Federal Advertising: Established Programs Were Largely Used to	 
Address Executive Order Directive to Ensure Small and		 
Minority-Owned Business Participation (12-JUL-07, GAO-07-877).	 
                                                                 
In 2005, federal spending on advertising exceeded $1 billion.	 
Five agencies--DOD, Treasury, HHS, Interior, and NASA--together  
made up over 90 percent of this spending from 2001 to 2005.	 
Executive Order 13170, signed in October 2000, directs agencies  
to take an aggressive role in ensuring substantial participation 
in federal advertising contracts by businesses in the Small	 
Business Administration's (SBA) 8(a) and small disadvantaged	 
business (SDB) programs and minority-owned businesses. This	 
report describes (1) strategies DOD, HHS, Treasury, Interior, and
NASA used to address Executive Order 13170, and (2) the total	 
obligations, number of contract actions, and percentage of total 
obligations represented by these actions that each agency awarded
to 8(a)s, SDBs, and minority-owned businesses for advertising	 
services. In conducting this study, GAO analyzed agency 	 
contracting data and executive order implementation plans and	 
interviewed agency procurement officials.			 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-877 					        
    ACCNO:   A72502						        
  TITLE:     Federal Advertising: Established Programs Were Largely   
Used to Address Executive Order Directive to Ensure Small and	 
Minority-Owned Business Participation				 
     DATE:   07/12/2007 
  SUBJECT:   Advertising					 
	     Executive orders					 
	     Federal procurement				 
	     Federal procurement policy 			 
	     Minority business contracts			 
	     Minority businesses				 
	     Small business					 
	     Small business contracts				 
	     Small disadvantaged business contractors		 
	     Program evaluation 				 
	     Financial analysis 				 
	     SBA 8(a) Business Development Program		 

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GAO-07-877

     * [1]Results in Brief
     * [2]Background
     * [3]Agencies Responded to Executive Order 13170 by Emphasizing E

          * [4]Agencies Are Generally Using Existing Programs to Address th
          * [5]Some Agencies Planned New Activities to Direct Federal Adver

     * [6]Advertising Obligations and Contract Actions Awarded to 8(a)

          * [7]Participation of 8(a), Small Disadvantaged, and Minority-Own
          * [8]Year-to-Year Variations in Agencies' Advertising Obligations

     * [9]Agency Comments and Our Evaluation
     * [10]GAO Contact
     * [11]Staff Acknowledgments

          * [12]Order by Mail or Phone

Report to Congressional Requesters

United States Government Accountability Office

GAO

July 2007

FEDERAL ADVERTISING

Established Programs Were Largely Used to Address Executive Order
Directive to Ensure Small and Minority-Owned Business Participation

GAO-07-877

Contents

Letter 1

Results in Brief 3
Background 4
Agencies Responded to Executive Order 13170 by Emphasizing Existing
Programs and Initiating Some New Activities Targeted to Advertising 8
Advertising Obligations and Contract Actions Awarded to 8(a), Small
Disadvantaged, and Minority-Owned Businesses Varied across Agencies 13
Agency Comments and Our Evaluation 25
Appendix I Scope and Methodology 27
Appendix II GAO Contact and Staff Acknowledgments 30

Table

Table 1: Advertising Obligations for Five Agencies, Fiscal Years 2001-2005
21

Figures

Figure 1: Total Advertising Obligations for the Federal Government for
Fiscal Years 2001-2005 14
Figure 2: Advertising-Related Obligations Awarded to 8(a)s, Small
Disadvantaged, and Minority-Owned Businesses for Fiscal Years 2001-2005 15
Figure 3: Number of Advertising-Related Contract Actions Awarded to 8(a),
Small Disadvantaged, and Minority-Owned Businesses for Fiscal Years
2001-2005 16
Figure 4: Amount of Advertising-Related Obligations Awarded to 8(a), SDB,
and Minority-Owned Businesses for Fiscal Years 2001-2005 18
Figure 5: Number of Advertising-Related Contract Actions Awarded to 8(a),
SDB, and Minority-Owned Businesses for Fiscal Years 2001-2005 20
Figure 6: HHS VERB Advertisement 23

Abbreviations

CCR Central Contractor Registry
CDC Centers for Disease Control and Prevention
DOD Department of Defense
FAR Federal Acquisition Regulation
FPDS-NG Federal Procurement Data System-Next Generation
GSA General Services Administration
HHS Department of Health and Human Services
MBE minority business enterprise
MOU memorandum of understanding
NASA National and Space Administration
OMB Office of Management and Budget
OSDBU Office of Small and Disadvantaged Business Utilization
SBA Small Business Administration
SDB small disadvantaged business

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separately.

United States Government Accountability Office
Washington, DC 20548

July 12, 2007

The Honorable John Kerry
Chairman
Committee on Small Business and Entrepreneurship
United States Senate

The Honorable Harry Reid
United States Senate

The Honorable Charles Schumer
United States Senate

In 2005, federal spending on advertising exceeded $1 billion, making the
government one of the top 50 advertisers in the country, according to
advertising industry data sources.^1 The government contracts with public
relations firms, advertising agencies, media organizations, and individual
members of the media to provide, among other things, messages about its
programs and services. As it does for virtually all of the other products
and services it procures, the federal government seeks to ensure
substantial participation of socially and economically disadvantaged small
businesses as well as minority-owned businesses in federal advertising. To
emphasize the government's efforts to provide increased access for these
businesses to federal advertising-related contracting opportunities, on
October 6, 2000, President Clinton signed Executive Order 13170. The order
directs executive branch agencies to create greater opportunities to
increase contracting between the federal government and small and
minority-owned businesses--specifically, businesses participating in the
Small Business Administration's (SBA) 8(a) business development program or
other programs for small disadvantaged businesses (SDB) as well as
businesses that claim minority-owned status. Section 4 of the executive
order relates specifically to the procurement of advertising-related
services and requires that each department or agency that engages in
advertising-related procurement take an aggressive role in ensuring that
8(a)s, SDBs, and minority-owned businesses have substantial opportunities
to participate in such procurements.

^1Advertising Age, Special Report: Profiles Supplement, June 26, 2006.

From fiscal years 2001 through 2005, the federal government obligated
about $4.8 billion for advertising-related services. Given the
significance of these obligations and uncertainty over whether federal
agencies were making sufficient efforts to attract 8(a), small
disadvantaged, and minority-owned businesses for federal advertising
contracts, you asked us to review the participation of these businesses in
federal advertising-related procurements. This report describes (1)
strategies that five selected agencies used to address section 4 of
Executive Order 13170, and (2) the total obligations, the number of
contract actions, and the percentage of total obligations represented by
these contract actions that each of the five agencies awarded to
businesses classified as 8(a), small disadvantaged, or minority-owned for
advertising-related services.^2 The agencies included in our review are
the Departments of Defense (DOD), Treasury, Health and Human Services
(HHS), and Interior and the National Aeronautics and Space Administration
(NASA). Collectively, these five agencies represented over 90 percent of
federal obligations for advertising-related services from fiscal years
2001 through 2005.

To describe the strategies the five agencies used to address the order, we
obtained documentation from the agencies outlining the actions they had
taken or planned to take to implement Executive Order 13170, interviewed
agency officials regarding their actions, and compared their actions with
the requirements of the executive order. To determine the dollar amount
and percentage for each of the five agencies' total advertising-related
obligations and the number of contract actions awarded to businesses
certified as 8(a), small disadvantaged, or minority-owned, we extracted
key data fields from the federal government's only governmentwide
contracting database, the Federal Procurement Data System-Next Generation
(FPDS-NG) for fiscal years 2001 through 2005.^3 We did not use FPDS data
from before fiscal year 2001 because the agencies did not consistently
report certain data elements important to our analysis, such as minority
ownership. We used information from fiscal years 2001 through 2005 to
identify the contract actions that each agency awarded to these businesses
and the total dollar amount each agency obligated for these actions.^4 We
also calculated the percentage of obligations awarded to these business
classifications for each agency. We conducted our work in Washington,
D.C., between October 2006 and June 2007 in accordance with generally
accepted government auditing standards. Appendix I discusses our scope and
methodology in more detail.

^2The term "contract action" as used in this report refers to actions that
resulted in new contracts, as well as orders for additional goods or
services under existing contracts or modifications to these contracts or
orders. [48 C.F.R., S5.001].

^3While Executive Order 13170 employs the term "minority business
enterprise" (MBE), as defined in Executive Order 11625 (October 13, 1971)
to refer to minority-owned businesses, federal procurement data are not
collected in the government's official contracting system, FPDS-NG, using
the term "MBE." Rather, the FPDS-NG's "minority-owned" data element
represents those contractors that have identified themselves as
"minority-owned" as described in the Central Contractor Registry (CCR).
CCR is the database from which SBA and procuring agencies draw business
information on potential government contractors; businesses seeking to do
business with the federal government must register in the CCR database
prior to the award of a federal procurement contract. According to SBA
officials, the description of the "minority-owned" data element used in
the CCR parallels that of MBE in Executive Order 11625.

Results in Brief

Because many of the requirements of Executive Order 13170 are consistent
with federal statutes that were in effect at the time of the order's
issuance, the five agencies we reviewed generally implemented section 4 of
the order by continuing their existing efforts to identify potential
contracting opportunities with all types of small businesses. Three of
these agencies also introduced activities to specifically address
advertising-related contracts. For example, the order requires that
agencies aggressively seek to ensure that 8(a)s, SDBs, and minority-owned
businesses are aware of contracting opportunities. Agency officials stated
that at the time the order was issued, they had a number of methods
already in place to help ensure that these businesses were made aware of
contracting opportunities, including maintaining small business Web sites
and posting annual forecasts of contracting opportunities to them. We
found that the agencies' focus on ongoing efforts was consistent with
SBA's and the Office of Management and Budget's (OMB) views of the order.
Both SBA and OMB noted that several provisions of the order paralleled
procurement program requirements under the Small Business Act. For
example, the order contains requirements for the two oversight
agencies--SBA and OMB--that reflect requirements in federal statutes
already in existence. In response, SBA combined its reporting requirements
under the Small Business Act and the order. Three agencies--HHS, Treasury,
and Interior--planned additional activities in response to section 4 of
Executive Order 13170 that specifically addressed contracting for
advertising services. For example, in January 2001 Treasury stated that it
would work with trade associations to identify opportunities for SDBs in
advertising.

^4For the purposes of this report, we refer to "obligations" and "contract
actions" that agencies have awarded, when to be precise, agencies do not
award obligations or contract actions but instead award contracts or enter
into contract actions that are associated with a certain dollar amount
(obligation).

From fiscal years 2001 through 2005, the five agencies obligated about 5
percent ($218 million) of the $4.3 billion they awarded for
advertising-related services to businesses certified as 8(a), small
disadvantaged, or minority-owned; this amount represented about 12 percent
of the 6,279 contract actions for advertising services these five agencies
awarded during this time. The utilization of 8(a)s, SDBs, and
minority-owned businesses in advertising contracts varied substantially
among the individual agencies. For example, DOD, which accounted for more
than 50 percent of advertising-related obligations for the federal
government over the 5-year period, awarded less than 2 percent ($49
million) of its dollars for advertising-related services to these types of
businesses. In contrast, NASA, whose obligations made up about 1 percent
of the total amount obligated by the federal government for advertising
services during the 5-year period, awarded about 89 percent ($41 million)
of its dollars to 8(a)s , SDBs, or minority-owned businesses. Looking at
agencies individually, we also found that the level of advertising-related
dollars varied, sometimes significantly, from one year to the next.
Generally, these variations were driven by large campaigns that the
respective agency had initiated. For example, in fiscal years 2001 and
2003, HHS officials told us that its increasing advertising obligations
were mostly attributable to the Centers for Disease Control and
Prevention's development of a Youth National Media Program, which resulted
in two advertising programs, portions of which it awarded to
minority-owned and small disadvantaged businesses. Agency officials from
DOD, NASA, and HHS told us that advertising procurement decisions were
often driven by needs rather than established procurement goals.

SBA, OMB, the General Services Administration (GSA), DOD, Treasury, HHS,
Interior, and NASA reviewed a draft of this report and had no comments.

Background

As reflected by federal statutes and a number of executive orders, it is
the policy of the federal government to encourage the participation of
small businesses, including businesses owned and controlled by socially
and economically disadvantaged individuals, in the performance of federal
procurement contracts. The Small Business Act established SBA as an
independent agency of the federal government to aid, counsel, assist, and
protect the interests of small business concerns; preserve free
competitive enterprise; and maintain and strengthen the overall economy of
the nation.^5 Among other things, the act sets a minimum governmentwide
goal for small business participation of not less than 23 percent of the
total value of all prime contract awards for each fiscal year and makes
SBA responsible for reporting annually on agencies' achievements on their
procurement goals.^6 The act authorizes the President to establish the
annual governmentwide goals.

To meet its responsibilities under the act, SBA negotiates annual
procurement goals with each federal executive agency with the intent to
ultimately achieve the 23 percent governmentwide goal. Some agencies have
goals higher than 23 percent, while others may have goals that are lower
than or equal to 23 percent--SBA negotiates all of them with the intent
that the governmentwide small business participation rate will not be less
than the goal of 23 percent. Among the agencies we reviewed for this
report, annual small business procurement goals for fiscal year 2005
ranged from 16 percent (NASA) to 56 percent (Interior). DOD's goal was set
at 23 percent, Treasury's at 24 percent, and HHS's at 30 percent. The
Small Business Act also sets annual prime contract dollar goals for
participation by certain types of small businesses that agencies strive to
meet as part of their efforts to meet their overall small business
participation goal. Specifically, these include goals for participation by
SDBs (5 percent), businesses owned and controlled by women or
service-disabled veterans (5 and 3 percent, respectively), and, businesses
located in historically underutilized business zones (HUBZones, 3
percent).^7

Similar to the Small Business Act, executive orders have been used with
the intent of increasing the participation of certain small and
minority-owned businesses in federal procurement. Executive Order 13170,
one of the most recent, seeks to provide added emphasis to the
government's policies regarding small and minority-owned business
participation in federal procurement.^8 Section 4, which specifically
highlights federal advertising, does not set specific goals or targets for
advertising-related contracts but states that:

^5Pub. L. No. 85-536, 72 Stat. 384 (1958) (codified as amended at 15
U.S.C. SS 631 et seq.).

^6A prime contract refers to a contract awarded directly by a federal
agency to a private business.

^715 U.S.C. S 644(g).

^8Increasing Opportunities and Access for Disadvantaged Businesses, Exec.
Order 13170, 65 Fed. Reg. 60827 (Oct. 12, 2000).

"Each department or agency that contracts with businesses to develop
advertising for the department or agency or to broadcast Federal
advertising shall take an aggressive role in ensuring substantial
minority-owned entities' participation, including 8(a)[s], SDB[s], and
Minority Business Enterprise[s] (MBE[s]) in Federal advertising-related
procurements."

The criteria for determining a firm's status as an 8(a) or SDB are set
forth in section 8 of the Small Business Act and related regulations,^9
while the definition of MBE is set forth in Executive Order 11625.
Specifically,

           o The 8(a) program, authorized by section 8(a) of the Small
           Business Act, was created to help small disadvantaged businesses
           compete in and access the federal procurement market.^10
           Generally, in order to be certified under SBA's 8(a) program, a
           firm must satisfy SBA's applicable size standards, be owned and
           controlled by one or more socially and economically disadvantaged
           individuals who are citizens of the United States, and demonstrate
           potential for success.^11 Black Americans, Hispanic Americans,
           Native Americans, and Asian Pacific Americans are presumptively
           socially disadvantaged for purposes of eligibility.^12 The
           personal net worth of an individual claiming economic disadvantage
           must be less than $250,000 at the time of initial eligibility and
           less than $750,000 thereafter.
			  
^9See 8(a) Business Development/Small Disadvantaged Business Status
Determinations, 13 C.F.R. Part 124 (2006).

^10See 15 U.S.C. S 637; 8(a) Business Development/Small Disadvantaged
Business Status Determinations, 13 C.F.R. Part 124 (2006); and Prescribing
Additional Arrangements for Developing and Coordinating a National Program
for Minority Business Enterprises, Exec. Order No. 11625, 36 Fed. Reg.
19967 (Oct. 13, 1971).

^11Unless otherwise noted, ownership means having a stake of 51 percent or
more in the business.

^1213 C.F.R. SS124.103 and 124.104 (2006). Business owners who are not
members of presumptive socially disadvantaged groups may petition the SBA
to be classified as disadvantaged. To do so, business owners must provide
narrative and supporting documentation that demonstrates social
disadvantage. That evidence must include the following elements: (1)
possession of at least one objective distinguishing feature that has
contributed to the business owners' social disadvantage -- such as race,
ethnic origin, gender, physical handicap, or long-term residence in an
environment that is isolated from mainstream America; (2) personal
experience of a substantial and chronic social disadvantage within
American society; and (3) the negative impact of this disadvantage on the
business owners' entry into or advancement in the business world.

           o To qualify for SDB certification, a firm must be owned and
           controlled by one or more socially and economically disadvantaged
           individuals or a designated community development organization.^13
           Individuals presumed to be socially disadvantaged for purposes of
           the 8(a) program are also presumed to be socially disadvantaged
           for purposes of determining eligibility for SDB certification. In
           contrast to the 8(a) program applicants, businesses applying for
           SDB certification need not demonstrate potential for success, and
           the personal net worth of the owners may be up to $750,000 at the
           time of certification. SDBs are eligible for incentives such as
           price evaluation adjustments of up to 10 percent when bidding on
           federal contracts in certain industries.^14 Prime contractors that
           achieve SDB subcontracting targets may receive evaluation credits
           for doing so. Section 8(a) firms automatically qualify as SDBs,
           but other firms may apply for SDB-only certification.

           o Executive Order 11625 defines minority business enterprises as
           those businesses that are owned or controlled by one or more
           socially or economically disadvantaged persons. The order states
           that disadvantages could arise from cultural, racial, or chronic
           economic circumstances or background or from similar causes. Under
           the order, socially or economically disadvantaged individuals
           include, but are not limited to, African-Americans, Puerto Ricans,
           Spanish-speaking Americans, American Indians, Eskimos, and Aleuts.
           While the definition of "MBE" is similar to the definition of
           "socially and economically disadvantaged small business" for
           purposes of the 8(a) and federal SDB programs, unlike these
           programs, the order does not limit the term "MBE" to small
           businesses.

           Executive Order 13170 spells out specific responsibilities for
           SBA, OMB, and executive agencies with procurement authority.
           Generally, the order gives SBA responsibility for setting goals
           with agencies and publicly reporting the progress toward those
           goals. Although the order gives OMB general oversight
           responsibility for implementing the order, OMB and SBA officials
           told us that the two agencies had agreed that SBA would take on
           the oversight responsibilities because SBA already had programs in
           place to oversee the small business programs of federal agencies.
           Section 2(b) of the order directed federal agencies with
           procurement authority to develop long-term, comprehensive plans
           to, among other things, aggressively seek to ensure that
           businesses classified as 8(a), small disadvantaged, and
           minority-owned are aware of contracting opportunities and report
           annually on efforts to increase utilization of these businesses.
           Section 2(b) also directed OMB to review each of these plans and
           report to the President on the sufficiency of each plan to carry
           out the terms of the executive order.
			  
^13SBA regulations provide that a business owned and controlled by an
Alaska Native Corporation, Community Development Corporation, or Native
Hawaiian Organization (each as defined in such regulations) may qualify as
an SDB. 13 C.F.R. S 124.1001 (2006).

^14Section 7102 of Federal Acquisition Streamlining Act of 1994, Pub. L.
No. 103-355, S 7102, 108 Stat. 3243, as amended by Pub. L. No. 106-554, S
1(a)(9) [Title V, S 503(d), 114 Stat. 2763 (2000)], authorized federal
agencies to employ price adjustments in evaluating bids by certain small
disadvantaged business concerns in competitive acquisitions. Section 7102
expired in September 2003. Under 10 U.S.C. S 2323, the Department of
Defense, NASA, and the Coast Guard still have authority to use price
adjustments in some circumstances. See 48 C.F.R. Part 19.11 (2006).

           The federal government awards contracts for advertising-related
           services for a variety of reasons, but primarily to deliver
           messages about its programs and services. According to Advertising
           Age, the largest amount of federal advertising spending goes to
           procure television and magazine advertising. Within the federal
           government, as we noted earlier, the biggest buyer of these
           services is DOD, which is very often doing so as part of ongoing
           recruiting campaigns by the military services. Additionally, for
           example, the Treasury's Bureau of Engraving and Printing procures
           the services of an advertising firm to promote public awareness
           and acceptance of changes to U.S. currency (e.g., the introduction
           of the redesigned currency). Similarly, NASA also uses advertising
           firms to help plan and carry out a variety of events held around
           the country intended to publicize its programs and ongoing space
           research as well to support internal purposes, such as organizing
           off-site conferences.
			  
			  Agencies Responded to Executive Order 13170 by Emphasizing Existing
			  Programs and Initiating Some New Activities Targeted to Advertising

           The five agencies we reviewed implemented Executive Order 13170
           primarily by continuing their existing efforts to broadly identify
           potential contracting opportunities with all types of small
           businesses, while three of the agencies addressed section 4 of the
           order by initiating new actions specific to advertising-related
           contracts. For example, HHS and NASA cited ongoing training
           efforts directed to procurement staff or small businesses as one
           way their agencies addressed the order. The five agencies' focus
           on ongoing efforts was consistent with SBA's and OMB's views that
           several provisions of the order duplicated program requirements
           under existing legislation. Specific to advertising, Treasury
           officials indicated that the agency was building on existing
           relationships with trade associations in order to identify
           advertising contracting for SDBs. Earlier this year, Treasury also
           established new outreach efforts and reporting requirements for
           advertising contracts with 8(a), SDB, and minority-owned
           businesses.
			  
			  Agencies Are Generally Using Existing Programs to Address the
			  Requirements of the Order

           Rather than develop plans focused specifically on section 4 of the
           executive order, for the most part the five agencies that we
           reviewed said that they already had programs in place to address
           similar requirements in previous legislation and that these
           activities were consistent with the expectations of the order. In
           response to the order, agencies generally reemphasized to
           procurement officers in subagencies around the country (who are
           responsible for awarding contracts) each agency's small business
           program policies and goals. While not directed specifically toward
           advertising contracts, these existing programs were designed to
           encourage the participation of small and minority-owned businesses
           in federal procurement.

           Treasury, HHS, and NASA spelled out their strategies for
           addressing the executive order in written implementation plans
           that they prepared pursuant to the requirements of section 2(b) of
           the order. DOD and Interior did not, as directed, prepare such
           plans at that time, but agency officials from those departments
           described to us the efforts they undertook. More specifically, to
           ensure that 8(a)s, SDBs, and minority-owned businesses were aware
           of contracting opportunities:

           o Treasury indicated in its implementation plan that it would
           continue to maintain a Web site for small business procurement and
           would post annual forecasts of contracting opportunities there.
           Further, the agency stated that it would publicize contracting
           opportunities in the Commerce Business Daily and FedBizOpps (an
           Internet-based point-of-entry for federal government procurement
           opportunities) and use its existing relationship with a variety of
           trade associations to foster the development of small
           minority-owned and women-owned businesses to increase awareness of
           contracting opportunities.

           o HHS's plan stated that the agency would continue to train
           program and procurement officials through the HHS Acquisition
           Training Program on policies that affect federal procurement
           awards to 8(a), small disadvantaged, and minority-owned
           businesses.

           o NASA's plan stated that it would continue to provide a 3-day
           course, "Training and Development of Small Businesses in Advanced
           Technologies," that was designed to increase the knowledge base of
           small businesses--including disadvantaged, 8(a), and women-owned
           businesses, and minority educational institutions--by improving
           their ability to compete for contracts in NASA's technical and
           complex environment.^15

           o Interior officials told us that they had disseminated
           information on future contracting opportunities to small
           businesses through the Internet, developed an advanced procurement
           plan, and conducted quarterly outreach meetings with potential
           small business contractors.

           o DOD officials noted that the department's Small Business Program
           adhered to the requirements set forth in the Small Business Act
           and other applicable statutory provisions and federal
           regulations.^16 The officials further explained that they used
           FPDS-NG and the department's internal database to monitor DOD's
           progress toward meeting its small business program goals.

           The five agencies' focus on enhancing their ongoing small business
           procurement programs to address section 4 of Executive Order 13170
           was consistent with SBA's and OMB's views that some requirements
           in the order reflected previous legislation. Specifically,
           officials from SBA and OMB told us that several provisions of the
           executive order paralleled procurement program requirements under
           the Small Business Act and other existing legislation. As a
           result, these two agencies, which were assigned certain oversight
           and reporting responsibilities in section 2 of the order, agreed
           that SBA should address such responsibilities as part of its
           ongoing oversight activities under the Small Business Act.^17 For
           example, the order requires SBA to conduct semiannual evaluations
           of the achievements in meeting governmentwide prime and
           subcontracting goals and the actual prime and subcontract awards
           to 8(a)s and SDBs for each agency and to make the information
           publicly available. However, prior to the issuance of the order,
           SBA was already evaluating awards to SDBs and publishing the
           information in its annual reports on the goals and achievements of
           each agency's procurement efforts. SBA's goaling requirements were
           previously established by the Small Business Act.^18
			  
^15NASA last held sessions at multiple locations during fiscal year 2004.
However, the training has been discontinued while NASA's new Assistant
Administrator reevaluates the program.

^16See 15 U.S.C. SS 631 et seq.; Title 10, Subtitle A, Part IV of the
United States Code; and the Federal Acquisition Regulation, Title 48 of
the Code of Federal Regulations.

^17Section 2(b) of the order also directed OMB to evaluate the sufficiency
of each agency's plans to address the order; OMB and SBA agreed that SBA
would be responsible for this provision as well. However, OMB officials
stated they had not seen SBA's evaluation of these plans; SBA officials
were unable to locate any records of these evaluations.			  

           Our comparison of the order to existing legislation also showed
           that almost all of the requirements in the order had already been
           reflected in previous legislation. For example, the order required
           agencies to ensure that minority-owned businesses are aware of
           future prime contracting opportunities, an existing requirement
           under the Small Business Act and the Federal Acquisition
           Regulation (FAR).^19 Similarly, the order requires that the
           directors of the Offices of Small and Disadvantaged Business
           Utilization (OSDBU) carry out their responsibilities to maximize
           the participation of 8(a)s and SDBs in federal procurement, a
           requirement that was previously set forth in the Small Business
           Act.^20 Specifically, the Small Business Act requires each covered
           agency to establish an OSDBU to be responsible for, among other
           things, the implementation and execution of the functions and
           duties under the sections of the act that pertain to the 8(a) and
           SDB programs in each agency. We found that many of the activities
           mentioned in the agencies' implementation plans or described to us
           highlighted actions that the agencies already had in place in
           their small business programs.
			  
			  Some Agencies Planned New Activities to Direct Federal Advertising
			  Contracts to 8(a)s, SDBs, or Minority-Owned Businesses

           Although agency officials at all five agencies indicated that
           their current small business programs broadly addressed procuring
           services from 8(a)s, SDBs, and minority-owned businesses,
           including advertising-related services, three of the five agencies
           we reviewed--HHS, Treasury, and Interior--planned new activities
           to increase federal advertising contracting opportunities for
           these businesses. For example, HHS stated in its implementation
           plan that it would make every effort to develop alternative
           strategies to maximize small and minority business participation
           in its advertising contracts at both the prime contracting and
           subcontracting levels. HHS also directed staff from its OSDBU to
           work with its operational divisions to ensure that all advertising
           efforts were properly structured under the Federal Acquisition
           Regulation.^21
			  
^18See 15 U.S.C. S 644 (g).

^19See 15 U.S.C. S 637(e) and (f); 48 C.F.R. S19.202-2 (2006).

^20See 15 U.S.C. S 644 (k).

^21The FAR is codified in Title 48 of the Code of Federal Regulations.			  

           In order to direct federal advertising procurement opportunities
           to 8(a)s, SDBs, and minority-owned businesses, Treasury stated in
           its implementation plan that it would identify contracting
           opportunities for SDBs in advertising and information technology
           by building on its existing relationships with trade associations.
           Treasury had previously established a memorandum of understanding
           (MOU) with several trade associations, including the Minority
           Business Summit Committee and the U.S. Pan Asian American Chamber
           of Commerce. Treasury intended the MOU to foster an environment
           that would allow small and minority-owned firms to compete
           successfully for Treasury contracts and subcontracts. According to
           Treasury officials, the focus on advertising in Executive Order
           13170 allowed the department to leverage an existing program by
           adding a component specifically for advertising and information
           technology services.

           In addition to the efforts to partner with trade organizations
           that it began in 2001, Treasury issued an acquisition bulletin in
           January 2007 establishing additional outreach efforts and
           reporting requirements relating to the procurement of federal
           advertising services from 8(a)s, SDBs, and minority-owned
           businesses. The bulletin requires (1) small business specialists
           located at Treasury's bureaus to use databases and other sources
           to identify minority-owned entities to solicit for
           advertising-related services, and (2) Treasury's bureaus to report
           all contract actions related to federal advertising to the Office
           of Procurement Executive for contracts awarded from March 1, 2007,
           through September 30, 2007.

           Interior, which had previously relied on its existing small
           business program to address the order, is currently drafting an
           implementation plan that will, according to the department's OSDBU
           officials, propose activities to increase advertising
           opportunities for 8(a)s, SDBs, and minority-owned businesses.
           Interior plans to convey through its efforts that the department's
           OSDBU is available to make the process of doing business with
           Interior simpler and more consistent across Interior's component
           subagencies. Interior plans to target all small businesses whose
           owners include representatives from socioeconomic groups
           identified as disadvantaged in the Small Business Act.
			  
			  Advertising Obligations and Contract Actions Awarded to 8(a), Small
			  Disadvantaged, and Minority-Owned Businesses Varied across Agencies

           Overall, from fiscal years 2001 through 2005, 8(a), small
           disadvantaged, and minority-owned businesses received about 5
           percent of the $4.3 billion in advertising-related obligations
           awarded by DOD, Interior, HHS, Treasury, and NASA. These
           businesses accounted for 12 percent of the contract actions that
           the five agencies awarded, but the percentages the agencies
           awarded varied substantially. ^22 For example, Treasury awarded
           less than 2 percent of its advertising-related dollars to 8(a)s,
           SDBs, and minority-owned businesses over the 5-year period, while
           HHS awarded about 25 percent to these business types. Advertising
           dollars also varied from one year to the next at individual
           agencies, sometimes significantly, primarily because of large
           advertising campaigns that the respective agencies undertook to
           publicize new programs or promote their mission (e.g., public
           health). The extent to which agencies' yearly increases in overall
           advertising obligations affected obligations to 8(a), small
           disadvantaged, and minority-owned firms also varied.
			  
			  Participation of 8(a), Small Disadvantaged, and Minority-Owned
			  Businesses Varied Widely among the Five Agencies

           According to federal procurement data, the federal government
           obligated about $4.8 billion to contractors for
           advertising-related services from fiscal years 2001 through 2005.
           During this period, the five agencies obligated $4.3 billion for
           advertising-related services--about 92 percent of total
           advertising-related obligations for the federal government (this
           amount consists of $3.4 billion of their own funds, and another
           $919 million on behalf of other agencies).^23 As shown in figure
           1, DOD accounted for over half of all advertising-related
           obligations during this period.
			  
^22We excluded administrative contract actions that did not have dollar
amounts in order to focus our analysis on actions that resulted in new
contracts or orders under existing contracts.

^23In certain instances, Interior and Treasury data include the contracts
of "franchise funds." Franchise funds are government-run, fee-for-service
organizations that provide a portfolio of services, including contracting
services. The franchise funds award contracts with other agencies' funds,
but the Interior and Treasury officials administering the franchise funds
are responsible for determining what type of business--e.g., 8(a), small
disadvantaged, or minority-owned--gets each contract. Sometimes, these
agencies will also administer contracts on behalf of other agencies but
not through the franchise fund.

           Figure 1: Total Advertising Obligations for the Federal Government
           for Fiscal Years 2001-2005

           From fiscal years 2001 through 2005, the five agencies we reviewed
           collectively obligated about $218 million to businesses designated
           as 8(a), small disadvantaged, or minority-owned; individually,
           their utilization of these businesses varied widely (fig. 2).
           Specifically, HHS awarded the highest dollar amount to 8(a), SDB,
           and minority-owned businesses during the 5-year period--about $122
           million--and NASA awarded the highest percentage of its dollars to
           these businesses--89 percent, or about $41 million.

           Figure 2: Advertising-Related Obligations Awarded to 8(a)s, Small
           Disadvantaged, and Minority-Owned Businesses for Fiscal Years
           2001-2005

           aObligations to businesses that may be classified in multiple
           categories are counted only once in this figure.

           During this period, the five agencies awarded a total of 6,279
           contract actions, about 12 percent of which (725) were awarded to
           businesses with these designations (fig. 3). Individually, the
           extent to which agencies awarded contract actions to 8(a), SDB,
           and minority-owned businesses varied widely, with Treasury
           awarding none on behalf of other agencies to these types of
           businesses and NASA awarding 45 percent. The number of contract
           actions awarded to 8(a)s, SDBs, and minority-owned businesses
           ranged from 0 at Treasury (administered for other agencies) to 449
           at DOD.

           Figure 3: Number of Advertising-Related Contract Actions Awarded
           to 8(a), Small Disadvantaged, and Minority-Owned Businesses for
           Fiscal Years 2001-2005

           aContract actions to businesses that may be classified in multiple
           categories are counted only once in this figure.
			  
^24While there are no governmentwide goals for awarding advertising
contracts to 8(a)s or minority-owned businesses, there is, as we note in
the background section of this report, a statutory goal for participation
by SDBs in annual agencywide procurement (of all goods and services, not
just advertising). According to SBA's goaling reports, between fiscal
years 2001 and 2005 all five agencies that we reviewed exceeded the
statutory goal of 5 percent for participation of small disadvantaged
businesses.

           Individually, the agencies we reviewed awarded different
           percentages of their advertising-related contracting dollars and
           actions to these types of small businesses. For example, on
           average, NASA awarded more than 80 percent of its total
           advertising-related obligations to businesses in each of these
           categories for the 5-year period. Except for 8(a)s and SDBs in
           2001, NASA consistently awarded 66 percent or more of its
           advertising-related obligations to the three types of businesses.
           In contrast, Treasury and DOD on average awarded 1.7 percent or
           less of their advertising-related obligations to 8(a), SDB, or
           minority-owned businesses. Figure 4 shows the amount of
           advertising-related obligations awarded by each agency to each of
           the three business types for 5 fiscal years as well as the total
           for the 5-year period.^24 Similarly, figure 5 shows the number of
           advertising-related contact actions awarded by each agency to each
           of the three business types for each year and the total for the
           5-year period. Contracting dollars and actions awarded directly to
           businesses can be counted in more than one category, so the
           dollars and actions awarded to various types of small businesses
           are not mutually exclusive.

Figure 4: Amount of Advertising-Related Obligations Awarded to 8(a), SDB,
and Minority-Owned Businesses for Fiscal Years 2001-2005

Note: Percentages cannot be totaled across columns because under SBA
guidelines, contracting dollars awarded directly to businesses can be
counted in more than one category. For example, a small disadvantaged
business may be minority-owned and therefore counted in both the small
disadvantaged column as well as the minority-owned column. Similarly, an
8(a) contractor may be accounted for in both the 8(a) and SDB categories.

^aWe found certain instances in which minority-owned businesses had
identified themselves as such in SBA's databases, but the information was
not captured in FPDS-NG. As a result, the analysis we present of contracts
that went only to minority-owned firms undercounts these businesses. We
did not perform statistical sampling to project the extent of this
undercounting.

^bIn fiscal years 2004 and 2005, contracts that Treasury awarded on behalf
of other agencies were worth $756 million but are not reflected in this
figure. Treasury awarded none of these contracts to 8(a)s, SDBs, or
minority-owned businesses.

^cIn fiscal years 2004 and 2005, the contracts that Interior awarded on
behalf of other agencies were worth $163 million and are not reflected in
this figure. Of the $163 million awarded during these 2 years, Interior
awarded $1.9 million to 8(a)s, $1.8 million to SDBs, and $1.9 million to
minority-owned businesses--all during fiscal year 2004.

Figure 5: Number of Advertising-Related Contract Actions Awarded to 8(a),
SDB, and Minority-Owned Businesses for Fiscal Years 2001-2005

Note: Percentages cannot be totaled across columns because under SBA
guidelines, contracting dollars awarded directly to businesses can be
counted in more than one category. For example, a small disadvantaged
business may be minority-owned and therefore counted in both the small
disadvantaged column as well as the minority-owned column. Similarly, an
8(a) contractor may be accounted for in both the 8(a) and SDB categories.

aWe found certain instances in which minority-owned businesses had
identified themselves as such in SBA's databases, but the information was
not captured in FPDS-NG. As a result, the analysis we present of contracts
that went to minority-owned firms undercounts these businesses. We did not
perform statistical sampling to project the extent of this undercounting.

bIn fiscal years 2004 and 2005, Treasury awarded 24 contract actions on
behalf of other agencies that are not reflected in the figure above.
Treasury awarded none of these 24 actions to 8(a)s, SDBs, or
minority-owned businesses.

cFor fiscal years 2004 and 2005, the contract actions that Interior
awarded on behalf of other agencies are not reflected in the figure above.
Of the $163 million awarded during these 2 years, Interior awarded two
contract actions to 8(a)s, one to an SDB, and three to minority-owned
businesses--all during fiscal year 2004.

Year-to-Year Variations in Agencies' Advertising Obligations Were Due to
Advertising Campaigns Specific to the Agency

As we noted earlier in this report, federal agencies award contracts for
advertising-related services for a variety of reasons, the primary one
being to deliver messages about the agencies' programs and services. The
advertising services that agencies procured ranged from recruiting and
public service announcements to public relations. We found that
advertising dollars for agencies sometimes varied significantly from one
year to the next (table 1) and that these differences were mostly the
result of large advertising campaigns specific to the individual agencies.

Table 1: Advertising Obligations for Five Agencies, Fiscal Years 2001-2005

(Dollars in millions)                           
Contracting department 2001 2002 2003 2004 2005 
DOD                    $373 $484 $549 $549 $720 
Treasury                $14  $27  $73  $45  $30 
Treasury: other funded    0    0    0 $636 $119 
HHS                    $170  $55 $124  $74  $70 
Interior                 $5   $4  $12   $7   $5 
Interior: other funded    0    0 $0.6 $152  $11 
NASA                     $1  $22   $3   $7  $12 

Source: GAO analysis of FPDS-NG data.

While we noted the year-to-year variations in agencies' overall
advertising obligations, we also observed that these variations did not
always translate into a direct effect on the share of agencies'
advertising obligations that went to 8(a)s, SDBs, or minority-owned
businesses (fig. 4). For example, during the 5-year period under review,
DOD showed an upward trend of increasing obligations for
advertising-related procurement, with the largest increase occurring in
fiscal year 2005 (about 31 percent). DOD officials attributed the increase
in advertising expenses to confronting the challenge of continuing to fill
the military ranks with recruits and reenlistees in the midst of war. More
specifically, during fiscal year 2005 DOD awarded multiple actions on four
ongoing unrelated large contracts with obligations ranging from about $60
million to $175 million. None of these new fiscal year 2005 contract
actions used 8(a)s, SDBs, or minority-owned businesses. Overall, however,
DOD increased its advertising-related obligations to each of the three
business types (from 2004 to 2005).

HHS officials told us that HHS's higher advertising-related obligations in
fiscal years 2001 and 2003 were mostly attributable to the Centers for
Disease Control and Prevention's (CDC) development of a Youth National
Media Program. In support of this initiative, two advertising programs
were conceived: the National Youth Media Campaign and the Targeted
Communities-Youth Media Campaign. HHS obligated $151 million for these two
campaigns. A portion of these obligations--just over $48 million--was
awarded to two minority-owned businesses, one of which was also certified
as a SDB. These campaigns included HHS's VERB advertisement targeted
toward children and teens to promote more physical activity (fig. 6).

Figure 6: HHS VERB Advertisement

The increase in HHS's overall advertising obligations from 2002 to 2003
did not have a uniformly similar effect on the obligations the agency
directed to 8(a)s, SDBs, and minority-owned firms, even though, as we
note, some of the spending for the youth initiative was directed to small
disadvantaged and minority-owned firms. Specifically, as a percentage of
the agency's total advertising obligations, HHS's total obligations to
8(a) and minority-owned firms decreased from 2002 to 2003, and its
obligations to SDBs showed an increase of less than 1 percent.

About 84 percent of NASA's obligations were related to two contracts. The
first of these was a contract NASA's Langley Research Center awarded in
fiscal year 2001 to an SDB for a variety of public relations activities.
For example, this contractor provided services such as preparing written
and photographic materials for media and selected internal and external
communications programs and administrative support for outreach and
special events. The contractor also developed, installed, and maintained
exhibits for events and provided logistical and general services to plan
and conduct conferences, symposia, peer reviews, and workshops for
off-site conferences and events. From fiscal years 2001 through 2005, NASA
obligated over $5 million for this contract.

The second NASA contract was awarded in fiscal year 2002 as a
multiple-year contract by its Marshall Space Flight Center. The contract
was originally awarded to a business classified as minority-owned that was
later admitted to the 8(a) and SDB programs. The contractor was primarily
responsible for providing support services to human resources, educational
programs, government and community relations, public exhibits, internal
communications, employee training, and organizational development. More
recently, the contractor has helped with several public events, including
an air show called Thunder in the Valley in Columbus, Georgia, in March
2007 and the X-Prize Cup in Las Cruces, New Mexico, in October 2006.^25
Between fiscal years 2002 and 2005, NASA obligated over $33 million for
this contract.

Generally, agency officials told us that the procurement decisions
reflected in their overall contracting data and specifically the
advertising contracting data we present here were more often driven by
needs identified at the subagency or local area level than by the
departments' needs. These decisions are made by contracting officers at
procurement offices, which are located around the country. For example,
NASA has contracting officers at each of its 10 field centers.^26 Each
center specializes in different areas of research and technology specific
to NASA. The Marshall Space Flight Center in Huntsville, Alabama, for
example, focuses on space exploration, with specific emphasis on
completing the international space station and returning to the moon.
Contract-related needs for the Marshall Space Flight Center seek to
advance technology in the space exploration area, and officials at the
center identify contracting opportunities to meet those needs. Officials
in NASA's OSDBU told us that they did not tell contracting officers what
services should be directed to small businesses, because the businesses
that were selected to provide a service were chosen based on need (as
identified by the centers' contracting officers and other officials) and
ability to meet the center's requirements.

^25According to NASA, the Thunder in the Valley Air Show included an
interactive traveling exhibit called The Vision for Space Exploration
Experience that allowed visitors to view the stars and other planets and
offered other tools to educate the public about space travel, including
virtual models of the moon and Mars, with the history of NASA's research
on each of them and future plans for space exploration. The X-PRIZE Cup
was a 4-day event during which participants could experience the future of
space flight through interactive models and simulations, view privately
developed spaceships, and meet experts involved in the development of
these various technologies.

Agency Comments and Our Evaluation

We provided SBA, OMB, GSA, DOD, Treasury, HHS, Interior, and NASA with a
draft of this report for review and comment. After reviewing the report,
all agencies responded that they did not have any comments, including any
of a technical nature.

As agreed with your offices, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days
after the date of this letter. At that time, we will send copies of this
report to the Ranking Member of the Senate Committee on Small Business and
Entrepreneurship, the Chair and Ranking Member of the House Committee on
Small Business, and other interested congressional committees. In
addition, we will send copies to the Secretaries of Defense, Treasury,
Health and Human Services, and Interior, as well as NASA's Administrator,
the Administrator of General Services, the Administrator of the Small
Business Administration, and the Director of the Office of Management and
Budget. We will also make copies available to others upon request. In
addition, the report will be available at no charge on the GAO Web site at
[13]http://www.gao.gov .

^26NASA's centers are responsible for carrying out its mission of space
exploration and research in various areas such as robotics and
aeronautics.

If you or your staff have any questions regarding this report, please
contact me at (202) 512-8678 or [14][email protected] . Contact points for
our Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix II.

William B. Shear
Director, Financial Markets and Community Investment

Appendix I: Scope and Methodology

In this report, we describe (1) strategies that the Departments of Defense
(DOD), Interior, Health and Human Services (HHS), Treasury, and National
Aeronautics and Space Administration (NASA) used to address section 4 of
Executive Order 13170, and (2) the total obligations, the number of
contract actions, and the percentage of total obligations represented by
these contract actions that each of the five agencies awarded to
businesses in the Small Business Administration's (SBA) 8(a) and federal
small disadvantaged business (SDB) programs and to minority-owned
businesses for advertising-related services. We queried the Federal
Procurement Data System-Next Generation (FPDS-NG) using the product
service codes for advertising and public relations to identify
advertising-related activity.^1 Using these data, we judgmentally selected
the four agencies that had obligated the most funds (DOD, Interior, HHS,
and Treasury) and one that had a high participation of 8(a), small
disadvantaged, and minority-owned businesses (NASA), based on
identification in the FPDS-NG of awards to 8(a)s, SDBs, and minority-owned
businesses for advertising-related contracts for fiscal years 2001 to
2005. In total, these agencies represented about 92 percent of all federal
advertising-related obligations for this 5-year period.

To describe strategies used by the five federal agencies to address
section 4 of Executive Order 13170, we obtained documentation from the
agencies outlining the actions they planned to take to implement the
order, interviewed agency officials regarding their plans and actions
taken, and compared both their planned actions as well as actions taken to
the requirements presented in the order. We also interviewed officials at
SBA and Office of Management and Budget (OMB) regarding the oversight
responsibilities each was given in implementing the order. Furthermore, we
identified a number of federal statutes and regulations pertaining to
executive agency procurement and small business programs, including the
Small Business Act and the Federal Acquisition Regulations, that were
consistent with the requirements of section 2 of the Executive Order
13170.

To determine the total dollar amount for each of the five agency's
advertising-related obligations for fiscal years 2001 through 2005 and the
dollar amount and percentage for obligations and contract actions awarded
to businesses designated as 8(a)s, SDBs, or minority-owned during that
same time period, we extracted key data fields from FPDS-NG. These data
fields included contracting department, procurement instrument identifier
(contract/order number), advertising-related product or service codes
(R701 and R708), SDB firm designation, 8(a) firm designation,
minority-owned designation, and funding agency. We then analyzed the data
to identify the total amount of advertising-related obligations for each
agency for each fiscal year and the amount and percentage of the total for
obligations and number of contract actions awarded to 8(a)s, SDBs, and
minority-owned businesses. We did not use FPDS data from before fiscal
year 2001 because agencies did not consistently report certain data
elements important to our analysis, such as minority ownership. Even after
the General Services Administration (GSA) upgraded the system to FPDS-NG
in 2003 (to capture, among other things, a data element for minority
ownership from fiscal year 2004 forward), agencies varied in the extent to
which they modified earlier years' data to reflect this information.

^1FPDS-NG is the federal government's only database of governmentwide
contracting activity.

In assessing the reliability of federal contracting data, we interviewed
officials from GSA, the agency responsible for maintaining FPDS-NG.
Additionally, we performed specific steps using the FPDS-NG data. First,
we compared FPDS-NG advertising totals to the Federal Procurement Data
System, the previous governmentwide contracting system, for the five
agencies for fiscal years 2001 through 2003.^2 For the DOD data, we also
compared FPDS-NG advertising totals to DD-350 (DOD's internal contracting
database) totals for fiscal years 2001 through 2005. In these comparisons,
we found some differences between the databases that we determined could
be attributed to the fact that FPDS-NG was a real-time system that allowed
for editing and updates, such as updates to the primary purpose of a
multiple-year contract in later years. FPDS and DD-350 did not allow for
such real-time changes. On the basis of this assessment, we concluded that
FPDS-NG data were sufficiently reliable for the purposes of our report.

Next, we tested the reliability of the 8(a), SDB, and minority-owned
designations in FPDS-NG. To do this, we electronically compared the
FPDS-NG designations for 8(a) and SDB to SBA's list of certified 8(a)s and
SDBs. We found a small number of certified 8(a) businesses that were not
designated as such in FPDS-NG. For DOD contractors that the DD-350 also
identified as being 8(a), we modified our data to reflect the certified
8(a) status. To determine the reliability of the minority-owned data in
FPDS-NG, we compared FPDS-NG contractor data for fiscal years 2004 and
2005 to the self-reported minority-owned designations in SBA's Small
Disadvantaged Businesses file and the Central Contractor Registration
database (the DOD database that also serves as the primary vendor database
for the U.S. government). We found that the number of minority-owned
businesses that received advertising-related contracts from these five
agencies was undercounted in the FPDS-NG for fiscal years 2004 and 2005.
We could not determine the degree of undercounting because our analysis
was not based on a sample that could be generalized to the population of
advertising-related contractors. Other than the minor differences that we
found, we determined that the business designations were sufficiently
reliable for the purposes of our report.

^2In 2003, GSA transferred data from FPDS to FPDS-NG when it upgraded the
system.

We conducted our work in Washington, D.C., between October 2006 and June
2007 in accordance with generally accepted government auditing standards.

Appendix II: GAO Contact and Staff Acknowledgments

GAO Contact

William B. Shear, (202) 512-8678, [email protected]

Staff Acknowledgments

In addition to the individual named above, Bill MacBlane, Assistant
Director; Johnnie Barnes; Michelle Bracy; Emily Chalmers; Julia Kennon;
Lynn Milan; Marc Molino; Omyra Ramsingh; and Rhonda Rose made key
contributions to this report.

(250318)

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www.gao.gov/cgi-bin/getrpt?GAO-07-877.

To view the full product, including the scope
and methodology, click on the link above.

For more information, contact William B. Shear at (202) 512-8678 or
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Highlights of GAO-07-877, a report to congressional requesters

July 2007

FEDERAL ADVERTISING

Established Programs Were Largely Used to Address Executive Order
Directive to Ensure Small and Minority-Owned Business Participation

In 2005, federal spending on advertising exceeded $1 billion. Five
agencies--DOD, Treasury, HHS, Interior, and NASA--together made up over 90
percent of this spending from 2001 to 2005. Executive Order 13170, signed
in October 2000, directs agencies to take an aggressive role in ensuring
substantial participation in federal advertising contracts by businesses
in the Small Business Administration's (SBA) 8(a) and small disadvantaged
business (SDB) programs and minority-owned businesses.

This report describes (1) strategies DOD, HHS, Treasury, Interior, and
NASA used to address Executive Order 13170, and (2) the total obligations,
number of contract actions, and percentage of total obligations
represented by these actions that each agency awarded to 8(a)s, SDBs, and
minority-owned businesses for advertising services.

In conducting this study, GAO analyzed agency contracting data and
executive order implementation plans and interviewed agency procurement
officials.

[22]What GAO Recommends

GAO is making no recommendations in this report.

GAO provided a draft of this report to the five agencies as well as
SBA,OMB, and GSA for their review and comment. The agencies had no
comments on the report.

Because much of Executive Order 13170 was consistent with existing
legislation, the five agencies we reviewed generally addressed the order's
emphasis on advertising contracts by continuing existing programs designed
to identify potential contracting opportunities with all types of small
businesses. The five agencies' focus on ongoing efforts was consistent
with SBA's and the Office of Management and Budget's (OMB) views that
several provisions of the order paralleled procurement program
requirements under the Small Business Act. Three agencies--HHS, Treasury,
and Interior--also planned additional activities that targeted the
agency's contracting efforts for advertising services. For example, one of
Treasury's additional activities was to work with trade associations to
identify opportunities for SDBs in advertising.

From fiscal years 2001 through 2005, 8(a), SDB, and minority-owned
businesses received about 5 percent of the $4.3 billion in
advertising-related obligations of DOD, Treasury, HHS, Interior, and NASA
and 12 percent of the contract actions that these agencies awarded; the
percentages varied substantially among each of the five agencies (see
fig.). For example, Treasury awarded less than 2 percent of its
advertising-related dollars to 8(a)s, SDBs, and minority-owned businesses
collectively over the 5-year period, while NASA awarded about 89 percent
to these types of businesses. Overall advertising obligations also varied
from one year to the next at individual agencies, sometimes significantly.
Year-to-year increases were driven by large campaigns that the respective
agencies undertook to publicize new programs or promote their mission
(e.g., public health). Agencies varied in the extent to which year-to-year
increases in overall advertising obligations had a similar effect on
obligations to 8(a), small disadvantaged, and minority-owned firms.

Advertising-Related Obligations for Fiscal Years 2001-2005

^aObligations to businesses that may be classified in multiple categories
are counted only once in this figure.

References

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  14. mailto:[email protected]
  15. http://www.gao.gov/
  16. http://www.gao.gov/
  17. http://www.gao.gov/fraudnet/fraudnet.htm
  18. mailto:[email protected]
  19. mailto:[email protected]
  20. mailto:[email protected]
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