A bidding process lets the government select who can complete the task the best and at the lowest price. No-bid contracts raise concerns about whether or not the government is getting the best deal it can.
Over the last decade, the government has awarded nearly a third of its advertising, marketing and public relations business without full and open competition designed to ensure taxpayers get the best price.
Many of the contracts were awarded without full bidding even though the work involved predictable or routine tasks far removed from the urgent or national security circumstances originally envisioned for exempting contracts from the normal procurement rigors, an investigation by the Washington Guardian and Medill News Service found.
For instance, the Pentagon gave $600,000 to the College of William and Mary to build a "high tech courtroom." It awarded another contract for $310,000 for "award seminar coordination and support" to the George C. Marshall Research Foundation. And the State Department spent $341,000 on audio visual services at the Organization of American States general assembly. Urgency was cited as the reason for each award.
Likewise, the Commerce Department awarded $3.9 million to a public relations firm for a U.S. Travel and Tourism Campaign without bidding. It didn't even list the reason for skipping competition.
The laissez faire approach leaves budget watchers increasingly concerned that taxpayers are getting bilked by the lack of price shopping.
"Guess what is going to happen? It’s going to cost more than if you had it competitively bid," Coburn said.
Across all agencies and all spending, the government awarded about 30 percent of its contracts without full and open competition over the last 12 years, according to USASpending.gov, the government's main contracting Web site. But that figure is skewed by a large amount of wartime and counter-terrorism contracting related to urgent national security matters. When those are removed, the government's normal course of business is to bid out most of its work.
And that makes the advertising, marketing and PR figures stand out even more.
There are a number of legal reasons a government agency may opt out of full and open competition, and choose instead a single company to provide a product or service. In some cases, there may be only one vendor capable of supplying the goods. In others, agencies may argue that holding a competition would jeopardize national security. They can also restrict bidders on the basis of “urgency,” which the Defense Department often does in wartime to meet urgent needs on the battlefront.
But the definitions of what gets bids and what doesn't falls into the hands of individual procurement officers. President Obama vowed during the 2008 campaign to force all contracts over $25,000 to be bid competitively. But that hasn't happened, even with services like advertising, marketing and public relations.
In 2011, for instance, the Pentagon gave a nearly $20 million contract for producing a television series to Bell Pottinger Communications USA, stating the contract was not competed because there was only one company able to produce the show. Yet, Hollywood has no shortage of studios.
Other loopholes exist that allow federal agencies to not compete certain contracts. According to federal contracting rules, certain contracts don't have to be competed if the amount of money spent is small. These "micro purchase threshold" contracts must be below $15,000 nationally or $25,000 internationally. It's left up to the discretion of the official overseeing the contract to decide if they're getting the best price.
And some contracts aren't competed because they are in the "public interest," a catch-all category that federal regulations say is usually decided on a case by case basis. During the controversy about the anti-Islam film "Innocence of Muslims," the State Department quickly produced a video showing Secretary of State Hillary Clinton and President Barack Obama denouncing religious intolerance. The $80,000 contract to air the video in Pakistan was not competed as it was considered in the "public interest."
Many overseas contracts aren't competed, either, because of national security concerns or because there is only one company within a host country with the resources to complete the project. Over the past ten years, $18 million has gone to "miscellaneous foreign contractors" without competition. But the agencies that award the contracts - usually the State and Defense Departments - don't disclose information about what overseas companies the money is going to.
In fact many contracts are missing information, hampering public oversight. Contracting forms are suppose to contain a description of what the money is being used for, but often that section is left blank. The single largest contract that wasn't competed was a 2005 award from the Army to Leo Burnett USA for $29 million. The government sorting code lists it as "advertising services," but the description on what exactly was being purchased was left blank. "Urgency" was listed as the reason the contract wasn't competed.
For advertising, marketing and communications awards, the Department of Veterans Affairs led the way in no-bid contracts, according to the Washington Guardian and Medill News Service analysis of the last 10 years of contracts listed on usaspending.gov. It had the highest percentage of its contracts as no-bid.
The agency awarded 65 percent of those contracts – worth about $44 million - without full and open competition.
The Energy Department awarded almost half of its contracts over the last 10 years without full and open competition. The top contractor was Environmental Dimensions Inc., a woman- and minority-owned disadvantaged business that provides environmental technical support. The contract covered work being done at Oak Ridge National Laboratory in Tennessee, DOE’s largest science and energy laboratory. The project cost roughly $2.7 million.
The Defense Department awarded the most no-bid advertising, marketing and communications contracts for the last 10 years of any government agency – totaling more than 10,000, about 26 percent of its total advertising contracts. Its two largest contracts went to advertising powerhouse Leo Burnett USA on the basis of urgency. The specific requirement wasn’t listed.
Other notable no-bid efforts include the Department of Interior’s National Obesity Prevention and Healthy Lifestyle Campaign, for which it awarded The National Advertising Council Inc. almost $2.5 million on the grounds of its status as a “unique source.” The Ad Council is a private organization that coordinates between the government and local broadcast stations to run public service announcements.
And the Commerce Department awarded $3.9 million to global public relations firm Daniel J. Edelman Inc. for a U.S. Travel and Tourism Campaign on a no-bid basis. The agency didn’t list the reason for opting out of full-and-open competition.
A no-bid contract means the federal government awarded money without seeking multiple bids. Usually federal officials get bids to seek out the best price for completion of the project, but a lack of competition raises issues about whether money was properly handed out. Other contracts, however, are not competed due to issues like national security or an urgent need.
The Ad Council is a private organization that coordinates between the government and local broadcast stations to run PSAs and other national announcements. It is in a unique position as it is the only entity that serves as this intermediary to get government commercials on the air.