SR-1000-001-09 (3)
BBB:SN:JS:\trans\admin\council\Advstaffrep03inhouse
Council Meeting: June 10, 2003 Santa Monica, California
TO: Mayor and City Council
FROM: City Staff
SUBJECT: Rejection of All Responses Received for Transit Bus Advertising
INTRODUCTION
This report requests that City Council reject all submissions received in response to the
City’s Request for Proposal to provide advertising concession services to Santa
Monica’s Big Blue Bus.
BACKGROUND
On April 27, 1999, the City Council awarded a bid for a five-year advertising concession,
with three one-year renewal options, to Gateway Outdoor Advertising. In February
2002, Gateway Outdoor Advertising filed Chapter 11 bankruptcy. On November 25,
2002, in the Bankruptcy Court of New Jersey, a settlement was reached between the
City of Santa Monica and Gateway Outdoor Advertising. As part of the settlement,
Gateway released the City from the 1999 Agreement and any obligation to Gateway,
enabling the City to select a new concessionaire.
Discussion
On March 19, 2003, the City issued a Request for Proposal (RFP) for advertising
concession, seeking proposals from an established and well-qualified firm to provide
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assistance in selling, placing, administering and managing commercial advertisements
on the interiors and exteriors of the Santa Monica Big Blue Bus vehicle fleet. A notice
was published in the Los Angeles Times and the RFP was mailed to a total of 21 firms.
Five firms submitted proposals. A three-member selection committee evaluated each
response based upon the total contract value, qualifications of the firm and personnel,
corporate structure, and experience and expertise in transit advertising. Although staff
has ranked the firms, it is recommended that a contract not be awarded at this time
because staff estimates that bringing this function in-house would result in increased
revenues for the Big Blue Bus.
In February 2003, Big Blue Bus staff developed and implemented an interim plan to sell
and place exterior bus advertisements until a new concessionaire was selected. A
temporary employee with experience in advertising sales and a firm that posts the signs
on the buses were hired to implement the program. Based upon the success of staff
efforts between February and April 2003, it is recommended that Big Blue Bus staff
continue to sell and place advertisements without the services of an advertising
concessionaire. Staff has set the goal of achieving $1.2 million in advertising revenue,
net of all Big Blue Bus program costs, which iswellin excess of the $900,000 revenue
budgeted for FY2003-04. The goal amount is equivalent to advertising revenue received
in FY1999-00. In addition, the revenue goal exceeds the amount proposed by any
respondent for the first two years of the concession. Should staff fail to meet or exceed
the goal in FY2003-04, an RFP can be issued at any time for a concessionaire to
provide this service.
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Budget/Financial Impacts
Advertising revenues have been budgeted at $900,000 in FY2003-04. Approving the
recommendation should not result in a decrease to advertising revenues, and may
result in an increase. Revenue and expense projections would be adjusted at mid-year,
if necessary, after the program has been in place for six months.
Recommendation
City staff recommends that the City Council reject all of the submittals received in
response to the Request For Proposal, Advertising Concession, issued March 19, 2003.
Prepared by: Stephanie Negriff, Director of Transit Services
Janeene de Martinez, Assistant Director, Transit Finance & Business
Services
Joe Stitcher, Customer Relations Manager
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