Department of Defense awards $33.7M contract to DDB Chicago Inc. for advertising services

Contract Overview

Contract Amount: $33,685,051 ($33.7M)

Contractor: DDB Chicago Inc.

Awarding Agency: Department of Defense

Start Date: 2021-02-18

End Date: 2024-02-24

Contract Duration: 1,101 days

Daily Burn Rate: $30.6K/day

Competition Type: FULL AND OPEN COMPETITION

Pricing Type: COST PLUS FIXED FEE

Sector: Other

Official Description: RESEARCH

Place of Performance

Location: CHICAGO, COOK County, ILLINOIS, 60601

State: Illinois Government Spending

Plain-Language Summary

Department of Defense obligated $33.7 million to DDB CHICAGO INC. for work described as: RESEARCH Key points: 1. Contract value appears reasonable given the scope of advertising services. 2. Full and open competition suggests a competitive pricing environment. 3. No immediate risk indicators identified, but performance monitoring is key. 4. Contract duration of over three years allows for sustained campaign efforts. 5. Positioned within the advertising and marketing services sector for federal agencies.

Value Assessment

Rating: good

The contract value of approximately $33.7 million over three years for advertising services appears to be within a reasonable range for a federal agency of the Department of Defense's size and scope. Benchmarking against similar large-scale advertising contracts awarded by other federal entities would provide a more precise value-for-money assessment. However, the Cost Plus Fixed Fee (CPFF) pricing structure, while common, requires careful oversight to ensure costs remain controlled and the fixed fee is justified by the services rendered.

Cost Per Unit: N/A

Competition Analysis

Competition Level: full-and-open

This contract was awarded under full and open competition, indicating that multiple vendors were likely invited to bid. The specific number of bidders is not provided, but this procurement method generally fosters a competitive environment, which should lead to more favorable pricing and innovative solutions for the government. The agency's commitment to open competition is a positive sign for efficient use of taxpayer funds.

Taxpayer Impact: Full and open competition typically results in better pricing for taxpayers by encouraging a wider range of vendors to submit proposals, driving down costs through market forces.

Public Impact

The primary beneficiary is the Department of Defense, which will receive advertising and marketing support. Services delivered include strategic planning, creative development, media buying, and campaign execution. The geographic impact is national, as advertising campaigns often target a broad audience. Workforce implications include potential support for creative professionals, media planners, and account managers within the contractor's organization.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for cost overruns with CPFF contracts if not closely managed.
Effectiveness of advertising campaigns can be difficult to measure definitively.

Positive Signals

Awarded through full and open competition, suggesting a robust bidding process.
Contract duration allows for long-term strategic planning and execution.
Contractor has experience in the advertising industry, implied by the award.

Sector Analysis

The federal advertising and marketing services sector is a competitive landscape where agencies procure a wide range of support, from creative development to media placement. This contract falls within the broader professional services category, specifically North American Industry Classification System (NAICS) code 541810 (Advertising Agencies). Spending in this sector can fluctuate based on agency needs for public awareness campaigns, recruitment, and public relations efforts. Comparable spending benchmarks would involve analyzing other large federal advertising contracts.

Small Business Impact

The contract was awarded to DDB Chicago Inc. and there is no indication of a small business set-aside. Therefore, the direct impact on small businesses through this specific award is likely minimal. However, the prime contractor may engage small businesses as subcontractors for specialized services, which would be detailed in their subcontracting plan, if applicable.

Oversight & Accountability

Oversight for this Cost Plus Fixed Fee contract would typically involve contract officers, program managers, and potentially contracting specialists within the Department of the Army. They would be responsible for monitoring expenditures, ensuring compliance with contract terms, and verifying the necessity and allowability of costs. Transparency is generally maintained through contract award databases and reporting requirements, though specific performance metrics may not always be publicly disclosed.

Related Government Programs

Department of Defense Advertising and Public Affairs Contracts
Federal Agency Marketing and Communications Services
Advertising Agencies - Government Contracts

Risk Flags

Cost Plus Fixed Fee contract type requires diligent oversight to manage costs.
Measuring the effectiveness of advertising campaigns can be challenging.

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $33.7 million to DDB CHICAGO INC.. RESEARCH

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 $33.7 million.

What is the period of performance?

Start: 2021-02-18. End: 2024-02-24.

What is the track record of DDB Chicago Inc. with federal contracts, particularly within the Department of Defense?

Information on DDB Chicago Inc.'s specific track record with federal contracts, especially within the Department of Defense, would require a detailed search of federal procurement databases such as SAM.gov or FPDS. While this award indicates they are capable of securing federal work, understanding their past performance, including any issues or successes on previous government contracts, is crucial for assessing reliability. Factors to consider would include the types of services previously rendered, contract values, performance ratings (if available), and any history of disputes or terminations. Without this specific data, we assume this award reflects a positive assessment of their capabilities by the contracting agency.

How does the pricing structure (Cost Plus Fixed Fee) compare to other federal advertising contracts of similar scope?

The Cost Plus Fixed Fee (CPFF) structure is common for services where the scope of work can be somewhat variable or difficult to define precisely upfront, such as advertising campaigns. It allows the contractor to be reimbursed for allowable costs plus a predetermined fixed fee representing profit. Compared to fixed-price contracts, CPFF can offer more flexibility but carries a higher risk of cost overruns if not rigorously managed. Benchmarking this contract's fee against similar CPFF advertising contracts would reveal if the fixed fee is competitive and justified by the expected effort and risk. Agencies often prefer fixed-price contracts when scope is well-defined to ensure better cost certainty for taxpayers.

What are the key performance indicators (KPIs) used to measure the success of this advertising contract?

Key Performance Indicators (KPIs) for an advertising contract like this are crucial for assessing its effectiveness and value for money. While not explicitly detailed in the provided data, typical KPIs for federal advertising contracts often include metrics related to campaign reach (e.g., impressions, audience engagement), message recall, public awareness shifts (measured through surveys), website traffic or lead generation (if applicable to campaign goals), and cost per acquisition or cost per impression. The Department of the Army would likely establish specific, measurable, achievable, relevant, and time-bound (SMART) goals in the contract's Performance Work Statement (PWS) to evaluate the contractor's performance and ensure alignment with agency objectives.

What is the historical spending pattern for advertising services by the Department of the Army or Department of Defense?

Analyzing historical spending patterns for advertising services by the Department of the Army and the broader Department of Defense is essential for context. This involves examining procurement data over several fiscal years to identify trends in contract values, types of services procured, and primary contractors. Such analysis can reveal whether this $33.7 million award represents an increase, decrease, or stable level of investment in advertising. Understanding past spending helps in evaluating the current contract's significance, identifying potential areas for cost savings, and forecasting future budgetary needs for similar services.

Are there any specific risks associated with the 'Advertising Agencies' (NAICS 541810) sector that could impact this contract?

The 'Advertising Agencies' sector, while generally stable, can present certain risks for federal contracts. These include the inherent difficulty in precisely measuring the return on investment (ROI) for creative campaigns, potential shifts in media consumption trends requiring agile strategy adjustments, and the risk of reputational damage if campaigns are perceived negatively by the public or media. For a CPFF contract, there's also the risk of scope creep or inefficient cost management by the contractor. The Department of Defense would need robust oversight mechanisms to mitigate these risks, ensuring campaigns are strategically sound, cost-effective, and aligned with agency messaging and values.

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: $33,685,051

Exercised Options: $33,685,051

Current Obligation: $33,685,051

Actual Outlays: $1,928,950

Subaward Activity

Number of Subawards: 10

Total Subaward Amount: $29,481,037

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