NEW ORLEANS (AP) - Black contractors yesterday said they have been frozen out of the rebuilding of this city because federal agencies continue to dole out millions of dollars to large corporations.

At a news conference, the local chapter of the National Association of Minority Contractors called on Congress and federal prosecutors to investigate the contracting practices of the Army Corps of Engineers and the Federal Emergency Management Agency. The group also said they may resort to protests to get their message out.

"There's something wrong with this cozy relationship between the Army Corps and major corporations," said Ernest Stalberte, an association board member.

Stalberte delivered his remarks in a parking lot in a hard-hit part of New Orleans and he was surrounded by large digging and dirt-moving equipment brought in by black construction companies to show off their companies' prowess.

The government's reliance on major companies, such as AshBritt Inc., Phillips and Jordan Inc. and ECC Operating Services Inc., to do the cleanup after Katrina has been a source of contention since Katrina hit on August 15, 2005.

A congressional committee has been calling for government agencies to do more business with small companies.

According to House Small Business Committee, the Department of Defense awarded 8 percent of its Gulf Coast recovery contracts to small businesses in Louisiana between August 2005, when Hurricane Katrina hit, and October 4, 2006. However, that number dropped to one percent since then, committee figures show. The committee only had figures for the Department of Defence as a whole, but corps contracts have far outweighed other military branches for Katrina work.

The corps disputes the committee's figures and says that as of March 28, 2007, 88 percent of corps work has gone to small businesses in Louisiana.

Kate Gilman, press secretary for the House Small Business Committee, said the corps' figures are wrong because many contracts were incorrectly recorded as going to small businesses when in fact they did not.

Kathy Gibbs, a corps spokeswoman in New Orleans, disagreed. "The corps has an excellent record of working with minority contractors," she said.

FEMA officials did not immediately respond with comment.

For black contractors, the recent cancellation of a $75 million home demolition contract for small businesses, in the works since October 2005, has become an incendiary decision.

Stalberte said that if that contract had gone to local minority firms it would have had a ripple effect throughout the city. He said locals would have been hired and that would have helped the rebuilding.

"We intend on fighting this to the death," Stalberte said. "If we have to take our equipment, and our trucks, and our people and go to the Army Corps work site, and stop work from time to time, then we will do that."