS) Federal Emergency Management Agency (FEMA). I appreciate the opportunity to appear before the committee today to discuss how FEMA is helping communities recover by working with local, small businesses following Presidentially-declared disasters and emergencies.

FEMA supports recovery by working through our local, state, and federal partners to return disaster survivors to their homes and communities, restore necessary public infrastructure, and ensure essential and emergency government services are operating. As part of this effort, FEMA embraces the value and economy of injecting commerce back into a disaster affected area through investment with the small business community in our disaster contracts, the backbone of our U.S. economy.

Today I will highlight FEMA's successes as well as areas where we are working to proactively identify local, small businesses qualified to compete for FEMA contracts. I will also discuss our efforts to increase the preparedness and resiliency of the private sector by helping them be informed, protected, and ready in the event of a disaster. By partnering with small businesses, FEMA is better able to leverage local resources, knowledge, and expertise in order to help communities quickly and effectively rebuild following a disaster.

Increasing Small Business Contract Opportunities

According to FEMA's partner in disaster recovery, the Small Business Administration (SBA), small businesses represent 99.8 percent of all businesses in America (employer firms) and employ half of all Americans working today. Because of their importance to the economy nationwide and locally, FEMA has a variety of initiatives, tactics, and tools to increase opportunities for small businesses.

Contracting with local, small businesses is critically important, since the ability of a community to recover quickly from a catastrophic event rests largely on small businesses. Unfortunately, according to a 2010 study by the National Federation of Independent Businesses, 30 percent of small businesses fail to recover following a Presidentially-declared disaster or emergency. This can have a crippling effect on the economy of these communities and leave many without jobs. While state and local governments issue the majority of disaster contracts that come from FEMA funds, when possible, FEMA is dedicated to helping communities rebuild by awarding its contracts to local small businesses. As much as possible, FEMA does this by adopting and adhering to this principle: hire local, buy local, and help communities get back on their feet.

Use of local small businesses is infused into FEMA's disaster contracting process. The Local Community Recovery Act of 2006 amended the Stafford Act to clarify the preference for local firms in the award of certain contracts for disaster relief activities. This legislation significantly enhanced FEMA's ability to provide set-asides for major disaster or emergency assistance acquisitions to businesses that reside or primarily do business in the geographic area affected by the disaster or emergency. FEMA responded to this change in legislation by adopting new procedures and strategies that engage local business communities to maximize local contracting. Currently, we are working with the Central Contractor Registration database to better capture information about local companies interested in debris removal or other services that support disaster response and recovery requirements. In addition, prior to issuing a solicitation, FEMA conducts market research to determine whether or not the capabilities of small local businesses meet program requirements. If small local businesses possess the necessary qualifications, then the solicitation is structured either as a local small business set-aside or to provide competitive advantages to local small businesses as allowed by the Federal Acquisition Regulations (FAR).

In addition, FEMA has established key teams to support local small business contracting efforts. During the disaster recovery phase, FEMA deploys Local Business Transition Teams (LBTTs) to Joint Field Offices (JFO) to encourage the timely transition of economic resources to local small businesses following the initial disaster response. These teams work with FEMA contract specialists in the field and at FEMA headquarters to identify products and services that can be provided locally in order to encourage and support the shift to local business contracts. Another important resource for local small businesses is the Disaster Acquisition Response Team (DART), which provides support to small businesses after the contract is in place. The DART's primary focus is to respond to disasters and provide contract administration and oversight of disaster contracts in the field. With the help of DARTs, local small businesses have been able to fulfill their contract requirements and submit their invoices properly in order to get paid in a timely manner.

These techniques and resources were successfully used in the Southeast this spring, in the aftermath of the April 2011 tornados, and proved to be a great success. Prior to the tornadoes, FEMA contracting staff worked with state purchasing directors and Procurement Technical Assistance Centers (PTAC) in each state to pre-identify approved local vendors for the commodities and supplies necessary for disaster relief support. In Alabama, this included searching a database with over 2700 local businesses classified by product or service offered.

During the recovery phase, LBTT members again worked with state partners to identify local and small businesses within the affected areas of disaster that could meet the requirements of FEMA recovery contracts. They also identified local businesses in the state purchasing director's vendor database. In addition, LBTT and DART members worked to identify contracts that could be set aside for small local businesses and provided local businesses with the information needed to compete for FEMA contracts.

In Joplin, Missouri, a DART member worked with a small local business to ensure they would be eligible to compete for FEMA contracts. They did this by answering questions and providing advice, such as the importance of the Central Contracting Registration. Not only was this an opportunity for this small business—which had never contracted with the federal government—to contract with FEMA now, but it was also a chance for this business to gain the skills and approvals needed to successfully compete for a government contract in the future.

Overall, these efforts have produced enormous results and fostered the extensive use of local firms in contracting opportunities for the federal disaster response. In Alabama, Mississippi, Tennessee, Kentucky, and Georgia, $13,358,680, was awarded to local firms in the declared disaster counties and 90 percent of local procurement initiatives went to small businesses within those states. FEMA Region IV is hoping to further support these economies by procuring prepositioned contracts for the top ten commodities needed following a disaster from local businesses.

In awarding contracts in general, FEMA provides small businesses a competitive advantage wherever legally possible. One method is to consider small or socioeconomic status when identifying contractors for consideration of contract awards, which is permissible under the FAR. FEMA actively solicits for small businesses wherever possible in an effort to reach and exceed the federal guidelines set by SBA for small business contracts. FEMA seeks out these potential opportunities with a dedicated, full-time Small Business Specialist, whose primary responsibility is to increase contracting opportunities for Small Disadvantaged Businesses, Women-Owned Businesses, HUBZone businesses, Service-Disabled Veteran Owned Businesses and Veteran Owned Small Businesses.

To further expand opportunities for small businesses, FEMA is currently changing the way it issues prepositioned contracts. Following Hurricane Katrina, FEMA put a number of contracts in place which could be utilized quickly to provide relief to disaster survivors and support life and safety in the most efficient and effective way. One advantage of prepositioned contracts is that they result in the delivery of necessary supplies and services faster and with less cost to the American taxpayer. When these contracts are made at the national level, however, they often inflate the percentage of procurement dollars going to large businesses. Recognizing this issue, FEMA is in the process of breaking down its prepositioned contracts for commodities, base camps, and ambulance services into geographic zones. This zone strategy will allow small businesses the opportunity to compete for prepositioned contracts by requiring service in a smaller geographical area.

Another post-Katrina improvement was the creation of the Industry Liaison Program to provide businesses with the information they need to successfully compete for FEMA contracts. Through this program, FEMA senior acquisition officials and small business experts, attend vendor outreach sessions and small business conferences in order to ensure that businesses interested in working with FEMA are aware of contracting opportunities. This group also facilitates meetings between potential vendors and program officials, allowing them to discuss their services or products directly with potential users. By providing small businesses with knowledge of our acquisition plans and meeting opportunities to discuss FEMA needs, small businesses are better able to effectively compete for contracts alongside larger firms.

FEMA also encourages our contracting specialists to increase small business contracts, whenever possible, by leveraging the more than 14,000 small businesses that participate in the Federal Supply Schedules managed by the General Services Administration (GSA). These Schedules streamline the contracting process since GSA has already pre-negotiated contract terms using an efficient contract process. To better take advantage of this opportunity, GSA has created a section of its GSA Schedules website that is focused on small business contracting. FEMA encourages its acquisition officers to use these avenues to help increase the percentage of contracts awarded to small business.

FEMA has had a lot of success in engaging the small business community and directing the maximum share of dollars back into local economies affected by disasters. I am proud to report that FEMA consistently meets or exceeds the SBA goal for the federal government of 23 percent of contracting dollars going to small businesses. While the final numbers for fiscal year 2011 are not yet available, so far 23.7 percent of FEMA's procurement dollars have gone to small businesses.

The faster local small businesses—the economic backbone of most communities—get back up and running, the faster the overall community can recover from a disaster. FEMA will continue to use various methods to proactively encourage and facilitate use of small businesses before, during, and after a disaster. Once funds are awarded, FEMA also works to ensure that money going to small businesses is used appropriately, effectively, and efficiently to aid disaster response.

Private Sector Preparedness

All of FEMA's efforts to contract with local, small businesses will only be possible if these businesses continue their operations following a disaster. Emergencies can paralyze business operations and put local communities' very survival at risk. Therefore, being prepared for a disaster is one of the most important things a business can do to ensure they will be there to aid the disaster recovery process.

Ready Business Campaign

It is essential that individual businesses have emergency plans that detail how they will protect employees and their investments in the event of a disaster. It is especially important that small businesses have an emergency plan, since their size alone makes them the most vulnerable private sector entities. Having a plan can help protect a company and its employees, and mitigate the risk of an extended lapse in business operations following a disaster.

In order to raise awareness to businesses about the need for emergency planning and stress the urgency to take action, DHS and the Ad Council launched the Ready Business Campaign in September 2004. This extension of the Department's successful Ready Campaign is also designed to educate and empower Americans to prepare for and respond to emergencies, but is focused specifically on business preparedness. Ready Business helps owners and managers of small- and medium-sized businesses by providing them with practical steps and easy-to-use templates that include information on a variety of preparedness topics including creating an evacuation plan, fire safety, and protecting business investments by securing facilities and equipment.

The campaign encourages business owners and managers to discuss the benefits of emergency preparedness measures and plan ahead to ensure they can stay in business following an emergency. The campaign directs business leaders to take the necessary steps and talk to their employees now, in order to protect their investments later. The campaign's messages are delivered through: television, radio, print, outdoor and Internet public service announcements (PSAs) developed and produced by the Ad Council. The products used to reach their audience include: brochures, web sites in English and Spanish, toll-free phone lines, and partnerships with a wide variety of public and private sector organizations.

To enhance these efforts and spread this important message even further, in May 2006, the Ready Campaign launched the Ready Business Mentoring Initiative. This initiative is designed specifically to help owners and managers of small- and medium-sized businesses prepare for emergencies. The program was designed to assist business and community leaders come together to host and deliver business preparedness workshops and training sessions. These sessions, together with the Ready Business Mentoring Guides, outline how businesses can plan to stay in business, talk to employees, and protect assets.

Engaging the Private Sector

FEMA's "Whole Community" approach to disaster preparedness, response, and recovery is designed to emphasize the importance of working with all community partners in advance of and during disasters or other hazards. Recognizing the importance of engaging the private sector, FEMA established a Private Sector Division as part of its Office of External Affairs in October 2007 to act as a facilitator for private sector innovation and networking across the agency.

In August 2011, the Private Sector Division hosted the first National Public-Private Partnership Conference, an event focused on building resilience through these relationships. The conference furthered a number of key FEMA objectives, such as integrating the private sector as part of the Whole Community concept, expanding outreach and public messaging capability, and increasing private sector engagement and understanding of emergency management initiatives. The Private Sector Division created a website where the private sector can find resources and information covering the whole emergency management cycle. This portal includes weekly tips, social media applications, and information on training, grants, and other federal resources. The site also includes a library of model public-private partnerships that have formed regionally or at the state and city levels as examples of best practices and requirements for success.

In addition to providing the private sector with important disaster-related information, we have worked to include businesses in a variety of our disaster preparedness activities. The Department of Homeland Security grant programs managed by FEMA allow a tremendous amount of flexibility for state and local jurisdictions to include private sector companies as part of their all-hazards planning efforts. Allowable activities include the development of public-private sector partnership emergency response activities, development of assessment and resource sharing plans, and the development or enhancement of plans that engage with the private sector to meet human services response and recovery needs of disaster survivors. To further connect directly to the private sector during the most crucial disaster response efforts, a rotating Private Sector Representative works in FEMA Headquarters' Private Sector Division to support FEMA's communication and coordination with all members of the private sector including small businesses during both steady-state and disaster operations. Private sector, volunteer, and faith-based representatives also participate in FEMA's no-notice "thunderbolt" disaster response and recovery exercises and they were extensive partners during the recent National Level Exercise 2011 (NLE11). FEMA is also taking steps to coordinate modifications to the Homeland Security Exercise and Evaluation Program (HSEEP) designed to encourage and guide state and local efforts to include the private sector in regular all-hazard exercise activities.

By engaging with the private sector, including small businesses, as a partner in disaster preparedness, FEMA gains crucial allies in our effort to prevent, prepare for, respond to, recover from, and mitigate all hazards. Moreover, by encouraging private sector preparedness, we are increasing the resilience of entire communities and increasing the likelihood they can quickly recover from a disaster.

Conclusion

Helping communities recover following disasters requires the engagement of all of our local, state, federal, non-profit, faith-based, and private sector partners. Many factors, including the revitalization of small businesses, play a vital role in helping communities rebuild after a disaster. FEMA will continue to do its part by maximizing the number of procurement dollars going to local small business in the aftermath of a disaster, as well as promoting contracting with small businesses generally. In conjunction with that effort, we will continue to build partnerships with, learn best practices from, and engage the private sector in FEMA's preparedness efforts. In doing so, FEMA continues to use the whole community approach to contribute to the full recovery of disaster-impacted communities, thus ensuring better coordination and faster recovery in the wake of a disaster. Thank you for this opportunity to discuss FEMA's efforts with the small business community; I would be happy to answer any questions you may have.

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