This paper examines how building construction contracting firms (contractors) in Louisiana reacted and adjusted to the halt in Affirmative Action programs in the field of public contracting following hurricane Katrina. We conceptualize the previous ability to thrive under these programs as a set of institutional capabilities that had to be "un-learned" in the face of the radically open contracting environment post-Katrina. Our data consist of archival sources and first-hand ethnographic interviews with the owners of contracting firms across the state of Louisiana. Our findings provide insight into whether and how small businesses adjust to institutional changes caused by large exogenous shocks. We argue that, in practice, these Affirmative Action programs became a set of institutional constraints that small contracting firms had to negotiate in order to procure government contracts outside of open bidding. Successful firms developed the capabilities to document and demonstrate need, navigate state bureaucracies, and develop the social network ties necessary to procure set-aside contracts. Hurricane Katrina, however, destabilized this institutional arrangement as the federal government advised the state of Louisiana to drop any type of quota or set-aside in order to focus on rebuilding New Orleans. The these programs were halted and, as a direct result, millions of dollars in contracts were awarded to out-of-state and foreign corporations that had previously had trouble penetrating the Gulf State contracting market. The impact of this redistribution of capital and the manner in which small businesses grappled with it provides a compelling picture of the natural, but perhaps unintended, consequences of disaster management policies.