Federal Advertising

Federal Use of Small Disadvantaged Subcontractors Is Minimal Gao ID: RCED-89-54 June 30, 1989

Pursuant to a congressional request, GAO reviewed the extent to which the Department of Defense (DOD) used minority-owned media and advertising companies in developing its advertisements and conducting campaigns, focusing on whether DOD prime contractors complied with the national policy to use small disadvantaged firms for subcontracts.

GAO found that: (1) DOD contracts totaled about $160 million of the $166 million federal advertising budget for fiscal year 1986, and included six contracts that were subject to the subcontracting provisions of the Small Business Act and the Federal Acquisition Regulation (FAR); (2) DOD did not use small disadvantaged advertising firms as prime contractors and only minimally used them as subcontractors; (3) DOD and its contractors often did not comply with the act, since they did not develop subcontracting plans or did not develop subcontracting plans that included all the mandated elements, did not keep records of the amount subcontracted to small disadvantaged subcontractors, set small-disadvantaged-business spending goals substantially less than the subcontracting dollar amount, or counted some advertising geared to minority audiences as meeting subcontracting goals; and (4) DOD and its prime contractors may not have complied in good faith with the policies or required subcontracting, which could constitute in a material breach of contract.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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