Democrats are urging major agencies to increase contracts to advertising firms owned by people of color after a Government Accountability Office (GAO) report released last week reveals several agencies have failed miserably in fulfilling this mandate.

The Departments of Defense and Treasury are drawing the most ire for failing to meet Executive Order 13170, which requires federal agencies to "aggressively" reach out to firms owned by people of color.

Senate Majority Leader Harry Reid, D-Nev.; Small Business and Entrepreneurship Committee Chair John Kerry, D-Mass.; senior Senate Judiciary Committee member Chuck Schumer, D-N.Y.; and Congressional Black Caucus Chair Rep. Carolyn Kilpatrick, D-Mich., commissioned the report after people of color who own media outlets and ad firms claimed that federal opportunities were severely limited.

In 2005, federal ad spending surpassed $1 billion, with much of this spent on recruitment advertising. Five agencies--Defense, Treasury, Health and Human Services (HHS), Interior, and National Aeronautics and Space Administration (NASA)--accounted for more than 90 percent of this spending from 2001 to 2005. GAO reviewed contracting data from these five agencies from 2001 to 2005.

"In light of this report, we have serious doubts that the command of E.O. 13170 that 'each department and agency shall ensure that all creation, placement and transmission of federal advertising is fully reflective of the nation's diversity'" is being met, according to a letter from Reid, Kerry, Schumer and Kilpatrick.

"This report shines a spotlight on the federal government's failure to make equal opportunity a reality, not just rhetoric," Kerry said in a statement.

Here are some highlights from the report:

• The Department of Defense hired firms owned by people of color for advertising only 1.8 percent of the time and paid them 84 percent less, on average, than firms owned by whites. The department accounts for more than 50 percent of all federal advertising spend, yet spent less with advertising firms owned by people of color than any other agency reviewed
• The Department of Treasury hired firms owned by people of color 1.9 percent of the time and paid them on average nearly 47 percent less per contract
• NASA used ad agencies owned by people of color 89 percent of the time, compared with HHS (24.6 percent) and Interior (6.4 percent)

Read the highlights or get the full report.

Reid is concerned that federal agencies are denying contract opportunities to ad firms owned by people of color. "That they may even be discouraging hiring minority firms and paying them nearly 84 percent less than majority firms is even more disturbing," he said. "We will continue to aggressively monitor these and other federal agencies to make sure that our government meets our own standards of contracting with minority firms."

The GAO report was distributed to the five agencies as well as the Small Business Association, Office of Management and Budget and General Services Administration for review and comment. None of the agencies responded.

Now Reid, Kerry, Schumer and Kilpatrick want answers. The Departments of Defense and Treasury will have until Sept. 7 to respond to the letter signatories what specific action their department is taking to increase the number of advertising contracts with firms owned by people of color, and when a senior-level official will "remind acquisition personnel to adhere to E.O. 13170 and instruct them to fulfill its mandate."

Why It Matters

People of color have been underrepresented and misrepresented in the media for years, according to the Democrats' statement, and providing contracts to more people of color will help address the problem.

Also, a recent Federal Communications Commission study revealed the challenges ad agencies and media outlets owned by people of color face in the commercial market and quoted a memo telling ad agencies not to buy spots on "urban" or "Spanish" radio stations. Stereotypes about the audiences these stations serve were the basis for such exclusions. 

Kerry hopes the report will be a wake-up call to the two agencies, which he calls "woefully behind the curve."

"Despite an 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," Kilpatrick said. "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."

This GAO report comes at a time when the government is coming under scrutiny for lacking representation of people of color in its top-tier work force.

(See also: Which Federal Agencies Fail at Diversity? EEOC Tells All)

Advertising with firms and outlets owned by people of color gives federal agencies access and exposure to a market and talent pool that traditional domains may reach less effectively. It also builds brand reputation among people of color.

"We must continue to advocate for the underserved and underrepresented and encourage our government to lead by example. Diversity is America's strength," said Kilpatrick. "By expanding access, we improve our ability to compete in the global marketplace, ensure that all people have the chance to achieve their potential, and enhance efforts to build a united America." 

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