Competitive bidding? Who does that, especially with advertising on public spaces? Hint: Cities that are making more money from outdoor advertising than Hamilton.
City staff are asking Council to rubber stamp another extension to the City’s street furniture advertising contract for 10 years, making it over 17 years since the contract was put to competitive bidding.
There are other companies interested in bidding on the contract, but City staff say the 10-year extension is necessary to get 76 new public benches installed prior to the 2015 Pan-Am games.The current contract extension – the third – is scheduled to expire on December 31, 2025. This is 27 years after the initial contract was given, all without proper competitive bidding.
The City will receive $50,850 in first year, increasing by 3% annual to $66,345 in 2025.
The cost to taxpayers of the extension is not known, City staff did not explore how to get the best value from the contract.
According to staff, there is no cost to taxpayers because the City gets a small cut of the advertising revenue. Missing the lost opportunity cost of potentially larger revenue from competitive bids.
History of Non-Competitive Renewals
In 1997, Hamilton Bench Advertising Limited (now Creative Outdoor) was awarded a 10-year contract for bus benches and other street furniture.
When the contract expired in 2007, City staff recommended a two-year extension. Council was told the extension was required to give staff time to review the City’s revenue generation policies and prepare for a competitive bidding process.
In 2009, City staff recommended another non-competitive contract extension. This extension was to the end of 2015 to coincide with the expiration of the bus shelter and outdoor billboard contracts.
If the latest non-competitive extension is approved by Council, it will be 27 years of the City not reviewing for the best value..
Under-Performing Contract Extension for Bus Ads in March
Also extended in 2009, the City’s under-performing bus advertising contract. This under-performing contract was extended again – at the request of staff without any competitive bidding process – in March of this year.
In March, staff claimed the extension was necessary to align with the December 2015 expiry of other advertising contracts.
Two other companies publicly stated an interest in providing a better contract for taxpayers.
One of the benefits, according to City staff, of the under-performing contract? The City gets
“any unsold advertising space free of charge” on city buses. As the current providing isn’t selling much space, the City enjoys plenty of “free” advertising on its own buses.
The PanAm Games and New Benches
The contract calls for the replacement of 76 benches before 2015 PanAm games, with 24 to be in “reserve” for immediate replacement of any damaged benches in PanAm area.
350 remaining benches across the City are to be replaced by July 31, 2016.
After this, City has the option to order up to 25 new benches per year for the remainder of the contract, currently the City only orders 4-5 per year.