The Federal Emergency Management Agency said yesterday it will set aside several major Gulf Coast reconstruction contracts for small, disadvantaged businesses that will be selected to do the work through competitive bidding.

The agency's director, R. David Paulison, testified in congressional hearings last week that FEMA would put out for bid work that remains to be done under contracts initially awarded without competition to four giant construction and engineering firms -- Shaw Group Inc., Bechtel Corp., CH2M Hill Inc. and Fluor Corp. Each of those firms received a deal worth up to $100 million in the first days after Hurricane Katrina struck. Their assignment was to set up temporary housing for hundreds of thousands of Gulf Coast residents displaced by the storm.

Yesterday's announcement means that smaller firms run by minorities, women, the disabled or others deemed "disadvantaged" by the Small Business Administration will be guaranteed part of the work. FEMA also said it would give preference to firms based in the areas hit hardest by Katrina.

The agency has come under intense criticism in recent weeks for awarding no-bid contracts to some of the nation's largest corporations, and for not giving enough work to small firms located in Louisiana, Mississippi and Alabama. An analysis by The Washington Post of the first wave of federal contracts signed after the storm hit showed that more than 90 percent of the contract value had been given to companies located outside those states.

The agency has said it needed the work done quickly and went with the firms it knew best.

"In the immediate response phase for Hurricane Katrina, our priority was to get relief quickly to those in need," Paulison said in a statement. "The oversight safeguards are in place for those emergency contracts so critically needed when disaster struck, and we will now use competitive strategies everywhere possible -- placing priority on the use of local and small disadvantaged businesses -- as we move into the long-term recovery phase."

In addition to contracts for small businesses, FEMA will also solicit bids for remaining work from all businesses, regardless of size, including the original contractors if they choose to bid. The firms that win those awards will divide work in the Gulf Coast with the small firms and will also be available for other disasters.

All of the contract awards will be for five years. The agency did not say yesterday how much each will be worth, how many winners there will be or what share will be reserved for small firms. Details of the contracts are expected to be announced within a week.

The decision to give preference to small and local firms was applauded yesterday by government watchdog groups.

"It looks like they're going to do what they should have done in the first place," said Keith Ashdown, vice president of Taxpayers for Common Sense. "There's been a lot of pressure on them to make sure that the economic benefit of these contracts stays in the Gulf Coast and doesn't flow to corporate boardrooms thousands of miles away. So in that respect, this is good news."

Izella Crayton, left, and her children tour their FEMA-supplied temporary housing with their host, Betty Ann Thompson, in Baker, La., last week.

FEMA Director R. David Paulison says the agency will seek bids.