CALIF. LOTTERY ACCOUNT REVIEW GETS NASTY

Contenders Attack FCB's Inclusion in Pitch

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SAN FRANCISCO (AdAge.com) -- An agency or agencies involved in the review for the California Lottery Commission's five-year, $125 million account questioned the way the commission has handled the pitch, especially with regards to one of the other contenders, Foote, Cone & Belding Worldwide.

Third year
In the latest go-round over the review, now entering its third year, the commission had asked the four finalists to submit questions they had about details of a modified request for proposal, or RFP, involving media cost and compensation. Questions were submitted anonymously, and the commission's answers were shared with all agencies via fax.

Most of the more than 40 questions asked of the commission pertained to technical aspects of the review, but a few foreshadowed what could be the legal issues raised in a threatened lawsuit by Omnicom Group's DDB Worldwide, Los Angeles.

Questions about Interpublic
One question noted that

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Interpublic Group of Cos. -- the parent company of San Francisco-based FCB and its media partner in the review, Initiative Media, as well as another contender, McCann-Erickson, Los Angeles -- is now the subject of an investigation by the Securities and Exchange Commission.

"Must that [SEC] investigation, its nature, etc. be now disclosed before the RFP responses as a whole can be evaluated and a new apparent successful bidder named?" the questioner asked.

The commission responded: "All bidders must update their RFP responses as appropriate."

Another question asked, "If [the California Lottery] determined that FCB's [original] submission did not conform ... why has FCB been permitted to continue as a finalist, and now have an opportunity to revise its price/cost bid?" The commission answered: "The lottery's decision stands on its own merits."

New grading scheme
As part of the rebidding, lottery executives changed how the commission will grade media costs and mark-up rates. In the earlier bid -- the one FCB won -- the cost-per-point of media was worth 20 points and compensation earned 10. In the new process, media costs will be eligible for 16 points, while compensation costs will have a 14-point maximum.

While it's mathematically possible for FCB to lose the review based on the rebid media portion, it entered the final stage with 68 points, out of a possible 70, on creative and other aspects of the bidding process.

One executive, however, does not believe that the new process allows for a new winner, especially given a new scoring methodology. "It changes the dynamic," with FCB's victory assured, said the executive, who asked to remain anonymous.

Apparent winners
The Lottery began its review for a new agency in 2000. DDB was named the so-called apparent successful bidder in January 2001. The account's incumbent at the time, Grey Global Group's Grey Worldwide, protested the decision on grounds involving disclosure of the names of individuals heading up media buying companies. The Lottery reviewed the Grey protest and decided to call for a new review. Last summer, following the second review, FCB was named the apparent winner. DDB, however, filed a formal protest over media costs submitted by FCB and Initiative.

Later, DDB reinforced the protest with a letter from its attorneys threatening a lawsuit.

Under a new schedule, the revised RFP must be submitted to the state by March 5; the commission must pick its apparent successful bidder by March 11. It's not clear at this point whether all the finalists will advance to the next round.

Agencies either declined comment or did not return calls. Lottery executives did not return calls by press time.

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