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Ocean City

City renews ad contract by default after notice deadline passes

(Sept. 27, 2013) Despite some question last week about the status of its marketing contract with MGH Advertising, Ocean City government will extend its agreement with the firm for another year.

The City Council’s decision is an apparent about-face from its position last year, when a divided council argued about whether other providers ought to be considered.

“Per the contract, the agreement has been renewed automatically for an additional one-year period as neither party (MGH or the Town of Ocean City) has given the required 120 day notice to terminate the contract,” Ocean City Communications Manager Jessica Waters said in an email.

MGH has been the city’s marketing firm for the past 11 years, coordinating the resort’s public presence outside the island, with everything from TV ads in Pennsylvania to billboards on the New Jersey Turnpike. The company last signed an agreement with the town in 2010, following a competitive selection process.

That agreement carried a guaranteed two years’ work, with a clause that further automatically extends the contract for each year for an additional year unless either party gives 120 days’ notice that they intend to terminate the agreement. The expiration date of the contract is Dec. 31 of each year, making the end of August the decision time.

“No one approached me about it, and to be honest I didn’t even think about it,” said MHG President Andy Malis. “If it’s extended, that’s great. If they [the city] put it up to bid again, that’s their call.”

If the city were to give MGH notice that it planned to opt out, it would then need to assemble a new bid specification and issue a request for proposals (RFP), which would likely generate responses from MGH as well as other firms. The city would then select a contractor, which could be MGH or another firm.

At last week’s council session, Councilman Brent Ashley asked if there had been any consideration given this year to issuing a new RFP.

“Their contract expires at the end of December 2014, as I understand it,” said Council Secretary and Tourism Commission Chair Mary Knight. City Manager David Recor concurred.

“I thought we extended it for one year, last year,” Ashley said.

“We should check on that, because Donna Abbot, our tourism director, had different information,” Knight said.

In August 2012, council voted 4-to-3 to give MGH notice and re-bid the contract before the end of the year. However, that decision was reversed, and the contract extended, after the city’s Tourism Advisory Board submitted that the resort’s stakeholders would not have enough time to comment and make a decision before the December expiration.

Although a non-binding body, TAB’s recommendation at the time was “to keep Andy’s contract for another year, but start the RFP process now and have a whole year to do it.” The council approved the recommendation with only Ashley and former Councilman Joe Hall in objection, preferring to go to bid immediately.

But as Ashley pointed out last week, the current council had never made another decision in the current year to extend or decline the contract.

“If we last voted to extend it for a year in 2012, it should be good to the end of 2013, not 2014,” he said.

Given that the city was obligated to give MGH notice a month ago in order to opt out, the contract will now be good through the end of 2014 by default. At what point the idea to go back to bid was abandoned, however, is not clear.

“In recent meetings with TAB, there has been no discussion about beginning the RFP process,” Waters said. “In fact, the discussions regarding tourism in the recent TAB meetings have been favorable.  The issue to go to RFP has not been revisited by TAB or the current council at this time.”

MGH’s status has always been somewhat of a hot potato in council chambers, as the agency’s success – and ergo the success of the city’s government in its role as the resort’s primary destination marketer – carries with it considerable political import.

Hall ­– before he lost his re-election in 2012 – frequently criticized the direction of the city’s marketing and maintained that City Hall had too much political investment in MGH’s success to be able to make a fair decision on its employment.

“Every time there’s a challenge coming up, we have to postpone because we can’t handle it,” Hall said last September. “If it’s not the right time [now], there’ s just going to be a conversation next September that that’s not the right time either.”

Roughly $4 million of the city’s annual spending on advertising and public relations comes under the purview of MGH. The vast majority of that money is spent on purchasing media space, with the agency’s direct fee being $22,958 per month.

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