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Lottery Advertising Subject of Contract Dispute

A well-known Fort Lauderdale advertising agency is challenging a decision by the Florida Lottery to hand over a nearly $80 million advertising contract to a rival firm.

The ongoing bid dispute has forced the Florida Lottery to handle all of its advertising duties in-house since the contract with its previous advertising company expired at the end of June. The turmoil over the contract comes at a time when the Lottery is already grappling with declining sales as the recession drags on. New forecasts for the current year predict that overall lottery ticket sales will decline by $117 million, or about a 2.9 percent drop.

Lottery officials announced last month their plans to award a 3-year contract to St. John & Partners Advertising and Public Relations, a Jacksonville company whose clients include Zaxby’s and Ford. But lawyers for losing bidder Zimmerman Advertising contend that lottery officials mishandled the bidding process and should have disqualified the firm.

Plus they say that Zimmerman – which finished with a slightly lesser score - offered to do the job at a cheaper rate than St. John. Zimmerman is a nationally-known advertising firm whose clients have included the Florida Panthers hockey team, Papa John’s Pizza and home builder Lennar.

“You don’t even negotiate or talk to this other bidder despite the fact they are cheaper, and a much larger and more respected agency in Florida?’’ said Robert Hosay, an attorney with the Foley & Lardner law firm representing Zimmerman.

Jackie Barreiros, public affairs director for the Florida Lottery, said the department was “comfortable with the process” used to select St. John. Instead of using the more rigid request for proposal process, the department instead handled the contract through an invitation to negotiate process that included asking finalists to do a presentation.

but she said agency lawyers have been holding meetings to discuss Zimmerman’s concerns about the final bid decision.

“We realize there is going to be disappointment when someone is not awarded a contract,’’ said Barreiros.

This year the lottery was given $30.2 million to spend directly on advertising, which includes TV, radio and print advertising in both English and Spanish. St. John was selected to oversee the main contract worth up to $24 million this year. State legislators set aside an additional $3.48 million which can be spent on ad agency fees.

Barreiros said that during final negotiations St. John offered to lower its agency fee to match the roughly 9.8 percent rate offered by Zimmerman in its initial bid. The total contract – which includes both the fees and advertising buys – could be worth nearly $80 million if lawmakers keep advertising spending levels intact until 2012.

This latest bid dispute marks the second time this summer that Foley & Lardner – which is home to former top Crist aide Christopher Kise – has challenged a major contract awarded by the Crist administration. That firm is also representing MHM Correctional Services in a dispute with the Department of Corrections. Both Zimmerman and MHM are represented by top Crist fundraiser and lobbyist Brian Ballard.

Zimmerman’s lawyers have asked that an administrative law judge recommend either throwing out all the bids for the ad contract or that Zimmerman get the contract.

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