Challenges of lottery ad contract rejected | Arkansas Blog

Thursday, January 5, 2017

Challenges of lottery ad contract rejected

Posted By on Thu, Jan 5, 2017 at 4:09 PM

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The state procurement director, Edward Armstrong, has rejected challenges to the proposed award of theArkansas lottery advertising business to CJRW.

It's a five-year, $34.5 million deal. Armstrong said the evaluation procedure that put CJRW's proposal on top had been fair.

The letter did not provide a definitive answer to the key question in the challenges of whether it is a conflict for CJRW to represent both the lottery and Oaklawn Park, which has casino and parimutuel gambling.

An Arkansas Business article has quoted a CJRW representative as saying the lottery had said it had no problem — nor did Oaklawn — with dual representation. But two competitors — Ghidotti-Vines and Mangan Holcomb Partners, the current ad agency for the lottery — contended CJRW should be disqualified for not disclosing the conflict.

A letter from the procurement office says rules only disqualify a "successful vendor" on account of conflict of interest. At this point, CJRW has only been recommended, not chosen, as the vendor. If it IS chosen, it would then be required  to disclose potential conflicts. Would that dual work for Oaklawn be a conflict? The opinion said that should be determined on a case-by-case basis, though a footnote seems to suggest representation of similar clients wouldn't automatically be a bar. It said, in part:

...the mere fact that a marketing firm has clients other than OAL does not necessarily present a conflict of interest incompatible with prioritizing OAL's interests. It should also be apparent that the mere fact that the other clients of the marketing firm also want the marketing firm to advertise their products and services, which will likely involve encouraging consumers to spend some of their discretionary dollars,  is not in itself a conflict that renders concurrent engagement incompatible ...
Historically, other gambling enterprises were viewed as conflicts by Oaklawn when ad contracts were being decided for the tourism agency in Hot Springs. Also, Camelot, a private management consultant to the lottery has identified Oaklawn in its business plan as the No. 1 competitor for lottery player dollars.

I have been interested in who, if anyone, said no conflict existed. The state Department of Finance and Administration, to date,  wouldn't answer that question. It referred me instead to the letter today, which still didn't answer the question.

When I objected that the question had not been answered, DFA spokesman Jake Bleed responded:

.. to my knowledge, no one over here has ever considered work for both Oaklawn and the lottery to constitute a conflict of interest.
The question then becomes whether calling Oaklawn the lottery's No. 1 competitor makes working for both a conflict of interest. Would it be a conflict of interest for an agency to handle both Razorback and Crimson Tide advertising? Kroger and Walmart?

The existing contract expires next week. The final decision clears the way for CJRW to take over, presumably after resolution of the conflict question and legislative OK. Its leadership includes Gary Heathcott, the governor's campaign advertising manager. CJRW, which already had state Parks and Tourism business, has also added the Department of Economic Development to its portfolio since Hutchinson took office.

Also so more details with comments from Kyle Massey at Arkansas Business

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