Government Contracts: DoE contract report takes some heat off of Ketchum

Though Ketchum didn't receive any major criticism from the DoE's inspector general over its contract with the department, that hasn't cleared it of fault.

Though Ketchum didn't receive any major criticism from the DoE's inspector general over its contract with the department, that hasn't cleared it of fault.

For critics of President Bush, government watchdog groups, and the PR industry, it was perhaps one of the most anticipated document releases of the year. But in the end, this month's report from the inspector general at the Department of Education (DoE) about the DoE's contract with Ketchum and commentator Armstrong Williams still left some wanting more.

The report found "no violations of pertinent contract law and found no evidence of any ethical violations in the formation of the Ketchum contract and [Graham Williams Group] requests," but it does cite poor planning, judgment, and follow-up as the main concerns.

What is ironic is that the report hardly addresses the propaganda issue, which brought so much attention to the contract in the first place, and instead concentrates on previously unquestioned details of the contract. But whether the findings finally take Ketchum out of the critical spotlight is still up for debate.

Surprisingly, the report appears to make the quality of the commercials produced by Williams' PR and advertising company, Graham Williams Group (GWG), one of its primary concerns. It also raises the not previously asked question of whether GWG even lived up to the terms of its subcontract. "Ads identified as a deliverable for the second work request were never completed," the report says. "Although GWG was paid to produce new ads, the television ad from the first work request was repeated under the second work request."

Margaret Spellings, current DoE secretary, echoed much of the report's criticism, saying that it revealed "a critical lack of oversight that ultimately showed a lack of regard for how taxpayer dollars were ultimately used." Spellings did not name former secretary Rod Paige, but implied that much of the blame lay on the DoE's senior management at the time.

"Proper management of departmental resources is imperative to fulfill the department's mission. Top decision makers should be well-informed, and must ensure all contracts are well managed and that we get what we pay for," she said in a statement. "In short, what happened here was wrong."

The report places blame for the entrance into the subcontract squarely on the DoE. Even before it had chosen which PR agency to work with, the report says, the DoE had decided to use GWG for minority outreach, something the report identifies as a concern.

"The department's direction to use a particular subcontractor gave the appearance of circumventing competition in contracting," it reads. "The department lost the opportunity to obtain Ketchum's 'expert advice' on how to best conduct a minority outreach campaign by directing Ketchum to utilize the GWG."

Eye on contract management

But there are some who feel that the real injustice was in what the report failed to address. Melanie Sloan, executive director of Citizens for Responsibility and Ethics in Washington (CREW), criticized the report because it did not investigate the propaganda issue, but rather focused on contract management. "It seemed irrelevant," she says. "I don't remember anyone asking this question: Was the contract managed properly? Who cares? The problem was you shouldn't have been entering into it in the first place."

While the inspector general's report does not directly address the propaganda issue, it does identify several clauses in the original statement of work as problematic. The Statement of Work (SOW) included the requirement that Williams provide department officials with the option to appear as studio guests on his program to discuss No Child Left Behind (NCLB) and that Williams would use his relationship with America's Black Forum to encourage producers to periodically address NCLB. "Activities relating to favorable NCLB commentary were included in the SOWs, providing the appearance that the Department was buying more than just advertising," the report says. "This included language contained in the GWG proposal, the Ketchum proposal, and the SOW issued by the Department."

Even so, Sloan says the report could be good news for Ketchum because it shows once and for all that the Omnicom agency had no part in selecting Williams to tout NCLB. "It was the DoE's idea to hire [GWG], and Ketchum never had any choice," she says. "They were just told this is what [the DoE was] doing. They had very little influence on what happened with that contract."

But does the absence of any real criticism by the inspector general completely relieve Ketchum of wrongdoing? Michael Robinson, partner at Levick Strategic Communications, says that although the report reveals that Ketchum had no part in recommending GWG, going along with the DoE's initial idea was not a good move because it ultimately took attention away from the merit of the law Ketchum was hired to promote. "You want to do what's in the best interest for your client," he says. "But sometimes what's in the best interest of your client is not that obvious. What the client wanted and needed was a discussion of the policy."

Whether or not Ketchum ultimately acted in the DoE's best interest, its desire to maintain good relationships with its existing clients is evident. Almost immediately after news of the contract with Williams broke, Ketchum announced efforts to conduct internal and external reviews to ensure that no similar contracts existed. Now it appears that the agency is taking it one step further.

Last week, Ketchum shared with PRWeek its first-ever disclosure guidelines. Prompted by not only the DoE-Williams flap, but also the Medicare VNR incident last year, the guidelines provide clear instructions for employees on how to proceed in future relationships with spokespeople, VNRs, and contracts. Bill Margaritis, corporate VP, worldwide communications and investor relations, for FedEx, an 11-year Ketchum client, says the firm has conveyed its commitment to the disclosure guidelines to its clients, as well.

In times of crisis, Robinson says, good communication with clients is most critical. "That's a step in the right direction," he says. At the height of the Williams controversy, Margaritis says, high-level management from Ketchum kept him apprised of what was going on. "They were very open and candid and transparent about what they were doing to manage this difficult situation," he says. "They did everything they could to reassure us that they would not lose focus on the account business, which they did not."

Even so, Margaritis notes that Ketchum could have handled the fallout better. "I'm sure there are some things that they could have done differently, whether it be faster or perhaps a little crisper. I'm sure they have gone through their lessons learned or their due diligence on what they could have done better."

Impact on the PR industry

Aside from Ketchum's reputation, another question that arises amid the release of the report is what effect it will have on the already tarnished reputation of the PR industry.

Scott Widmeyer, chairman and CEO of Widmeyer Communications, says that although Ketchum is not directly blamed in the report, it doesn't have any benefit for the industry because the findings show evidence of low-quality work. "That in and of itself taints the industry," he says. "I think there needs to be a clear understanding in the contracting processes of what services are being provided."

Widmeyer acknowledges that the critical eye cast on the industry will not go away anytime soon, but does not believe the industry is in need of an image makeover. "I don't think we need to wage a PR campaign on behalf on the PR industry," he says. "I think we put a better face on it by making accountability front and center of everything we do in the work that we do."

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