Tuesday, October 7, 2008

FDA's PR Shop Scandal

The flap over the U.S. Food & Drug Administration’s (FDA) contract award to PR shop Qorvis Communications has got me steamed. And not for the reasons you might think.

Here is a quick rundown of the facts as reported by the Washington Post:

-The FDA hires Mildred Cooper as a temporary PR consultant to advise the agency’s commissioner and other senior officials. Cooper then recommends the agency undertake a public relations campaign to help create a more positive image with the American public and on Capitol Hill

-Prior to her FDA gig, Cooper worked for a company called Luna Innovations, a Qorvis client. She picks up the phone and calls her contacts at Qorvis to discuss the FDA’s PR challenges. Together, Cooper and Qorvis develop a scope of work and budget for a PR campaign.

-With a desire to award the contract to Qorvis, the FDA then side-steps normal procedures and awards the contract to an Alaska Native corporation that qualifies for special set-asides. It’s understood by all parties that Qorvis will do the work as a subcontractor.

-After being made aware of the circumstances surrounding this award, FDA deputy commissioner John Dyer suspends the contract and initiates an independent investigation.

While the back room dealings by the FDA and Qorvis reek of suspicion and scandal, the truth is that no one involved did anything illegal. Alaska Native-owned companies do qualify for set aside contracts and typically rely on subcontractors to handle all of the work. Everyone involved in government contracting knows this.

As for the FDA’s Mildred Cooper, she merely called on a firm she had a relationship with and believed could perform the task at a high level. Guess what? That exact same thing happens in business each and every day. People hire vendors they know and trust. It’s called relationship sales.

The Washington Post cited this situation as an example of “how contract competition requirements designed to get the best deals for taxpayers have often been subverted in recent years for the sake of convenience or to serve narrow interests…”

Yet, the best deal for taxpayers in this case may have very well been for Qorvis to represent the interests of the FDA. Mildred Cooper sure thought so and that’s why she was hired.

In the interest of full disclosure, I do know a few of the Qorvis executives fairly well. My firm competes against their technology practice and I’d like to think there is a healthy respect between our companies. Yet, I have no love for Qorvis. They’re a competitor.

In this case though I do believe they’re going to get a lot of undeserved knocks in the business and trade media. That’s because the world works on relationships…except apparently in government.


Anonymous said...

Sorry, have to disagree. The FDA PR chief makes a rookie mistake. In my years as a governmental/political PR director, I always consulted my principles that you have to ask yourself two questions when making a decision:
1--Is it legal? In this case, yes. Any company worth its salt (meaning they've hired a lobbyist to help them figure out how to work the system)will find a way to get a piece of the set-aside pie.
2--Do you want to see the decision on the front page of your local paper?

The moral implications of gaming the system aside, it's a stupid move for someone whose entire life ought to revolve around reputation management to make a decision that puts their PR shop in the spotlight like that.

Philosophically, I agree that relationship sales is a good thing. But as a PR professional, you have to understand the environment you're in and act accordingly. For good or bad, intense scrutiny is a fact of the public sector.

Good blog, though--thanks for giving us something to discuss.

Bill T--Ohio

Heather said...

Neither Qorvis nor Mildred Cooper is at fault in this issue. However, FDA certainly is. Whether or not the federal government handles contracts in a manner consistent with the private sector is somewhat irrelevant to this particular issue. The agency is required to follow specific guidelines (that exist theoretically to save taxpayers’ money and to ensure fairness). That said, the FDA continuously prompts public scrutiny with its actions – and inactions. Having worked on issues pertaining to the agency, it is my opinion that they have suffered from some very bad decision-making on numerous occasions over the last few years – including this latest one. The irony behind this latest “scandal” is that they sought a better public image through a $300,000 PR initiative – one that would improve public perception and increase trust in the agency. Instead of taking logical, ethical steps to make that happen via the appropriate channels for a federal agency, they again make a poor decision that further deteriorates their image. The issue is very simple: the FDA is plagued by bad decision-making. Underneath it all, the FDA’s problems will not improve through hiring any firm – they have serious issues internally that clearly must be addressed.

Anonymous said...

When I read this, another suspicion came about...anybody getting any kickback? Relationship selling? Maybe...Kickbacks?...maybe

Steve Lunceford said...

Marc, I have to say that given how how GSA recently went through a scandal involving Lurita Doan handing out a no-bid award to a friend for PR, FDA should have been more attentive to ensure there was not any hint of impropriety/rule bending. In Doan's case, her no-bid incident was the straw that broke the camel's back and helped hasten her departure from the agency.

At the heart, both deals are similar to what you've posted: hiring based on previous relationship; but that won't fly under federal contracting rules. If there's an urgent need and there's limited expertise to fit such need, I think agencies have greater leeway to source to a known entity without competition, but I don't believe either of those hurdles apply to this case.

Interesting to note that Wash Post is the pub leading the way to write about Fed agencies and their PR firm hiring practices. Maybe it will be a new beat for them ;-)

Anonymous said...

Innovative people in Federal Contracting have figured out ways to game the system. It is their response to the unfortunate circumstance we find ourselves in when the tenacious win over the talented, gaming the back-side of the same system. The bar needs to be raised all around.

Larry Marchese said...

I've always thought that the government bidding process is fine for buying hard goods (road signs, toilet paper and F-16s, etc.), but breaks down when it comes to professional services that involve strategy and judgment - that has to be a process that includes subjective decision making.

Whether the parties involved needed to be more thorough and careful aside, I expect the leadership at our government agencies to be able to use their best judgment in deciding who is the best to do a job like this.

Great subject for discussion. Thanks.

Chris Parente said...

Good post. If someone has to be "O'Harrowed" -- a great term I heard the other day -- it might as well be Qorvis.

It's amusing when the Post writes these pieces -- there is often a Casablanca-ish "I'm shocked to discover gambling at this club" tone to the coverage. But where your analogy breaks down between government and private sector is the use of public funds. The disclosure bar is higher.

For example, it's none of my business how my neighbor's company spends its money. It is my business how the FDA spends its money, because I'm a taxpayer. If there was a process that was circumvented, then that's wrong and the FDA deserves the egg on its face.

Anonymous said...

Welcome the world of government contracting. It is all about relationships and is no different than the commercial world. The sad part is government procurements are supposed to be fair and afford any company an opportunity to win an award. A set-aside is exactly what is says, set-aside for someone they know, and in the meantime the government gets exactly what they want. It is a good system for the government but stinks for companies wanting to win more contracts. Every procurement is WIRED before it is even issued - that is a fact! And if you think otherwise, you must be new to gov. contracting or very naive.