DoD's $31.4M advertising contract with Campbell-Ewald Company shows potential for cost savings

Contract Overview

Contract Amount: $31,400,000 ($31.4M)

Contractor: Campbell-Ewald Company

Awarding Agency: Department of Defense

Start Date: 2008-03-12

End Date: 2009-01-31

Contract Duration: 325 days

Daily Burn Rate: $96.6K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 2

Pricing Type: FIRM FIXED PRICE

Sector: Other

Official Description: OPTION PERIOD 2 - SPACE CHARGES & MEDIA PLACEMENT

Place of Performance

Location: WARREN, MACOMB County, MICHIGAN, 48088

State: Michigan Government Spending

Plain-Language Summary

Department of Defense obligated $31.4 million to CAMPBELL-EWALD COMPANY for work described as: OPTION PERIOD 2 - SPACE CHARGES & MEDIA PLACEMENT Key points: 1. The contract's value suggests a significant investment in advertising services. 2. Full and open competition was utilized, indicating a broad market search. 3. The firm fixed-price contract type shifts cost risk to the contractor. 4. The contract duration of 325 days is standard for advertising campaigns. 5. The North American Industry Classification System (NAICS) code 541810 confirms the service is advertising. 6. The contract was awarded by the Department of the Navy, a major component of the DoD. 7. The base award amount of $96,615 appears to be a small portion of the total potential value.

Value Assessment

Rating: fair

Benchmarking the value of this contract is challenging without more detailed service breakdowns. However, the base award of $96,615 for a contract with a potential value of $31.4 million suggests that the majority of the spending is allocated to option periods or specific media placements. The firm fixed-price nature is generally favorable for the government, as it caps costs. Further analysis would require comparing unit costs for specific advertising services (e.g., cost per thousand impressions, cost per click) against industry benchmarks.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, meaning all responsible sources were permitted to submit offers. This approach typically fosters a competitive environment, encouraging multiple bidders to present their best pricing and service offerings. The fact that it was competed broadly suggests the government sought the most advantageous solution available in the market. The number of bidders is not specified, which would provide further insight into the intensity of the competition.

Taxpayer Impact: Full and open competition generally leads to better price discovery and potentially lower costs for taxpayers by leveraging market forces.

Public Impact

The Department of Defense benefits from enhanced public awareness and recruitment efforts. The contract supports the delivery of advertising and media placement services. The geographic impact is likely national, given the scope of the Department of Defense. The contract supports jobs within the advertising and media industries.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Lack of specific details on the breakdown of the $31.4 million potential value makes it difficult to assess value for money.
The significant difference between the base award and the potential value raises questions about the utilization of option periods.
Without knowing the number of bidders, the true level of competition cannot be fully assessed.
The contract's age (awarded in 2008) means current market rates and effectiveness may differ significantly.

Positive Signals

The use of full and open competition is a positive indicator of seeking market-based solutions.
The firm fixed-price contract type effectively transfers cost overrun risk to the contractor.
The contract is for advertising services, a core function for public outreach and recruitment.

Sector Analysis

The advertising industry is a dynamic sector encompassing creative development, media planning, and placement across various channels. This contract falls within the 'Advertising Agencies' NAICS code (541810). The Department of Defense, as a major government entity, frequently engages advertising agencies to manage public relations, recruitment campaigns, and public service announcements. Spending in this sector can vary widely based on campaign scope and duration, with large federal agencies representing significant clients.

Small Business Impact

Information regarding small business set-asides or subcontracting plans is not provided in the data. As this was a full and open competition, it is possible that small businesses could have participated directly or indirectly. However, without specific details on subcontracting goals or achievements, the impact on the small business ecosystem remains unclear.

Oversight & Accountability

Oversight for this contract would typically reside within the Department of the Navy's contracting and program management offices. Accountability measures would be tied to the performance standards outlined in the contract and the firm fixed-price structure, which incentivizes the contractor to meet cost and performance targets. Transparency is generally facilitated through contract databases, though detailed performance reports may not always be publicly accessible.

Related Government Programs

Department of Defense Advertising Contracts
Navy Recruitment Advertising
Federal Media Buying Services
Government Public Relations Campaigns

Risk Flags

Potential for cost overruns if options are exercised without updated market analysis.
Relevance of 2008 pricing and strategies in the current advertising market.
Lack of transparency on the number of bidders impacting competition assessment.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $31.4 million to CAMPBELL-EWALD COMPANY. OPTION PERIOD 2 - SPACE CHARGES & MEDIA PLACEMENT

Who is the contractor on this award?

The obligated recipient is CAMPBELL-EWALD COMPANY.

Which agency awarded this contract?

Awarding agency: Department of Defense (Department of the Navy).

What is the total obligated amount?

The obligated amount is $31.4 million.

What is the period of performance?

Start: 2008-03-12. End: 2009-01-31.

What specific advertising services were included in the $31.4 million potential value?

The provided data does not specify the exact breakdown of services covered by the $31.4 million potential value. It is described as 'OPTION PERIOD 2 - SPACE CHARGES & MEDIA PLACEMENT'. This suggests the bulk of the contract value is allocated to the cost of purchasing advertising space across various media (e.g., television, radio, print, digital) and the associated media placement fees. The base award of $96,615 likely covered initial planning, strategy, or a small initial placement. Without a detailed statement of work or task orders, it's impossible to quantify specific services like creative development, market research, or campaign analytics within this total potential value.

How does the base award of $96,615 compare to the total potential value of $31.4 million?

The base award of $96,615 represents a very small fraction (approximately 0.3%) of the total potential contract value of $31.4 million. This significant disparity strongly indicates that the majority of the contract's value is tied to option periods and the 'space charges & media placement' for future advertising efforts. The base award likely covered initial setup, planning, or a limited scope of work, with the substantial remaining amount available for use if the government exercises subsequent options. This structure is common for large-scale, long-term service contracts where future needs are anticipated but not fully committed upfront.

What are the risks associated with a firm fixed-price contract for advertising services?

Firm fixed-price (FFP) contracts are generally advantageous for the government as they place the risk of cost overruns on the contractor. For advertising services, the primary risks for the contractor under an FFP structure include underestimating the cost of media placements, creative production, or campaign management. If the contractor's costs exceed the fixed price, their profit margin shrinks or they incur a loss. Conversely, the government benefits from cost certainty. However, if the FFP price is set too high due to inadequate competition or flawed cost estimation by the government, taxpayers may overpay. The risk for the government is ensuring the price reflects fair market value.

What does 'OPTION PERIOD 2 - SPACE CHARGES & MEDIA PLACEMENT' imply about the contract's scope?

This description indicates that the primary purpose of the contract, particularly in its option periods, is to facilitate the purchase of advertising inventory ('space charges') across various media platforms and the strategic placement of those advertisements ('media placement'). This suggests the contractor acts as an intermediary or agency responsible for negotiating rates with media outlets, booking ad slots, and ensuring the ads reach the intended audience. It implies a focus on the execution and logistical aspects of advertising campaigns rather than solely on creative development, although creative services might be implicitly included or procured separately.

How does the contract's award date (2008) affect its relevance today?

The contract's award date of March 12, 2008, means it predates significant shifts in the advertising landscape, particularly the rise of social media marketing, programmatic advertising, and advanced digital analytics. While the core principles of media placement and space charges remain relevant, the specific channels, costs, and effectiveness metrics have evolved dramatically. Benchmarking current spending against this 2008 contract would require substantial adjustments for inflation, technological advancements, and changes in media consumption habits. The strategies and pricing from that era may not reflect optimal value in today's market.

Industry Classification

NAICS: Professional, Scientific, and Technical Services › Advertising, Public Relations, and Related Services › Advertising Agencies

Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › MANAGEMENT SUPPORT SERVICES

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: N0014005R0038

Offers Received: 2

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Parent Company: THE Interpublic Group of Companies Inc (UEI: 006985790)

Address: 30400 VAN DYKE AVE, WARREN, MI, 10

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $31,400,000

Exercised Options: $31,400,000

Current Obligation: $31,400,000

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: N0014006D0005

IDV Type: IDC

Timeline