GAO: Only 5% of Government Ad Business Goes to Minority Firms

Democrats Blast Contracting Process as a 'Mockery'

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WASHINGTON (AdAge.com) -- The U.S. government is doing a poor job of awarding small and minority firms advertising and public relations contracts, according to a Government Accountability Office study.
The GAO found that on average the government devoted 5% of its $4.3 billion in ad-related expenditures to small or minority businesses.
The GAO found that on average the government devoted 5% of its $4.3 billion in ad-related expenditures to small or minority businesses.

The GAO report released yesterday examined contracts from 2001 through 2005. It found that on average the government devoted 5% of its $4.3 billion in ad-related expenditures to small or minority businesses, but that compliance varied considerably among government agencies.

Treasury, Defense
The Department of Defense used minority firms for advertising only 1.8% of the time and paid them on average nearly 84% less than non-minority firms. The Treasury Department used minority firms for advertising only 1.9% of the time and paid them on average nearly 47% less per contract than ad contracts with non-minority firms. (Government numbers usually include work preparing brochures, hiring photographers and public-relations efforts along with traditional advertising.)

The GAO said other federal agencies faired somewhat better. The Interior Department did 6.4% of its business with minority firms; Health and Human Services 24.6 %; and NASA 88.9%. NASA and Interior spent little on advertising and PR contracts, however.

The Defense Department's $2.7 billion in spending surpassed all the other agencies combined. Health and Human Services spent $494 million and the Treasury $188 million during the five years studied.

Senators speak out
The GAO report has angered some Democrats. In letters sent the day of the report's release, Senate Majority Leader Harry Reid, D-Nevada; Senate Small Business and Entrepreneurship Chairman John Kerry, D-Mass.; Sen. Chuck Schumer, D-N.Y;. and Congressional Black Caucus Chair Rep. Carol Kilpatrick, D-Mich., urged the Defense and Treasury departments to do more.

"I am deeply concerned that the Departments of Defense and Treasury are denying minority advertising firms the opportunity to work with the federal government," said Mr. Reid.

Mr. Kerry suggested the government's record was inadequate. "This report shines a spotlight on the federal government's failure to make equal opportunity a reality, not just rhetoric," he said.

Ms. Kilpatrick said the lack of compliance is making a "mockery" of the contracting process. "Despite an [Clinton era] executive order, federal agencies are not providing minority business owners -- who pay taxes, provide jobs, and help strengthen our economy -- with equal opportunities in the federal contracting process. Failure to promote inclusion and fairness in contracting is not only an egregious disservice to America's families, but it is also a mockery of the promise upon which our country was founded."
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