Since you have a PA at your disposal, try micing your amp through the PA system with a uni-directional mic (shure sm57). This will hopefully break the feedback loop. You shouldn't have to turn up your amp much, just enough to were you get a strong signal on your mixer. If feedback occurs before you reach this peak, try throwing a light blanket over the front of your amp and the mic. Ok once that is solved, place the PA speaker in front of the space where you guys stand. Face them about a 35' to 45' degree angle away so that you can't see the front of the speaker from where you stand. This should solve the feedback problem, but you'll still need to follow the advice of Doc and SPL.
If this does not work, it's definitely the room and you'll just have to find a better place. Sorry. Look for something that doesn't have alot of metal surfaces. Concrete is ok, but wood, and dry wall are the best because they all can absorb some of the sound waves. Also if you can carpet the floor that will help with absorbing soundwaves. You need to find a better acoustical environment. Good Luck!
[Edited by noticingthemistake on 10-26-2003 at 11:16 AM]
"My whole life is a dark room...ONE BIG DARK ROOM" - a.f.i.