A year after the Agriculture Department's inspector general demanded the contract for milk advertising be rebid, the agency is proposing a policy that would force all of the U.S. government's dozen commodity boards to seek advertising agencies by competitive bid.
Agriculture officials said a notice of the new policy was printed in the Federal Register Dec. 17 and, subject to comments received, could take effect in 90 days.
There was no immediate word on whether the policy would force existing ad contracts--including Bozell's for milk--to be rebid. Several of the boards last week suggested the immediate impact would be limited and the policy would only apply to new contracts.
The commodity boards--including those for beef, pork, cotton and eggs--were formed under laws that allow farmers and growers to assess themselves a marketing fee, which the government collects and then turns over to a board to spend on behalf of industry marketing. The boards have contended that because the farmers and growers essentially tax themselves, procedures and spending decisions shouldn't be overseen by the government.
Publicity over high spending by the Cotton Board, together with charges by the Agriculture Department's inspector general that the department wasn't doing enough to oversee the National Fluid Milk Processors Education Program, prompted Agriculture Secretary Dan Glickman to form a panel a year ago to examine the department's proper oversight role.
That panel, headed by Undersecretary Michael Dunn, issued a 39-page report last week. While its recommendations covered several areas, the report suggested the boards use competitive bidding for most contracts and set formal goals for marketing and evaluating their campaigns regularly--at least once in five years using an outsider.
Mr. Dunn said last week he would like the boards to begin competitive bidding immediately, but he also acknowledged the boards have existing contracts.
"We won't ask anybody to terminate existing contracts . . . but by next year we would expect some kind of documentation," he told Advertising Age.
He also said Mr. Glickman, who immediately endorsed the panel's recommendations, rejected the boards' claim that they should be allowed to operate without government oversight.
"The secretary said that because he appoints the members [of the board], he is the one that is ultimately responsible" for their spending, said Mr. Dunn.
The Agriculture Department, however, offered few specifics on how its recommendations should be carried out.
Several of the boards last week took an optimistic view of the new requirements even as they were preparing to submit comment on the policies.
"This is really not going to affect us a whole lot," said Kurt Graetzer, CEO of MilkPEP, noting the request to bid wouldn't prompt annual ad reviews.
He also contended it would not force a rebidding of the contract with Bozell, New York. He called the new policy an attempt to "forge closer relationships between the USDA and programs run by these boards."
Linda Eatherton, VP-public relations for Dairy Management Inc., the dairy farmer organization that has pooled its financial resources with MilkPEP, said it was premature to comment.
"The task force very clearly heard the producers who testified. They felt they were accountable to their programs and did not need further government oversight. In general, many of the recommendations are things already done by the milk boards," she said.
Copyright December 1999, Crain Communications Inc.