Leo Burnett has hired a Washington law firm to lobby Congress on its behalf regarding the U.S. Army's $95 million account. The move comes as some lawmakers consider holding hearings on Burnett's handling of the contract.
Burnett said it previously hired Patton Boggs to help the agency sort through government-contract issues after Burnett won the Army account. It called on the firm again after lawmakers recently raised concerns about the contract.
Lawmakers have questioned the fees the Chicago agency pays its subcontractors on the account, as well as the amount the Army allocates for ethnic marketing. "I am calling for immediate congressional hearings to investigate possible discriminatory compensation practices by Leo Burnett," said Rep. Robert Menendez, D-N.J. "This case ... proves that it's unfortunately not just enough to hand the dollars over. You've got to ... make sure the advertising actu ally reaches the audi ences we need to reach."
The Cartel Group in San Antonio handles the Hispanic portion of the account, and Images USA in Atlanta has the African American duties. Cartel's contract was signed on Feb. 6.
"Both subcontractors are being treated unfairly," said Rep. Carolyn Kilpatrick, D-Mich. "To this day, the Afri can American shop does not have a contract, and I think that is horrendous."
A lawsuit alleging collusion between the government and ad agencies to lower minority shops' fees is also being prepared for the Rev. Al Sharpton's Madison Avenue Initiative [Adweek, April 8].
Per Burnett's contract with the Army, the agency is paid $208 an hour for creative work and $156 an hour for account-services work. The subcontractors are paid an average of $90 an hour, sources said.
Rates in the industry range from $150-200 an hour for senior positions, according to agencies that have worked on federal contracts.
Burnett said the subcontractors are paid fairly, based on the contract. "The profit level was decided by the Army," said Ray De Thorne, Burnett's evp on the account. "The subcontractors are being paid at the rate they requested. The rate was developed by them, and they built in the same profit level as Leo Burnett. We all agreed to share in the incentive bonus proportionally."
Army rep Paul Boyce said the sub contractors work for Burnett. "The Army needed a firm that can provide the level of services the Army requires to recruit America's young people," he said. "The messages are reaching the American public."