McCann retreats from Army review
McCann is finally waving a white flag after a long battle for the U.S. Army account.
In an unexpected twist to a long-running saga, McCann filed January 18 to the U.S. Court of Federal Claims requesting "the voluntary dismissal of its protest" that was initially filed in November.
The lucrative account went up for review in 2014 but has been extended multiple times along with its contract with McCann. After the business was awarded to Omnicom Group's DDB in November of last year, Interpublic Group of Cos.' McCann filed a protest with the Government Accountability Office which was ultimately unsuccessful. The GAO denied McCann's protest bid on the grounds that its submission was incomplete because of a missing disk. McCann then took the matter to the U.S. Court of Federal Claims, where it remained until today's filing by the agency to dismiss.
The agency, which has been fighting to stay on with the Army for years, did not offer a reason for its decision. In an interview, McCann Worldgroup CEO Harris Diamond didn't discuss specifics, but said the agency was proud of the long, Effies-winning relationship with the Army.
"We helped the United States Army explain its mission: Recruit the folks that wanted to serve in the country's interest," he says. "We're really proud of it. We're disappointed we won't be going ahead, but really proud of what we accomplished."
People close to the matter say McCann's pulling out had to do with pricing. Some details of the bid process became public once the third rival in the pitch, WPP agency Possible, filed another complaint in December of last year about DDB's pricing.
Possible alleged in the U.S. Court of Federal Claims that at the price DDB promised the Army, the Omnicom shop would "likely be unable to perform the basic requirements of the contract." It further charges that DDB "could not have offered the levels of innovation that Possible did" at the price it promised. Although the complaint was filed in late December 2018 it was unsealed this month. DDB also filed to intervene as a party defendant on the action.
DDB's attorney couldn't be reached for comment on McCann's withdrawal and a DDB spokeswoman did not respond to a request for comment.
Darwin Hindman, head of the government contracts practice at law firm Baker Donelson and an adjunct professor at Vanderbilt Law School, says a truly lowball bid could do the Army more harm than good.
"Even though one of the reasons for competition is to drive down lower prices, at some point the argument is that the benefit to the government may be lost if the contractor bids a price that is so low that [the contractor] is losing money," he says. "Experience has shown that contractors who are not getting paid a fair price will try to cut corners or not put their best people on the contract," he says, adding that some could default if the account is unprofitable.
Adds Hindman: "Even though it saves the government money in the short-term, it's actually not in the government's best interest to make an award like that because they may find they're getting an underperforming contractor or may have to reprocure that contract later, which of course is expensive and messy."
As of press time, the court had tentatively set an oral argument to hear Possible's suit March 1 in Washington, D.C. Possible and its attorney declined to comment.
In the meantime, McCann continues working with the Army; its contract will continue through March.
The Army contenders are jumping through all these legal hoops for a good reason.
Government accounts "are multi-year, they typically reflect an agency-of-record assignment, and in today's project-based, cost-managed environment, these are highly prized because they are lucrative and they are typically relationships that are renewed at the end of the contractual period," says Forrester analyst Jay Pattisall. He adds that because opportunities like the Army business are "few and far in between," agencies can see them as worth the hassle of legal action.
The 2020 Census drew similar levels of agency contention. WPP's Y&R won the account in 2016 after a review — sparking speculation that the agency had lowballed the bid. The Wall Street Journal subsequently reported that Y&R had submitted a proposal that would cost the government agency $14 million for a three-year deal, a far lower bid than other players, which ranged from $25 million to more than $30 million.
An agency review for the California State Lottery some 17 years ago involved its own share of intrigue. In January 2002, the client awarded its creative and media account to DDB in Los Angeles. But WPP's Grey Worldwide Los Angeles protested the win, alleging DDB didn't reveal it would buy media from sibling media shop OMD.
The lottery's director wrote to agencies involved in the pitch to say that while she dismissed Grey's allegation, she was calling for a new review because both shops didn't comply with state regulations requiring agencies to disclose the names of officers and directors and other media partner information. It didn't work out for either shop: IPG's FCB was named the eventual winner.