|The U.S. Army is using extensions to give Leo Burnett an extra year and a half on its contract.
The Army announced July 7 it is extending for six months Burnett’s Army contract and also increasing spending. That marks the fourth or fifth contract extension for Burnett, which initially won a maximum four-year contract for Army advertising in July 2000. The extensions have added a year and a half on the original contract. Potentially, a new account is worth $1 billion over five years.
By law, government contracts are required to be bid competitively to keep costs down, and the watchdog group, Project on Government Oversight, was critical of the extension on the grounds that it doesn’t assure the government gets the best price.
Scott H. Amey, the group’s general counsel, said he is “disturbed with the Army’s repeated use of extensions in its advertising contract. One short-term extension might be justified, but multiple extensions are nothing more than an attempt to dodge competition, which prevents taxpayers from getting the best deal.
“The Army contract may be a good example of how the contracting system is ripe for abuse," he said.
Evading legal requirements?
Mr. Amey said the "government circumvents violations by citing justifications allowing less than full and open competition. For example, only one responsible source, national security, and unusual and compelling urgency justifications allow the government to evade competition requirements.”
Paul Boyce, an Army spokesman, said the delay has less to do with national security than a desire to ensure the new contract is bid properly. “It’s a potential five-year contract worth approximately ... $1 billion, so the Army must be very careful and prudent in its contracting policies.”
After notifying ad agencies in spring 2004 of the new contract, the Army repeatedly delayed awarding the contract -- after agencies spent thousands of dollars to compete for the business. Then in April the Army announced it was abandoning the bidding, citing “inconsistencies in the evaluation process.”
At the time, competing agencies were told a new contract would be in place by this fall, but the new extension makes clear the Army’s target date is now the end of the year.
Agencies involved in the canceled review, including Interpublic Group of cos.' McCann Erickson Worldwide and WPP Group's Y&R Advertising, Ogilvy & Mather and Grey Worldwide, could formally protest, but there is no indication the agencies were planning to do so. The agencies may re-pitch the account when the Army finally does put the contract up for bidding.