BP Oil Spill Fuels Government Contracting

NEW YORK (TheStreet) -- The BP oil spill last year took its toll on small businesses along the Gulf Coast, but the federal government is also looking to increase contracting opportunities that could balance out the damage to some.

Exactly one year ago, the Deepwater Horizon oil rig used by BP exploded in the Gulf of Mexico, ultimately leaking some 5 billion barrels of oil into the surrounding waters, harming the ecosystem and the businesses and residents making their living off the waters. According to the Small Business Administration, the disaster was a good reason to remind local businesses of the large amount of government contracting work in Mississippi, Louisiana and Alabama.

The BP disaster was an "opportunity to offer federal contracting as a revenue source for the businesses affected -- and not just what came out of the spill, but the billions of contracting that comes out of the Gulf" through NASA, the U.S. Army Corps and even from 2005's Hurricane Katrina, for instance, says Joe Jordan, SBA's administrator of government contracting and senior adviser for the Gulf Recovery Act.

The funds are in addition to direct business disaster loans.

Some small businesses saw immediate contracting opportunities after the oil spill as a result of cleanup efforts.

Others can still look to take advantage of opportunities at the prime contracting level in such industries as manufacturing, construction, maintenance and technical services, information technology, even coastal restoration. Subcontracting -- filling the needs of the supply chain -- is equally important, Jordan adds.

"There are a lot of places where small businesses could play quite well," Jordan says, and local business owners should not be deterred if they want to expand into another industry that might be more profitable.

As of April 14, just 26% of the approximately $226.2 million in government contracts awarded as a result of the oil spill has been to small businesses, according to the Federal Procurement Data System.

The largest customer so far has been the Department of Commerce's National Oceanic and Atmospheric Administration, which awarded more than $103 million in contracts as of last week.

The Department of Homeland Security was the second-largest contractor, awarding about $32 million in contracts.

"There are still more contracts that are going to be awarded as a result of that," says Lourdes Martin-Rosa, an American Express OPEN adviser on small-business government contracting and president of Government Business Solutions.

According to preliminary SBA numbers for fiscal 2010, small-business contractors increased in all three of the hardest-hit Gulf states as compared with 2009. While there weren't new appropriations after the BP spill, the SBA and federal government did work harder to get a greater percentage of what there was to work with into the hands of small businesses, the SBA says.

According to Martin-Rosa, the government is trying to increase the federal small-business contracting target to 35% from 23% in Gulf Coast areas.

That should be a wake-up call for business owners to "get their ducks in a row" and register to be able offer their services to government agencies, she says.

Small businesses should also consider the General Services Administration Schedule Program, Martin-Rosa says. The agency provides commercial products and services to federal, state and local governments.

"That is the preferred method of procurement," she says. "In situations like the Gulf Coast, GSE- and GSA-scheduled contractors are preapproved and at preapproved pricing."

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