Department of Defense awards $78.2M contract for social labor services to DDB Chicago Inc

Contract Overview

Contract Amount: $78,231,480 ($78.2M)

Contractor: DDB Chicago Inc.

Awarding Agency: Department of Defense

Start Date: 2021-12-03

End Date: 2022-12-02

Contract Duration: 364 days

Daily Burn Rate: $214.9K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: SOCIAL LABOR

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60601

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $78.2 million to DDB CHICAGO INC. for work described as: SOCIAL LABOR Key points: 1. Contract awarded through full and open competition, suggesting a competitive bidding process. 2. The contract type is Cost Plus Fixed Fee, which can lead to cost overruns if not managed carefully. 3. The contract duration is 364 days, indicating a relatively short-term service requirement. 4. The award was made by the Department of the Army, a major component of the DoD. 5. The North American Industry Classification System (NAICS) code 541810 points to advertising agencies as the service provider. 6. The contract was awarded as a delivery order, implying it's part of a larger indefinite-delivery indefinite-quantity (IDIQ) contract or a similar framework.

Value Assessment

Rating: fair

Benchmarking the value of this $78.2 million contract for social labor services is challenging without specific deliverables and performance metrics. The Cost Plus Fixed Fee (CPFF) contract type introduces inherent risk, as costs can escalate beyond initial estimates, with the fixed fee providing a baseline profit for the contractor. Comparing this to similar contracts would require detailed analysis of the scope of work, service levels, and the specific advertising or social labor services rendered. Without more granular data on the services provided and their effectiveness, a definitive value-for-money assessment is difficult.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under 'full and open competition,' indicating that all responsible sources were permitted to submit bids. The number of bidders is not specified, but this procurement method generally fosters a competitive environment, which can lead to better pricing and service offerings for the government. The open competition suggests that the Department of the Army sought the best value from the market rather than restricting the opportunity to a select few contractors.

Taxpayer Impact: Full and open competition is generally favorable for taxpayers as it increases the likelihood of obtaining competitive pricing and innovative solutions, maximizing the value of government spending.

Public Impact

The primary beneficiaries are likely the Department of the Army and potentially other Department of Defense entities requiring social labor or advertising services. The services delivered are related to advertising agencies (NAICS 541810), suggesting campaigns, public relations, or communication strategies. The contract is based in Illinois (IL), indicating a potential geographic focus for the contractor's operations or service delivery. The contract may impact the workforce within the advertising and marketing sector, particularly at DDB Chicago Inc. and potentially its subcontractors.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee (CPFF) contract type can lead to cost overruns if not closely monitored.
Lack of specific performance metrics makes it difficult to assess the true value and effectiveness of the services.
The contract is a delivery order, suggesting it might be part of a larger, potentially less scrutinized, IDIQ contract.
The specific nature of 'social labor' services is vague and requires further clarification to understand the scope and necessity.

Positive Signals

Awarded through full and open competition, promoting a competitive marketplace.
DDB Chicago Inc. is a known entity in the advertising industry, suggesting established capabilities.
The contract duration is defined, providing a clear timeframe for service delivery.
The award is for a specific NAICS code, indicating a defined service category.

Sector Analysis

The advertising and marketing services sector is a significant part of the professional services industry. Federal spending in this area supports various government communication needs, from public awareness campaigns to recruitment and public relations. The market includes a wide range of agencies, from large multinational corporations to smaller specialized firms. This contract, valued at over $78 million, represents a substantial investment within this sector, likely for a large-scale or ongoing requirement by the Department of the Army.

Small Business Impact

There is no indication from the provided data that this contract included small business set-asides or subcontracting goals. The award to DDB Chicago Inc., a presumably larger entity, suggests that small businesses may not have been the primary focus of this specific procurement. Further investigation into subcontracting plans would be necessary to determine the impact on the small business ecosystem.

Oversight & Accountability

Oversight for this contract would typically fall under the Department of the Army's contracting and program management offices. The Cost Plus Fixed Fee structure necessitates rigorous financial oversight to ensure costs are reasonable and allocable to the contract. Transparency would be enhanced through regular reporting requirements and potential audits. Inspector General jurisdiction would apply if any fraud, waste, or abuse were suspected.

Related Government Programs

Department of Defense Advertising and Public Relations Contracts
Army Marketing and Advertising Services
Federal Government Communications Contracts
Cost Plus Fixed Fee Service Contracts

Risk Flags

Cost Plus Fixed Fee contract type carries inherent cost overrun risk.
Lack of specific performance metrics makes value assessment difficult.
Vague description of 'social labor' services requires further clarification.
Potential for contractor to prioritize profit over cost efficiency in CPFF structure.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $78.2 million to DDB CHICAGO INC.. SOCIAL LABOR

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 $78.2 million.

What is the period of performance?

Start: 2021-12-03. End: 2022-12-02.

What specific 'social labor' services are being procured under this contract, and how do they align with the Department of the Army's mission?

The provided data indicates the North American Industry Classification System (NAICS) code is 541810, which corresponds to 'Advertising Agencies.' Therefore, 'social labor' in this context likely refers to services related to advertising, marketing, public relations, social media management, and campaign development. These services could be used for various purposes such as recruitment drives, public awareness campaigns on specific issues, promoting military initiatives, or managing the Army's public image and social media presence. The alignment with the Army's mission would depend on the specific objectives of the advertising campaigns, such as enhancing recruitment, improving public perception, or communicating critical information to the public or military personnel.

How does the Cost Plus Fixed Fee (CPFF) structure for this $78.2 million contract compare to typical contract types for advertising services within the federal government?

Cost Plus Fixed Fee (CPFF) contracts are less common for standard advertising services compared to fixed-price contracts (like FFP - Firm-Fixed-Price) or even Cost-Plus-Incentive-Fee (CPIF). CPFF is typically used when the scope of work is not well-defined, involves significant research and development, or carries substantial uncertainty, making it difficult to estimate costs accurately upfront. For advertising, where deliverables are often more tangible (e.g., ad creative, media buys, campaign plans), fixed-price arrangements are generally preferred for better cost control. The use of CPFF here suggests a potentially complex or evolving scope, requiring close government oversight to manage costs and ensure the fixed fee remains appropriate for the effort expended. It places more risk on the government to control costs compared to fixed-price contracts.

What is the track record of DDB Chicago Inc. in performing federal contracts, particularly those of similar size and scope?

DDB Chicago Inc. is a well-established advertising agency with a significant presence in the commercial sector. Information regarding their specific track record with federal contracts, especially those of this magnitude ($78.2 million) and type (CPFF for advertising/social labor services), is not detailed in the provided data. A comprehensive assessment would require searching federal contract databases (like SAM.gov or FPDS) for past performance records, including contract awards, past performance evaluations, and any reported issues or disputes. Without this specific federal performance data, it's difficult to definitively assess their track record in government contracting, although their commercial reputation may suggest capability.

Given the $78.2 million award value and a 364-day duration, what is the approximate daily spending rate for this contract?

To calculate the approximate daily spending rate, we divide the total award amount by the number of days in the contract duration. The total award is $78,231,479.63, and the duration is 364 days. Daily spending rate = $78,231,479.63 / 364 days ≈ $214,921.65 per day. This figure represents the average amount the government is spending daily on the services provided under this contract. It's important to note that this is an average; actual spending may fluctuate based on the specific activities and invoicing schedules throughout the contract period.

What are the potential risks associated with a Cost Plus Fixed Fee (CPFF) contract for advertising services, and what oversight mechanisms are crucial?

The primary risk with a CPFF contract is the potential for cost escalation. Since the government reimburses the contractor's allowable costs plus a fixed fee, there is less incentive for the contractor to control costs aggressively compared to fixed-price contracts. This can lead to the government paying more than initially anticipated if costs are not managed effectively. For advertising, this could mean higher media spending, increased production costs, or extended project timelines. Crucial oversight mechanisms include rigorous review and approval of all claimed costs, detailed progress reports, regular performance reviews, and potentially independent cost audits. The contracting officer must ensure that all costs are reasonable, allocable, and allowable according to the contract terms and federal acquisition regulations.

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: $78,231,480

Exercised Options: $78,231,480

Current Obligation: $78,231,480

Actual Outlays: $7,306,840

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $73,194,821

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