GAO-07-877, Federal Advertising: Established Programs Were Largely Used to Address Executive Order Directive to Ensure Small and Minority-Owned Business Participation


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to Address Executive Order Directive to Ensure Small and Minority-Owned 
Business Participation' which was released on August 13, 2007. 

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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: 

GAO Highlights: 

Highlights of GAO-07-877, a report to congressional requesters 

Why GAO Did This Study: 

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. 

What GAO Found: 

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. 

Figure: Advertising-Related Obligations for Fiscal Years 2001-2005: 

[See PDF for Image] 

Source: GAO analysis of Federal Procurement Data System-Next Generation 
data for fiscal years 2001-2005. 

[A] Obligations to business that may be classified in multiple 
categories are counted only once in this figure. 

[End of figure] 

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. 

[Hyperlink, http://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 shearw@gao.gov 

[End of section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

Agencies Responded to Executive Order 13170 by Emphasizing Existing 
Programs and Initiating Some New Activities Targeted to Advertising: 

Advertising Obligations and Contract Actions Awarded to 8(a), Small 
Disadvantaged, and Minority-Owned Businesses Varied across Agencies: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Table: 

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

Figures: 

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

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

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

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

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

Figure 6: HHS VERB Advertisement: 

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 Aeronautics 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: 

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.[Footnote 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. 

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.[Footnote 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.[Footnote 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.[Footnote 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. 

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. 

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.[Footnote 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.[Footnote 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).[Footnote 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.[Footnote 8] Section 4, which 
specifically highlights federal advertising, does not set specific 
goals or targets for advertising-related contracts but states that: 

"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,[Footnote 9] while the definition of MBE is set forth in 
Executive Order 11625. Specifically, 

* 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.[Footnote 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.[Footnote 11] 
Black Americans, Hispanic Americans, Native Americans, and Asian 
Pacific Americans are presumptively socially disadvantaged for purposes 
of eligibility.[Footnote 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. 

* 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.[Footnote 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.[Footnote 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. 

* 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. 

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: 

* 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. 

* 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. 

* 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.[Footnote 15] 

* 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. 

*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.[Footnote 
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.[Footnote 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.[Footnote 18] 

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).[Footnote 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.[Footnote 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.[Footnote 21] 

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. [Footnote 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).[Footnote 23] As 
shown in figure 1, DOD accounted for over half of all advertising- 
related obligations during this period. 

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

[See PDF for image] 

Source: GAO analysis of FPDS-NG data for fiscal years 2001-2005. 

[End of figure] 

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: 

[See PDF for image] 

Source: GAO analysis of FPDS-NG data for fiscal years 2001-2005. 

[A] Obligations to businesses that may be classified in multiple 
categories are counted only once in this figure. 

[End of 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: 

[See PDF for image] 

Source: GAO analysis of FPDS-NG data for fiscal years 2001-2005. 

[A] Contract actions to businesses that may be classified in multiple 
categories are counted only once in this figure. 

[End of figure] 

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.[Footnote 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: 

[See PDF for image] 

Source: GAO analysis of FPDS-NG data 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. 

[A] We 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. 

[B] In 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. 

[C] In 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. 

[End of figure] 

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

[See PDF for image] 

Source: GAO analysis of FPDS-NG data 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. 

[A] We 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. 

[B] In 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. 

[C] For 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. 

[End of figure] 

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: DOD; 
2001: $373; 
2002: $484; 
2003: $549; 
2004: $549; 
2005: $720. 

Contracting department: Treasury; 
2001: $14; 
2002: $27; 
2003: $73; 
2004: $45; 
2005: $30. 

Contracting department: Treasury: other funded; 
2001: $0; 
2002: $0; 
2003: $0; 
2004: $636; 
2005: $119. 

Contracting department: HHS; 
2001: $170; 
2002: $55; 
2003: $124; 
2004: $74; 
2005: $70. 

Contracting department: Interior; 
2001: $5; 
2002: $4; 
2003: $12; 
2004: $7; 
2005: $5. 

Contracting department: Interior: other funded; 
2001: $0; 
2002: $0; 
2003: $0.6; 
2004: $152; 
2005: $11. 

Contracting department: NASA; 
2001: $1; 
2002: $22; 
2003: $3; 
2004: $7; 
2005: $12. 

Source: GAO analysis of FPDS-NG data. 

[End of table] 

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: 

[See PDF for image] 

Source: HHS. 

[End of figure] 

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.[Footnote 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.[Footnote 
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. 

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 http://www.gao.gov. 

If you or your staff have any questions regarding this report, please 
contact me at (202) 512-8678 or shearw@gao.gov. 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. 

Signed by: 

William B. Shear:
Director, Financial Markets and Community Investment: 

[End of section] 

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.[Footnote 27] 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. 

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.[Footnote 28] 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. 

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

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

William B. Shear, (202) 512-8678, shearw@gao.gov: 

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. 

[End of section] 

FOOTNOTES 

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

[2] The 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., §5.001]. 

[3] While 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. 

[4] For 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). 

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

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

[7] 15 U.S.C. § 644(g). 

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

[9] See 8(a) Business Development/Small Disadvantaged Business Status 
Determinations, 13 C.F.R. Part 124 (2006). 

[10] See 15 U.S.C. § 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). 

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

[12] 13 C.F.R. §§124.103 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. 

[13] SBA 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. § 124.1001 (2006). 

[14] Section 7102 of Federal Acquisition Streamlining Act of 1994, Pub. 
L. No. 103-355, § 7102, 108 Stat. 3243, as amended by Pub. L. No. 106- 
554, § 1(a)(9) [Title V, § 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. § 
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). 

[15] NASA 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. 

[16] See 15 U.S.C. §§ 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. 

[17] Section 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. 

[18] See 15 U.S.C. § 644 (g). 

[19] See 15 U.S.C. § 637(e) and (f); 48 C.F.R. §19.202-2 (2006). 

[20] See 15 U.S.C. § 644 (k). 

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

[22] We 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. 

[23] In 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. 

[24] While 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. 

[25] According 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. 

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

[27] FPDS-NG is the federal government's only database of 
governmentwide contracting activity. 

[28] In 2003, GSA transferred data from FPDS to FPDS-NG when it 
upgraded the system. 

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