Miniority Firms Are Getting Shafted

Remember when Jose Pinero, Microsoft’s director of diversity and multicultural marketing, went on the record with the fact that the company was slow to hear his message of multicultural advertising? Well, it seems the government has a similar problem. The U.S. government is apparently doing a crap job of awarding small and minority firms advertising and public relations contracts. A recent Government Accountability Office study said that between 2001 and 2005 the government devoted 5% of its expenditures to small or minority businesses.

And here’s the real kicker – when they did use these firms, they paid them FAR LESS. The Department of Defense used minority firms 1.8% of the time and paid them nearly 84% less than non-minority firms. The Treasury Department used minority firms for advertising 1.9% of the time and paid them on average nearly 47% less per contract than ad contracts with non-minority firms. By the way, the DOD takes up half of the entire government’s advertising budget of $4.3B.

Wowza. Let’s look at this very rationally – these firms might have lost out because they didn’t have the resources to handle larger projects. Alright, then let’s say they get smaller jobs like preparing brochures. Why would you pay them so much less? Was it the agencies fault and they bid low to get the business? Or does the government just set a price and run with it on a case by case basis?

Something else to consider. The two agencies with the smallest budgets, Health and Human Services and NASA spent the most amount of cash with minority firms (24.6% and 88.9%). Are the DOD and the Treasury Department just old boys clubs then?

Either way, in a country where equal opportunity for men, women, and all sorts of colors is touted as a pillar of our values, the government needs to do better. Read more details here.