Wednesday 23rd August 2017

Oregonians deserve a safe space from government manipulation, propaganda and bloated contracts

Oregon State Government’s $278 Million Self-Promotion ‘PR’ Machine

I cover the “daily greed” of national, state, and local politics.

Oregonians deserve a safe space from government manipulation, propaganda and bloated contracts.

Remember, Cover Oregon? A national laughing stock with over $3 million spent on this ad and cited in ‘Wastebook 2013’ by then-U.S. Senator Tom Coburn. 

State government, agencies and commissions are shelling out hundreds millions of dollars to public relations firms. Eighty-seven state agencies spent $278 million dollars to convince citizens to spend more taxpayer or gaming dollars on bigger government, higher taxes, more regulations, or more gambling from 2012 through 2016.

Here’s how the numbers breakdown. Since 2012, taxpayers paid $110 million to employ 303 public affairs employees, spokespeople, advertising, video, print, web, graphic designers, marketing and communications managers. But, it wasn’t enough. The state shelled out an additional $168 million to outside PR and advertising firms. Some of those firms charge fees up to $260 per hour and one company reaped total payouts of $34 million – convincing Oregonians to gamble.

The Oregon Public Relations Machine Overview

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Oregon Public Relations Machine Overview

In Oregon, the public relations industry is a favor factory for insiders. The biggest agencies are doling out extremely lucrative PR contracts.

Since 2012, the Oregon State Lottery Commission awarded contracts and payments of $34.5 million (from gaming dollars) to one vendor: Borders Perrin and Norrander (BPN). During this period, data at OpenTheBooks.com shows that BPN gleaned $34.5 million of the $55.9 million paid to outside PR/advertising vendors at the lottery. BPN handled the Lottery’s sponsorship of the Portland Trailblazers, ‘Wheel of Fortune’ television ads, Jackpots Scratch ads, and other campaigns.

In 2013, Borders Perrin and Norrander signed two major contracts with the Lottery. First, a ‘Price Agreement’ contract allowed BPN to charge up to $260 per hour for their ‘Creative Director.’ The contract was then amended or extended four times without competition until May 2017. In fact, BPN billed $200 or more per hour for five additional positions (see graphic).

In Oregon, public relations, marketing and advertising for state run enterprises is very lucrative.

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In Oregon, public relations, marketing and advertising for state run enterprises is very lucrative.

BNP’s second contract was for ‘Media Planning and Buying Services.’ This contract allowed BPN to charge $140 per hour and even included an extra provision for ‘media planning and/or buying commissions.’ Here is the BPN commission payout schedule: 8 percent of a media budget between $3 million and $4.99 million, 7 percent between $5 million and $7.99 million, and 5 percent on $8 million plus.

We reached out to BNP and the Oregon Lottery for comment. BNP did not respond. When we asked the Lottery for justification, their answer was troubling:  they are exempt from state procurement laws.  In other words, ‘they can’ and so ‘they do’ hand out these contracts.

Pollinate – a Portland-based advertising firm – collected more than $1 million managing the ‘social media and web’ business for the Lottery since 2013. The contract allows for 19 position titles to bill up to $195 per hour and the contract has a potential life of eight years. In a written statement, Pollinate stated they invoiced the Lottery for up to $150 per hour, but never at the allowable $195 per hour.

Top 10 Oregon State Agencies Spending on 'PR,' Communications, Advertising and Marketing 2012-2016

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Top 10 Oregon State Agencies Spending on ‘PR,’ Communications, Advertising and Marketing 2012-2016

The Oregon Tourism Commission (website: TravelOregon.com) is funded by a $35.6 million biennial hotel/motel ‘lodging’ tax. However, the Commission is one of the least transparent government entities. There’s no transparency of employee salaries, vendor spending or agency contracts.

At OpenTheBooks.com, we began auditing the commission and found 43 staffers at an operational cost exceeding $5 million per year. Despite the staff, Travel Oregon spent $17.21 million in ‘Global Marketing’ (2015-2017) – much of it with outside firms.

Who is watching the hen house at Travel Oregon?

Travel Oregon’s principal advertising agency is Wieden+Kennedy – a firm reaping up to $22.87 million in scheduled payout (2013-2019). It all started from an original $7.15 million contract (2013-2015) containing a provision allowing for a single two-year contract extension. Today, the contract value is $22.87 million and runs through 2019 – a three-fold $15.62 million increase. Records provided by Travel Oregon show two contract extensions, rather than one.

Travel Oregon is acting like they have a lot to hide. When providing the Wieden+Kennedy contracts, the agency redacted important information: the monthly and annual retainer fees, total amount of ‘retainer service hours,’ hourly fees in excess of retainer services, ‘media and production’ costs, and ‘other media campaign’ costs from the contract.

With millions of dollars of taxpayer money funding the state government PR machine, there are real opportunities for corruption. For example, at the behest of Oregon Governor Kate Brown, the Oregon PR machine is muscling law-abiding businesses.

This spring, the Health Authority of Oregon (OHA) and the Department of Environmental Quality (DEQ) launched ‘Cleaner Air Oregon’ – a taxpayer-paid public relations campaign to try and enact the most stringent environmental regulations in the nation. The state is targeting manufacturing companies for polluting ‘violations’ of proposed regulations – even though they are in compliance with all current state and federal regulations.

The Cleaner Air Oregon campaign shows the growing and troubling power of the state spin machine. Data at OpenTheBooks.com shows that these two agencies employed 18 “Public Affairs Officers” and spent an additional $10.9 million with outside PR vendors since 2012.

Judge Carol Bispham's court room statement as reported in The Oregonian newspaper.

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Judge Carol Bispham’s courtroom statement as reported in The Oregonian newspaper. 4/2017

Even obscure state agencies are conferring millions of dollars in public relations contracts.

For example, Oregon Forest Resources Institute (OFRI), a small state agency, paid out $5.2 million in outside advertising and production work since 2012. The Portland-based public relations firm Cappelli Miles captured $4.6 million at a billing rate of $150 per hour. Last year, OFRI paid Cappelli Miles more than $1.1 million, up from $611,000 in 2012.

This contract is yet another case study of how Oregon state contract awards often circumvent competitive procurement.

In 2011, the initial competitively bid five-year contract with OFRI totaled $4.75 million. Yet, today, after four amendments the contract has grown to $12.65 million and now runs through 2021. A clause in the contract allows for another five-year extension option through 2026.

In a written statement, OFRI says Cappelli receives $70,000 to $180,000 in management, production and ad placement fees annually with no commissions. The rest of the payout goes to Oregon Public Broadcasting, commercial television, internet, etc.

In Oregon, the $278 million state-run self-promotion machine is advancing its own interest (larger budgets, more taxes, and more regulations) arguably at the expense of the public’s interest. Governor Kate Brown and 87 state agencies pretend to be transparent when, in reality, they are engaged in self-promotion.

“Just the facts, Ma’am!” transparency shouldn’t be served with government manipulation, propaganda, or bloated public contracts wasting taxpayer dollars.

Adam Andrzejewski (say: Angie-eff-Ski) is the founder of OpenTheBooks.com – a database of 3.5 billion government salaries, pensions and expenditures from the Federal, State and Local levels across America. Learn more at OpenTheBooks.com

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