DoD's $73.4M Advertising Contract Awarded to DDB Chicago Inc. Under Full and Open Competition

Contract Overview

Contract Amount: $73,403,636 ($73.4M)

Contractor: DDB Chicago Inc.

Awarding Agency: Department of Defense

Start Date: 2020-12-02

End Date: 2021-12-02

Contract Duration: 365 days

Daily Burn Rate: $201.1K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: LOCAL MEDIA FOR AEMO, CHICAGO, IL

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60601

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $73.4 million to DDB CHICAGO INC. for work described as: LOCAL MEDIA FOR AEMO, CHICAGO, IL Key points: 1. Significant contract value of $73.4 million for advertising services. 2. Awarded through full and open competition, indicating a competitive bidding process. 3. Potential risk associated with the 'Cost Plus Fixed Fee' pricing structure. 4. Services fall under the Advertising Agencies sector, supporting broader government communication efforts.

Value Assessment

Rating: good

The contract value of $73.4 million for advertising services appears reasonable given the scope and duration. Benchmarking against similar large-scale government advertising contracts would provide further context on pricing efficiency.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded under full and open competition, suggesting that multiple bidders had the opportunity to compete. This method generally promotes price discovery and can lead to more competitive pricing.

Taxpayer Impact: The use of full and open competition is a positive indicator for taxpayer value, as it aims to secure the best possible services at competitive prices.

Public Impact

Taxpayers benefit from a competitive bidding process for essential advertising services. The contract supports the Department of the Army's communication and outreach initiatives. Potential for innovative advertising campaigns that reach target audiences effectively.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee pricing can incentivize cost overruns if not closely monitored.
Contract duration of one year may require frequent re-competition or extensions.

Positive Signals

Awarded through full and open competition.
Clear NAICS code (541810) for advertising agencies.

Sector Analysis

This contract falls within the advertising and marketing services sector, which is crucial for government agencies to communicate with the public and stakeholders. Spending benchmarks for this sector vary widely based on agency size and mission.

Small Business Impact

While this contract was awarded under full and open competition, there is no specific indication of small business participation or subcontracting goals. Further analysis would be needed to determine the extent of small business involvement.

Oversight & Accountability

The Department of the Army's oversight will be critical in managing the 'Cost Plus Fixed Fee' structure to ensure cost efficiency and prevent unnecessary expenditures. Regular performance reviews and audits are essential.

Related Government Programs

Advertising Agencies
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Potential for cost overruns due to 'Cost Plus Fixed Fee' structure.
Lack of specific small business participation details.
Short initial contract duration may lead to administrative burden for re-competition.
Effectiveness metrics and oversight mechanisms need careful monitoring.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $73.4 million to DDB CHICAGO INC.. LOCAL MEDIA FOR AEMO, CHICAGO, IL

Who is the contractor on this award?

The obligated recipient is DDB CHICAGO INC..

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $73.4 million.

What is the period of performance?

Start: 2020-12-02. End: 2021-12-02.

What is the typical profit margin for 'Cost Plus Fixed Fee' contracts in the advertising sector, and how does this contract's fee compare?

The typical profit margin for 'Cost Plus Fixed Fee' contracts in the advertising sector can vary, but generally, the fixed fee is negotiated as a percentage of the estimated cost. This percentage aims to provide a reasonable profit while incentivizing the contractor to manage costs effectively. A detailed review of the contract's fee structure against industry standards and the estimated costs would be necessary to assess if it aligns with fair market value and provides adequate taxpayer protection.

What specific advertising services are covered under this contract, and how will their effectiveness be measured?

The contract specifies services under NAICS code 541810 (Advertising Agencies), implying a broad range of activities such as campaign development, media planning and buying, creative services, and market research. Effectiveness measurement would typically involve key performance indicators (KPIs) defined in the contract, such as reach, engagement, message recall, or conversion rates, depending on the campaign objectives. The Department of the Army's contracting officer's representative (COR) would be responsible for monitoring these metrics.

Given the one-year duration, what is the process for potential follow-on work or contract extensions, and how will competition be ensured for future needs?

A one-year contract duration often includes options for extension or is a prelude to larger, multi-year requirements. The process for follow-on work would depend on the contract's specific terms and conditions, including any stated options. For future needs, the agency would typically conduct market research to determine the best procurement strategy, which could involve re-competing the requirement under full and open competition or exploring other contract vehicles if justified.

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: W9124D16R0046

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Address: 225 N MICHIGAN AVE FL 10, CHICAGO, IL, 60601

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $73,403,636

Exercised Options: $73,403,636

Current Obligation: $73,403,636

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: W9124D19D0001

IDV Type: IDC

Timeline