FCB LOST $125 MILLION ACCOUNT REVIEW BY A FAX

California Lottery Used Paperwork Technicality to Bounce Leading Contender

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SAN FRANCISCO (AdAge.com) -- The saga of the California Lottery ad account review is about to take
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another torturous twist. Lottery officials are today expected to announce that the winning decision hinged on the method used by contenders to deliver their final documents to lottery commission headquarters.

Document delivery
A number of individuals involved in the situation said the front-runner, Foote, Cone & Belding Worldwide, San Francisco, lost the review because it faxed -- rather than hand-delivered -- its final paperwork.

As a result, McCann-Erickson Worldwide, Los Angeles, which hand-delivered its bid document, was named the apparent winner of the $125 million, five-year account.

FCB is expected to protest the decision on the grounds that it is not a material breach of the lottery's rules.

FCB and McCann-Erickson are both part of the Interpublic Group of Cos.

No comment
Lottery executives did not return calls. Citing gag orders from the lottery, executives at the agencies declined comment.

The lottery's original request for proposal specified that hard copies of responses be sent to its offices in Sacramento. However, some recent correspondence between the lottery and agencies has been carried on by fax.

The review process has now gone on for three years, and so far lottery officials have named three different agencies as "apparent successful bidder," only to throw the results out after subsequent challenges. Earlier this week, the lottery selected McCann, which ranked third or fourth in the competition. The required documents involved rebids for the media portion of the account.

Two other finalists in the review, Omnicom Group's DDB Worldwide, Los Angeles, and five-year incumbent Grey Global Group's Grey Worldwide, Los Angeles, declined to submit a rebid on media costs, saying the numbers were stacked against any agency except FCB. That left only the two Interpublic shops as contenders.

Protest from previous round
Meanwhile, the lottery has received an official protest from DDB, an earlier apparent winner, that has raised issues about media costs FCB and its media-services partner Initiative Media offered in the second round of the review.

Grey Worldwide has been handling the lottery's account in the interim. Grey is also considering protesting the decision, an executive knowledgeable about the situation said.

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