• Ad Age, Tuesday, August 14, 2007 10:31 AM

Uncle Sam is doing a lousy job of giving small and minority-owned firms their share of advertising and public relations contracts, according to a new study by the Government Accountability Office study. The GAO examined contracts from 2001 through 2005 and found that the government devoted an average of just 5% of $4.3 billion in ad-related expenditures to small or minority businesses, with compliance varying greatly among government agencies.

For instance, the Department of Defense used minority firms for advertising only 1.8% of the time -- and paid them 84% less than non-minority firms, while the Treasury Department used minority shops for just 1.9% of its business and paid them 47% less per contract. Some other agencies scored better, with the Interior Department doing 6.4% of its business with minority firms; Health and Human Services 24.6 %; and NASA almost 90%, although NASA and Interior spend relatively little. Defense ponied up $2.7 billion; Health and Human Services spent $494 million and Treasury laid out $188 million.

In letters sent the day of the report's release, Senate Majority Leader Harry Reid, Small Business and Entrepreneurship Committee Chairman John Kerry, D-Mass and Congressional Black Caucus Chair Rep. Carol Kilpatrick, D-Mich., all urged Defense and Treasury departments to do more.

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