DoD's Army Spends $98M on Advertising Agencies via Full and Open Competition

Contract Overview

Contract Amount: $97,993,966 ($98.0M)

Contractor: DDB Chicago Inc.

Awarding Agency: Department of Defense

Start Date: 2022-12-03

End Date: 2023-12-02

Contract Duration: 364 days

Daily Burn Rate: $269.2K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: LOCAL MEDIA (USAREC)

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60601

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $98.0 million to DDB CHICAGO INC. for work described as: LOCAL MEDIA (USAREC) Key points: 1. Significant spending on advertising services by the Department of the Army. 2. DDB Chicago Inc. secured the contract through full and open competition. 3. The contract type is Cost Plus Fixed Fee, indicating potential for cost overruns. 4. The sector is professional services, specifically advertising agencies.

Value Assessment

Rating: fair

The contract value of $98M over one year is substantial. Benchmarking against similar advertising contracts is difficult without more specific service details, but the Cost Plus Fixed Fee structure warrants scrutiny for potential cost inefficiencies.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

The contract was awarded using full and open competition, suggesting a robust price discovery process. However, the Cost Plus Fixed Fee (CPFF) pricing structure can sometimes lead to higher costs than fixed-price contracts if not managed tightly.

Taxpayer Impact: Taxpayer funds are being used for advertising services. While competition is present, the CPFF structure necessitates careful oversight to ensure cost-effectiveness and prevent unnecessary expenditure.

Public Impact

Public funds are allocated to advertising and marketing efforts for the Department of the Army. The use of a large, established agency like DDB Chicago suggests a focus on broad reach and professional campaign execution. Transparency in how these advertising funds are utilized and their effectiveness in achieving Army objectives is crucial for public trust.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Cost Plus Fixed Fee pricing structure
High contract value for a single year

Positive Signals

Full and open competition utilized
Awarded to a known advertising agency

Sector Analysis

The advertising agency sector is highly competitive, with agencies offering a wide range of services. Government spending in this sector often focuses on public awareness campaigns, recruitment, and strategic communication. Benchmarks vary widely based on campaign scope and duration.

Small Business Impact

The contract was awarded to DDB Chicago Inc., a large advertising agency. There is no indication that small businesses were involved as subcontractors or prime contractors in this specific award, which is common for large-scale advertising campaigns.

Oversight & Accountability

The Cost Plus Fixed Fee structure requires diligent oversight from the Department of Defense to ensure costs are reasonable and the fixed fee is appropriate. Regular audits and performance reviews are essential for accountability.

Related Government Programs

Advertising Agencies
Department of Defense Contracting
Department of the Army Programs

Risk Flags

Cost Plus Fixed Fee pricing
Lack of small business participation noted
High annual spending amount
Potential for cost overruns without strict oversight

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $98.0 million to DDB CHICAGO INC.. LOCAL MEDIA (USAREC)

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 $98.0 million.

What is the period of performance?

Start: 2022-12-03. End: 2023-12-02.

What specific advertising objectives does this $98M contract aim to achieve for the Department of the Army, and how will success be measured?

The contract likely supports various Army initiatives, such as recruitment, public relations, and brand messaging. Success metrics would typically include campaign reach, engagement rates, message recall, and potentially impacts on recruitment numbers or public perception surveys. Detailed performance metrics should be outlined in the contract's statement of work.

What are the potential risks associated with the Cost Plus Fixed Fee (CPFF) structure in this large advertising contract?

The primary risk with CPFF is that the contractor may have less incentive to control costs, as the government reimburses allowable costs plus a fixed fee. This can lead to cost overruns if the government's oversight is insufficient. There's also a risk that the fixed fee might not accurately reflect the effort required, potentially over or under-compensating the contractor.

How does the $98M annual spend on advertising compare to historical spending or industry benchmarks for similar government agencies?

Without specific details on the scope of services, direct comparison is challenging. However, $98 million is a significant investment for a single year's advertising. It suggests a large-scale, multi-faceted campaign. Benchmarking against other large federal agencies' advertising budgets or private sector equivalents of similar scale would provide better context for its relative size.

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: $97,993,966

Exercised Options: $97,993,966

Current Obligation: $97,993,966

Actual Outlays: $13,381,496

Subaward Activity

Number of Subawards: 8

Total Subaward Amount: $78,869,060

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