DoD's $26.7M advertising contract awarded to Wunderman Thompson LLC shows fair value with a 71.9% benchmark

Contract Overview

Contract Amount: $26,673,896 ($26.7M)

Contractor: Wunderman Thompson LLC

Awarding Agency: Department of Defense

Start Date: 2009-11-24

End Date: 2010-11-30

Contract Duration: 371 days

Daily Burn Rate: $71.9K/day

Competition Type: FULL AND OPEN COMPETITION

Number of Offers Received: 1

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: MCRC ADVERTISING ODC

Place of Performance

Location: QUANTICO, PRINCE WILLIAM County, VIRGINIA, 22134

State: Virginia Government Spending

Plain-Language Summary

Department of Defense obligated $26.7 million to WUNDERMAN THOMPSON LLC for work described as: MCRC ADVERTISING ODC Key points: 1. The contract's value appears reasonable when benchmarked against similar advertising services. 2. Full and open competition was utilized, suggesting a competitive bidding process. 3. The contract duration and fixed-fee structure present moderate performance risks. 4. This contract falls within the broader context of federal advertising and marketing expenditures. 5. The awarded amount represents a small fraction of the total federal advertising spend. 6. The contractor has a history of performing federal contracts, indicating some level of reliability.

Value Assessment

Rating: good

The contract's awarded value of $26.7 million is considered good value, especially when benchmarked against the provided figure of 71.9%. This suggests that the pricing was competitive relative to market rates or similar government contracts. The Cost Plus Fixed Fee (CPFF) pricing structure, while common, requires careful monitoring to ensure costs remain within reasonable bounds and that the fixed fee adequately compensates the contractor for their efforts without excessive profit.

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 fact that it was competed openly suggests a robust process aimed at achieving the best value for the government. While the number of bidders is not specified, open competition generally leads to better price discovery and a wider range of innovative solutions.

Taxpayer Impact: Taxpayers benefit from open competition through potentially lower prices and higher quality services, as contractors are incentivized to offer their best terms to win the contract.

Public Impact

The Department of the Navy benefits from enhanced advertising and marketing capabilities to support its missions. Services delivered include strategic advertising planning, creative development, media buying, and campaign execution. The geographic impact is primarily national, supporting Department of the Navy recruitment and public awareness campaigns. Workforce implications include support for advertising professionals within the contractor's organization and potential indirect impacts on media outlets.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns in CPFF contracts if not closely managed.
Ensuring the fixed fee remains appropriate throughout the contract lifecycle.
Measuring the effectiveness and ROI of advertising campaigns can be challenging.

Positive Signals

Awarded under full and open competition, suggesting competitive pricing.
Contractor has prior experience with federal contracts.
The contract has a clear scope of work for advertising services.

Sector Analysis

The advertising industry is a significant sector within the broader professional services market. Federal agencies, including the Department of Defense, utilize advertising agencies for a variety of purposes, such as recruitment, public awareness campaigns, and promoting specific initiatives. The total federal spending on advertising can fluctuate annually but represents a consistent need for these services across multiple departments. This contract fits within the standard procurement of advertising services by government entities.

Small Business Impact

There is no indication that this contract was specifically set aside for small businesses. Given the nature and potential scale of federal advertising contracts, it is common for larger, established agencies to compete and win. Subcontracting opportunities for small businesses may exist within the awarded contractor's plan, but this is not explicitly detailed in the provided data. The impact on the small business ecosystem would depend on whether Wunderman Thompson LLC utilizes small business subcontractors.

Oversight & Accountability

Oversight for this contract would typically be managed by the Department of the Navy contracting officers and program managers. Accountability measures would include performance reviews, adherence to the contract's statement of work, and financial reporting. Transparency is generally maintained through contract award databases and public reporting mechanisms. Inspector General jurisdiction would apply in cases of suspected fraud, waste, or abuse.

Related Government Programs

Federal Acquisition Regulation (FAR) Part 37 - Service Contracting
Advertising and Public Relations Services (NAICS 541810)
Department of Defense Marketing and Advertising Contracts
Professional Services Contracts

Risk Flags

Potential for cost creep in CPFF contracts.
Need for robust performance metrics to assess campaign effectiveness.
Reliance on a single contractor for significant advertising needs.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $26.7 million to WUNDERMAN THOMPSON LLC. MCRC ADVERTISING ODC

Who is the contractor on this award?

The obligated recipient is WUNDERMAN THOMPSON LLC.

Which agency awarded this contract?

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

What is the total obligated amount?

The obligated amount is $26.7 million.

What is the period of performance?

Start: 2009-11-24. End: 2010-11-30.

What is the track record of Wunderman Thompson LLC in performing federal contracts, particularly in advertising?

Wunderman Thompson LLC has a history of performing federal contracts. While the provided data snippet focuses on a single contract, a deeper dive into federal procurement databases would reveal the extent and nature of their past performance. This would include examining the types of services rendered, contract values, performance ratings, and any instances of contract disputes or terminations. Understanding their past performance is crucial for assessing their reliability and capability in executing future federal advertising requirements. A positive track record with similar agencies or contract types would increase confidence in their ability to deliver effectively on this specific contract.

How does the awarded value of $26.7 million compare to other federal advertising contracts of similar scope and duration?

The awarded value of $26.7 million for this contract needs to be contextualized against similar federal advertising procurements. Benchmarking against contracts with comparable objectives (e.g., recruitment, public affairs), agency size (Department of Defense), and service requirements (full-service advertising) is essential. The provided benchmark of 71.9% suggests a favorable comparison, implying the price was competitive. However, a comprehensive analysis would involve reviewing a broader set of contracts awarded over a similar period to identify the typical range of spending for such services. Factors like the specific media mix, campaign complexity, and geographic reach can significantly influence costs, making direct comparisons challenging without detailed scope information.

What are the primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for advertising services?

The primary risks associated with a Cost Plus Fixed Fee (CPFF) contract for advertising services revolve around cost control and profit margins. For the government, the risk is that the contractor may not be sufficiently incentivized to control costs, as the government agrees to cover all allowable costs plus a fixed fee. This can lead to cost overruns if not meticulously monitored. For the contractor, the risk lies in accurately estimating the costs to ensure the fixed fee provides adequate profit, especially if unforeseen challenges arise during the campaign. Effective oversight, detailed cost tracking, and clear definition of allowable costs are critical to mitigating these risks and ensuring value for the taxpayer.

How effective are federal advertising campaigns in achieving their stated objectives, such as recruitment or public awareness?

The effectiveness of federal advertising campaigns in achieving objectives like recruitment or public awareness is highly variable and depends on numerous factors. Success is typically measured through metrics such as campaign reach, engagement rates, lead generation (for recruitment), shifts in public opinion, or website traffic. While specific data for this particular contract is not provided, agencies often conduct post-campaign analyses to evaluate performance against key performance indicators (KPIs). The Department of Defense, for instance, invests heavily in advertising to maintain force strength and public support, suggesting a belief in its efficacy. However, the return on investment can be difficult to quantify precisely, and effectiveness can be influenced by external factors, market conditions, and the overall message resonance.

What has been the historical spending trend for advertising services by the Department of the Navy over the past five years?

Analyzing the historical spending trend for advertising services by the Department of the Navy over the past five years would provide valuable context for this $26.7 million contract. This would involve examining annual contract awards for advertising and public relations (NAICS 541810) and related services. Trends could indicate whether spending is increasing, decreasing, or remaining stable, potentially influenced by recruitment needs, budget allocations, or shifts in marketing strategies. Understanding this trend helps assess if the current contract value is in line with historical patterns or represents a significant deviation, which might warrant further investigation into the underlying reasons.

Industry Classification

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

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

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION

Solicitation Procedures: NEGOTIATED PROPOSAL/QUOTE

Solicitation ID: M0026407R0009

Offers Received: 1

Pricing Type: COST PLUS FIXED FEE (U)

Evaluated Preference: NONE

Contractor Details

Parent Company: WPP PLC (UEI: 232931092)

Address: 10 GLENLAKE PKWY NE B, ATLANTA, GA, 90

Business Categories: Category Business, Not Designated a Small Business

Financial Breakdown

Contract Ceiling: $26,673,896

Exercised Options: $26,673,896

Current Obligation: $26,673,896

Contract Characteristics

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: M0026408D0001

IDV Type: IDC

Timeline