Thursday, January 29, 2009

More on the Idaho Department of Commerce Public Relations Contract Saga

SEE UPDATE BELOW

There's been a flurry of talk, rumor and speculation around the Idaho Department of Commerce, and the news that they had awarded their Public Relations contract to a firm based out of New York.

First, some housekeeping. For those who are not yet aware, word came out Tuesday afternoon via the Idaho Business Review that the Department had selected Development Counsellors International to handle the PR contract. This (Thursday) morning, however, the Department announced that it had withdrawn that decision, and they would be "negotiating exclusively with Idaho firms using Idaho talent".

Commerce Director Don Dietrich provided this statement:

After thoroughly reviewing the contracting process and its result, I determined that it was inappropriate to hire an out-of-state vendor to help us revitalize and expand Idaho’s economy and produce Idaho jobs. The intent letter sent to DCI is being withdrawn, and we will be negotiating exclusively with Idaho firms using Idaho talent for the Idaho Department of Commerce’s public relations needs.
The news has also been picked up nationally, most recently being reported by PR Week.

Since this story first broke, there's been an uproar throughout the marketing / advertising / public relations community, both online and offline. Much of it is based on a very simple, yet valid argument: With this decision, the Department of Commerce is contradicting it's mission statement in the worst possible way.

From the Department's website:

The mission of the Idaho Department of Commerce is to create jobs, strengthen communities, and market the state by:
  • Fostering economic development by assisting the growth of existing Idaho businesses and attracting new businesses to the state.
  • Assisting Idaho businesses in the exportation of goods and services to nations throughout the world
  • Cultivating the development of new businesses and job opportunities across the industry sector
  • Expanding Idaho's tourism and recreation industries
  • Promoting Idaho as a location for feature film and commercial production
Through this decision, the Department effectively demonstrated that it had no intention of living up to it's own mission statement, specifically that of "assisting the growth of existing Idaho businesses."

Now, let's step into the Department's shoes for a moment.

For this, or any government agency, decisions are a numbers game. Typically, those numbers are preceded by a dollar sign. In this case, it came in the form of scoring on a points system. This type of decision-making allows those involved in the process to take any emotion out of the equation - it's a competition, and the highest score wins.

From an operational point of view, this format is understandable. Without this type of process in place, decisions might never be made. Public agencies, State and Local Governments are under enormous pressure to avoid even the hint of impropriety in their decision-making process. This type of system is in place for that very reason, and it's not likely to change.

Was there preference given to in-state respondents? Yes, in the form of a 50 point bonus in the scoring. Was the intent of the bonus points to discourage out-of-state responses? Doubtful. It did, however, demonstrate that the Department made a good-faith effort to give those respondents based in Idaho a leg up on the competition.

Knowing that this is a number's game, let's look at it from another angle. By selecting an out-of-state agency, the Commerce Department made a huge gamble. The argument can be made that they were gambling on the fact that the revenue that would be generated for the State as a result of future PR efforts would exceed the revenue that the State would receive through employment taxes, sales taxes et. al. as a result of keeping the work in-state. Although the reported $200,000 value is not a large contract when compared to other state agencies, it's still real money. And it pays salaries, keeps people employed, prevents layoffs, allows companies to hire additional staff. The list goes on and on.

And given recent news about budget concerns for the State of Idaho, that's a very real concern in the hallways and offices of State Government. Case in point: the PR Week report suggest that "the decision to rescind the offer was a result of internal discussions", and by "conferring with the Governor's office". I'd be very surprised if that wasn't a topic in those 'internal discussions'.

So, the question now at hand is: what will the Idaho Department of Commerce do next?

The original RFP was issued in late October/early November, and it took until late January to reach a decision. Will the whole process begin again? If that's the case, it is likely that everyone involved would have to start from scratch as well, resubmitting their entire proposals and all related materials. And based on that timeline, It's not unreasonable to think that it could be April before another decision is made.

Or, they could award the contract to the highest-finishing in-state respondent. That would likely prompt others involved to file an appeal, based on the current circumstances alone, which, in turn, would drag out the decision-making process just as long.

Finally, they could piece-meal out the work to a handful of agencies that responded to the RFP. That seems the most likely, and the quickest, solution to the situation. The danger in this course of action, however, is that the Department will likely end up being counseled in several different directions by those involved, and will suffer from a lack of a single, cohesive vision and strategy.

All of the above is pure speculation on my part, of course.

So, who are the winners and losers out of this whole ordeal? Let's examine:

Winners:
DCI. They played by the rules that were set forth at the very beginning, and according to those rules, they won. They were at a points-disadvantage because they were out-of-state, but they overcame that deficit and still finished on top. There will be those, undoubtedly, that side with DCI in the opinion that they got a raw deal. And perhaps they did. But they've also received a tremendous amount of exposure, seemingly none of it negative, for their involvement.

Losers:
Idaho Department of Commerce. This is a no-brainer, but worth mentioning nevertheless. The Department of Commerce is going to be sporting a black eye because of this, and the way the news of the selection was handled. Will they recover? Yes, but it'll take time.
Idaho PR Agencies. They're going to be a casualty of this entire event as well. Fairly or not, these agencies are now going to be under enormous pressure to produce spectacular results. That pressure, especially by those watching from within the PR/marketing/advertising world will be unreasonable and unfair at times, but it will still be there. Any misstep will be painfully public, no matter how small. Unfair? Yes. Unreasonable? Yes. The way of the world? Yes.

But then again, I could be wrong about all of the above. It's been known to happen before.

UPDATE: Andrew T. Levine, President of DCI has submitted A Letter to Idaho: DCI Reponds to the Public Relations Award Retraction (via the Idaho Business Review). Andrew makes very reasonable arguments / points on behalf of his firm, and it's worth taking the time to read.

And, for what it's worth, I agree with Andrew and his belief that there are no winners in this whole situation. It would be unfortunate, on several fronts, for the Department of Commerce to have to start from scratch. RFPs are a time- and cost-intensive process for all parties involved, and in any organization those are limited commodoties.

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2 comments:

bcritchfield said...

Going to have to disagree with you on the lack of cohesiveness argument. With the new reality of virtual agencies, I think a conglomeration of agencies can deliver a very cohesive and very effective campaign. However, there does need to be buy in and coordination.

While the Idaho PR agencies who are selected will be expected to perform, you have to also realize that this is a small contract and there is only so much you can do with it. However, I think the firms in Idaho will leave everyone pleasantly surprised.

Michael said...

As one who has probably been drawn a bit more into the fray on this controversy than I should have (of my own accord, mind you), I think you've done an excellent job of dispassionately laying out the issues in a way that does justice to its many facets.

Thanks for taking the time to help us all gain some much needed perspective, Brian. Excellently written!