The Army contended the review -- limited to full-service agencies or consortiums with $350 million in annual billings -- will open the door to greater use of minority agencies because it will offer the Army more flexibility to use outside ad agencies on projects. The Army's current contract with Y&R Advertising requires any advertising expenditure over $10,000 to be handled by that agency or by its partners.
"The notion that we would knowingly and intentionally [not use minority agencies] is counterintuitive to the direction of the Army, " said P.T. Henry, assistant secretary of the Army for manpower and reserve affairs.
He also noted Army Secretary Louis Caldera is the service's first Hispanic secretary.
"The notion of Louis Caldera doing anything resulting in any process that shut out minority agencies is inconceivable," Mr. Henry said.
The Army published its plans for the review on Feb. 24 in Commerce Business Daily (AA, Feb. 28).
A 16-page questionnaire sent to more than a dozen agencies recently indicates the ad agencies will be evaluated on 146 points.
U.S. Rep. Carolyn Kilpatrick (D., Mich.) in a statement last week expressed concern over the Army's review guidelines.
"Requiring minority agencies to partner for this niche business excludes the independents from competition regardless of their competence and expertise," she said. "This reduces the [Department of Defense's] access and ability to identify shops that can create the best creative work and have expertise for targeted efforts."
The Army's action surprised minority advertising advocates, lawmakers and some administration officials who had been working on two fronts to expand the government's use of minority agencies. There were indications last week that some were trying to get the Army to change its stance.
Last year, minority legislators put language into several appropriations bills asking for the use of minority advertising agencies. The language inserted in the Defense Department appropriations was the strongest.
"The [conference] committee understands there are many qualified minority-owned businesses, women-owned businesses and small businesses that design and place advertising campaigns," it said. "The committee believes these firms can provide valuable new insights and expertise . . . [and] expects the department to increase the use of these qualified businesses in the initiation, design and placement of its advertising in the print, radio and electronic media."
A report on government advertising procurement, currently being drafted by a White House interagency work group and due later this month, is expected to say that government agencies may be missing out on getting the best ad agency resources by arbitrarily setting a high minimum billing requirement.
That report is expected to cite as an example an unspecified government agency that set a billings level $100 million below the Army's requirement.
Mr. Henry, however, said the Army's motives are being misunderstood and that minority agencies will benefit from, not be hurt by, the Army's procedures.
He said the bidding requirement for the $130 million in advertising would allow a consortium of smaller shops to participate, that the Army's need for a single agency or consortium rather than separate contracts reflected the variety of creative tasks it has and that the minimum size was set to assure the Army business wasn't more than 20% or 30% of an agency's business.
"What we are looking for is an agency that can best translate the Army's message to America," he said, adding the Army needs a coordinated message. Having individual agencies working separately "dramatically complicates the matter and makes for a recipe to not succeed," he said.
While the Army has hired Jones-Lundin Associates, Chicago, to conduct its agency search, its final request for proposals hasn't yet been written.
Mr. Henry said the Army intends to give itself considerably more flexibility to use outside advertising or PR agencies for specific projects than it has with its current contracts. He said some TV ads might be done by outside resources depending on how the contract is written.
He also said he is confident the Army will get the best resources.
"We will have a top quality minority firm that we will be linked up with, and the contract will open the door on a case-by-case basis for us to deal directly with the best firm, regardless of how small they are," he said.