Amid concern over bidding, PA lottery account returns to Marc USA
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Michael J. Brunner, CEO of Downtown ad agency Brunner, thought he won the lottery earlier this year.
His agency signed a five-year contract with the state Department of Revenue to take over the Pennsylvania Lottery marketing and its $183 million budget. Hiring had begun, including vendors.
Then, last Thursday, he received a phone call from the state secretary of revenue. Pennsylvania was canceling the contract. It had discovered problems in the bidding process that took place between last summer and early this year.
And, since the governor is considering privatizing management of the lottery anyway, the state decided to just extend its marketing contract with the previous contract holder, Station Square agency Marc USA, for one year.
Brunner and the state are now negotiating how much the agency will be paid for work done between March 19 and April 12, said Mr. Brunner, in a phone interview.
In the meantime, his agency is trying to cope with the abrupt setback. He said 14 people had been hired to work on the account, some had moved to Pittsburgh from other markets. Ten more were either getting ready to come or discussing positions.
"There is no company that just has people sitting on the bench to work on work that might be there," said Mr. Brunner, who described the situation as painful.
Not entirely clear is the role of the lawsuit filed earlier this year in Commonwealth Court by Marc USA, the longtime holder of the lottery ad account. The agency had raised concerns over the selection process.
A spokeswoman for the Department of Revenue said Wednesday that the lawsuit is without merit and did not trigger the decision not to give the work to Brunner.
Allison Roberts said, "Subsequent review of the procurement, which involves many steps and many Commonwealth agencies, did uncover a few potential issues regarding procedure."
"For this reason, the Department of Revenue, having consulted with the Department of General Services and the Office of General Counsel, has decided it is in the best interest of the Commonwealth to terminate the advertising services contract between the lottery and Brunner."
Mr. Brunner believes the state's discovery of procedural problems may have come as it prepared to respond to the lawsuit.
In a prepared statement issued Wednesday afternoon, he said, "We appreciate that the Commonwealth has repeatedly stressed that this change in direction was not due to any fault or performance issues on the part of Brunner. We have also been assured that we followed all instructions and requirements as outlined in the [request for proposal]."
In the middle of all this, on April 2, Gov. Tom Corbett, a Republican, announced that his administration had issued a request for qualifications to pursue a private management agreement for the Pennsylvania Lottery, saying a private sector firm might be able to offer new ideas to boost revenues from the program that benefits older Pennsylvanians.
While lawmakers study that issue, the lottery team at Marc USA is back on the job.
"Marc USA is thrilled to continue our work with the Pennsylvania Lottery to benefit older Pennsylvanians," said Michele Fabrizi, president and CEO, in a prepared statement. "We look forward to helping the lottery to achieve the kind of record-breaking results it has enjoyed since our partnership began in 2002."
The reprieve does not mean the animatronic character Gus the Groundhog will be coming back. His retirement, state officials have said, was planned even before the advertising contract was awarded to Brunner.
First Published April 19, 2012 12:00 am