With Democrats back in control of Congress, the Bush administration again felt the heat about its response to Hurricane Katrina as two panels of federal lawmakers on Thursday questioned the government's commitment to rebuild the Gulf Coast and do so by hiring locals.

At a field hearing of the House's Small Business Committee in New Orleans, six government departments were scolded for allowing big national companies to cash in on the Katrina recovery while local small businesses have largely been left out of the windfall.

"We're going to be watching what your agencies do," said Rep. Nydia Velazquez, D-N.Y., the committee chairwoman. "We're not asking you to give hand outs to small businesses, we're asking you to follow the law."

Her committee charges that only 12.5 percent of Katrina contracts have so far gone to local small businesses in Louisiana, Mississippi and Alabama. Under federal guidelines, agencies are urged to give about 23 percent of their contracts to small businesses, committee staff said.

The government agencies -- including two of the biggest players in Katrina recovery, the Army Corps of Engineers and the Department of Homeland Security -- argued that they had done a good job hiring small businesses.

But Velazquez questioned the veracity of those claims, and held up a list of 61 contracts that went to large companies that had been recorded as small businesses by the U.S. Department of Homeland Security.

Paul Schneider, undersecretary for management at DHS, acknowledged "errors in the coding" and said the "logic flow of the system is flawed and needs to be fixed."

Meanwhile at a subcommittee hearing in Washington, D.C., Sen. Mary Landrieu, D-La., questioned the Bush administration's commitment to rebuilding the Gulf Coast, citing uncertainty about the funding needed to strengthen New Orleans' levee system and blaming a local-match provision for further slowing the region's recovery from the 2005 hurricanes.

Landrieu and state and local leaders reiterated complaints that federal rebuilding money isn't flowing freely enough. Landrieu called the system broken.

It's not that the federal government hasn't allocated funds; it has, more than $110 billion since Katrina. But much of that was for short-term and emergency response needs -- leaving relatively little for permanent infrastructure projects, said Stanley Czerwinski, a director with the Government Accountability Office.

As of March 1, the 18-month anniversary of Katrina, most of the $150 million New Orleans said it received under FEMA's public assistance program -- $137.7 million -- went for emergency response, temporary projects, like roof repairs, and debris removal, according to City Hall.

State and local leaders urged a federal waiver of a local-match requirement for public repair and reconstruction projects funded through the Federal Emergency Management Agency. Landrieu blamed the match provision for "causing just a complete shutdown of these projects."

The Bush administration has opposed a waiver, saying a pot of federal grant money already has been set aside for local parishes to tap to satisfy their match. But a spokeswoman for the Louisiana Recovery Authority has blamed "onerous" federal rules for keeping cities and parishes from taking advantage.

Donald Powell, who leads the president's Gulf Coast recovery operation, said Bush is committed to rebuilding the region, with public safety -- and a strong levee system -- key to that. He said the current levee system in New Orleans is "far better" than it was before Katrina.

But Landrieu questioned the opposition to including $1.3 billion in a supplemental spending bill that could eliminate the need for the Army Corps of Engineers to divert money from one bank of the Mississippi River to the other, as proposed. The administration has said it would consider additional funding for the corps later.

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Associated Press writer Becky Bohrer in New Orleans contributed to this report.

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