Wednesday, July 5, 2017

Renege? Ad agency sues DPS.

The Mann Agency sued to collect $712,743 in unpaid advertising bills from the Mississippi of Department Safety  in Hinds County Circuit Court last week.   Mann had a contract with DPS to produce and place ads with media outlets on behalf of the agency.  Mann argues that DPS should pay the bills upon presentation of the invoices while DPS argues it should reimburse Mann after the ad agency pays the media outlets.  The case is assigned to Judge Bill Gowan.

Mann has had an advertisement contract with DPS since 2008 (but for 2012-2014) for the "Click It or Ticket" and "Drive Sober or Get Pulled Over" campaigns.   Mann would create ads, submit them to DPS for approval, and then place them with media outlets.  DPS would pay Mann for the ads and placement after Mann submitted the invoices. For example, Mann would place an ad with WLBT.  WLBT would submit an invoice to Mann.  Mann would submit the invoice to DPS.  DPS would pay the invoice.  Everyone was happy.

 However, DPS changed this practice last year and said it would only reimburse  Mann for the ad placements after Mann showed proof that the advertising agency had already paid the media outlets for the ad placements. 

Mann claimed in the complaint:

6. In 2008-09, DPS paid the media outlets directly after the Mann Agency had placed the media ads.  The DPS wanted to shift the cumbersome paperwork burden (of writing separate checks) to the outlets to the Mann Agency so it proposed a new contract in 2010. The Mann Agency objected to language that could be construed to require it to first pay the media outlets and then seek reimbursement from DPS. DPS agreed that such a construction was not the intent of the parties but added any revision to the language would require a restart of the entire  contract process and time did not permit such a restart.

7. The parties agreed that the contract should not be construed to require the Mann Agency to pay first. The parties agreed to the following process: (1) the Mann Agency places any media buy, (2) the Mann Agency collects invoices from those media outlets, (3) the Mann Agency presents the invoices in bulk to DPS, (4) DPS pays Mann Agency a lump sum for the ads, and (5) the Mann Agency disburses the money to the media outlets.

8. In addition to the above pass through arrangement, the Mann Agency also invoiced DPS for its costs for production and online advertising, some of which is paid for in advance by the Mann Agency.

9. This agreed "practice of the parties" is also the standard practice in the advertising industry.

10. In 2011, the DPS extended the contract for another year. At that time, the parties confirmed the practice of the parties in a letter agreement that stated: "Payment for services rendered will be due upon submission of invoices by the Mann Agency and completion of work."

 Mann resumed handling DPS advertising in 2014.  The complaint states:

Contractor shall pay all media placement and production costs and be reimbursed by the DPS (Mississippi Office of Highway Safety) upon presentation of detailed media invoices....
13. The production and media breakout costs on page 16 of the contract are clearly labeled as 'pass through' or flow-through. The DPS's payment of reimbursed costs are retained by the agency. They do not 'pass through' to any third party.
What does the clause on page 16 state? 

Section 4. Budget. All media purchases will be completed on an hourly rate. Flat rate or commission pricing will not be considered. Further, all advertising money is "pass through" and not subject to any general and administrative (G&A) fees or profit. The Contractor shall pay all media placement and production cost and be reimbursed by the MOHS upon presentation of detailed media invoices. Paid media budgets for each campaign are provided  per  campaign,  depending  on  availability  of federal  funds.   The total  cost  shall  not exceed $2,250,000.00....
The contract was renewed for another two years but new leadership assumed control of the department responsible for the advertising campaigns at DPS:

15. In 2016, Ray Sims, became the new Executive Director of Public Safety Planning (PSP). Carol Mann met with Sims for the first time and other staff on November 4, 2016, to discuss several issues including an overdue payment on a $600,000 invoice for an ad campaign.
16. A new staff attorney (KF: Niki Boland, Esq.) said that the Mann Agency should pay the media outlets the $600,000 first and then request reimbursement from DPS. Carol Mann protested that such a position was contrary to the long-term practice of the parties. Mann also said that such performance by the Mann Agency was impossible.

17. Ray Sims agreed with the Mann Agency that the payment practice would continue as it had for six years. Accordingly, Sims agreed to pay the Mann Agency the overdue invoices of $600,000.

18. After that meeting,  payment  was still not forthcoming.  Carol  Mann then met with DPS Comptroller Mark Valentine on November 15, 2016 to express her concern about payment and the position taken by a staff attorney. Valentine  assured  her not to worry.  He cited the language  in the contract  that  referred  to a pass through.   He said  a "pass through"  meant  that DPS had to pay her first and then the money  would  pass through  her account  to the media outlets.
19. Soon thereafter, DPS paid the $600,000 invoice. Upon payment, the Mann Agency immediately disbursed the money to the media outlets.
However, DPS did not return to the old ways but instead tried to force Mann to adopt a different policy:

20. In late November 2016, DPS said it wanted to place another approximately $700,000 in new ads to run during December 2016. Carol Mann was concerned that some staff members would continue to lobby Ray Sims not to pay the Mann Agency until it had paid for the ads.

21. To put the issue to rest, on Dec. 5, 2016, Mann asked for written clarification of what Ray Sims had just said, i.e., that DPS would pay Mann who would in tum pay the media outlets.

22. Those concerns were confirmed when DPS ignored Mann's requests for a written assurance.

23. The parties were at a standoff, and the DPS stood to lose the federal grant if the ads were not run.

24. On December 5, 2016, the PSP Accounting/Auditing Bureau Director, Jeb Stuart, went to Mann's office and assured Carol Mann that if the ads were placed, the DPS would pay for the ads on a two-day turnaround after the Mann Agency submitted invoices.

25. Based on that assurance, the Mann Agency placed the ads with more than 70 media outlets and incurred the obligation to pay those outlets and production costs of $680,531.79. Mann also had her own expenses totaling $32,212.00

26. The Mann Agency presented MDPS with invoices totaling $712,743.79.

27. The DPS then breached the agreement to pay on a two-day turnaround. In fact, the DPS did exactly what it had promised not to do. It refused to pay at all until the Mann Agency first paid the media outlets and then sought reimbursement from DPS.
28. DPS has also refused to reimburse Mann for her own out of pocket costs for production and other expenses.

29. The DPS fraudulently induced the Mann Agency to incur the legal obligation to pay for more than $680,000 in media and production costs on the expressed promised that it would pay the Mann Agency within a two-day turnaround.

30. State law requires state agencies to pay invoices within 45 days.

31.  On January 4, 2017, the DPS did not renew Mann's contract.

32. The DPS has in bad faith manufactured a bogus issue as a pretext not to pay for services received.
This one is heating up  Stay tuned. 


Anonymous said...

Nice job of editing.

Anonymous said...

This has some of the signs of another "prison kickback" scheme.

Anonymous said...

I didn't know Rudy worked for this advertising firm?

Anonymous said...

I bet these are Federal funds and the staff at the State have no idea how to manage a contract. I have done work the Highway Safety Planning bunch several times and they always have trouble paying for work completed. Many will not bid on their job for they will not paid. You would think an Ad agency would know the right buttons to push to get this moves along. I lot of wasted money.

Anonymous said...

Kingfish could edit all his posts with a crayon and he'd still get more daily visits than you, Donna. -mr37

Kingfish said...

Blessed are those who chastise and correct. I was obviously in a hurry and frankly, that was some crap writing. Cleaned it up.

Anonymous said...

4:17 could use a bit of editing assistance.

Anonymous said...

The level of state spending on advertising is asinine. The reply is always that it's somebody else's money, not the state's. So what?

And then look at all the cronies and cousins the money goes to. At the end of the day, that is what this is about, Watch.

Anonymous said...

There has to be more to this story. Who got the subsequent contract?

Anonymous said...

It's a good think DPS could run these ads. Probably saved thousands of lives.*eye roll*
These agencies make out like bandits spending so called "government" money.

Anonymous said...

These types of ads are the only thing that keep Ah-ba-ba-ba-ba Gallo employed.

Anonymous said...

If you can't finance the contract, you shouldn't bid on the contract. I never got paid up front.

Anonymous said...

KF, this being the latest in your posts trying to cover for Mann and dissemination DPS does a good job of telling gone side if the story. Nice how you omit the fact that the contract requires her to pay the bill, submit copies of proffered of payment and get reimbursed.

Just because previous administration's didn't make her perform that part of the contract doesnt cover her ass. Current administration is requiring her to live up to her contract terms.

She could solve this problem by acting like a business person and finance her operation. But she wants all the gravy with no expense.
She makes a nice fee for doing little of nothing. Calling medua outlets and buying time. Get a fee. Hell, if she doesn't want it I'll take her contract as it is now, finance the bills, collect my payment and enjoy her sweethe art commissions.

No crock a dilemma tears here.

Anonymous said...

This issue could be much bigger than advertising. In construction the standard AIA application for payment requires general contractors to certify that all bills associated with the work they are billing for have been paid. Contractors sign this routinely and have for decades. In practice almost no contractors can finance a job. Bonding companies typically allow contractors to bond many times their net worth. So for example a contractor with a net worth of $1,000,000 may have $20,000,000 under contract. Most of that 20 mil is subcontracted. On large contracts a construction contractors would typically have 3 to 5% profit in the job. The owner is holding 5% retainage until the end of the project. There is no money to pay interest on bank loans. In many cases it is doubtful a bank would loan enough to cover an arrangement for financing all of the payments. In decades of working for the state, I have had this argument only once and it was because they payment was not normal due to an insurance claim or something. Typically the state knows contractors cannot pay subs in advance and they are only concerned if bills from the previous month have not been paid. If the state were to decide not to follow industry norms on this the taxpayers would pay much more in construction costs on construction contracts.

Anonymous said...

7:!3 the state requires construction contractors to furnish payment and performance bonds. When a contractor defaults the bonding company completes the project and pays all the bills. Can ad agencies get bonds ?
Legal question: If the state includes language in contracts that they use over and over and the state fails to enforce that language time after time, has the state waived the right to enforce that provision? Seems to me that bidders have a right to expect the state to enforce contract language in the same manner time after time. If not, the enforcement could be used as a penalty. Some state official could threaten to enforce some minor clause that has never been used unless he was paid a bribe not to enforce.

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Trollfest '09

Trollfest '07 was such a success that Jackson Jambalaya will once again host Trollfest '09. Catch this great event which will leave NE Jackson & Fondren in flames. Othor Cain and his band, The Black Power Structure headline the night while Sonjay Poontang returns for an encore performance. Former Frank Melton bodyguard Marcus Wright makes his premier appearance at Trollfest singing "I'm a Sweet Transvestite" from "The Rocky Horror Picture Show." Kamikaze will sing his new hit, “How I sold out to da Man.” Robbie Bell again performs: “Mamas, don't let your babies grow up to be Bells” and “Any friend of Ed Peters is a friend of mine”. After the show, Ms. Bell will autograph copies of her mug shot photos. In a salute to “Dancing with the Stars”, Ms. Bell and Hinds County District Attorney Robert Smith will dance the Wango Tango.

Wrestling returns, except this time it will be a Battle Royal with Othor Cain, Ben Allen, Kim Wade, Haley Fisackerly, Alan Lange, and “Big Cat” Donna Ladd all in the ring at the same time. The Battle Royal will be in a steel cage, no time limit, no referee, and the losers must leave town. Marshand Crisler will be the honorary referee (as it gives him a title without actually having to do anything).

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In the spirit of helping those who are less fortunate, Trollfest '09 adopts a cause for which a portion of the proceeds and donations will be donated: Keeping Frank Melton in his home. The “Keep Frank Melton From Being Homeless” booth will sell chances for five dollars to pin the tail on the jackass. John Reeves has graciously volunteered to be the jackass for this honorable excursion into saving Frank's ass. What's an ass between two friends after all? If Mr. Reeves is unable to um, perform, Speaker Billy McCoy has also volunteered as when the word “jackass” was mentioned he immediately ran as fast as he could to sign up.

In order to help clean up the legal profession, Adam Kilgore of the Mississippi Bar will be giving away free, round-trip plane tickets to the North Pole where they keep their bar complaint forms (which are NOT available online). If you don't want to go to the North Pole, you can enjoy Brant Brantley's (of the Mississippi Commission on Judicial Performance) free guided tours of the quicksand field over by High Street where all complaints against judges disappear. If for some reason you are unable to control yourself, never fear; Judge Houston Patton will operate his jail where no lawyers are needed or allowed as you just sit there for minutes... hours.... months...years until he decides he is tired of you sitting in his jail. Do not think Judge Patton is a bad judge however as he plans to serve free Mad Dog 20/20 to all inmates.

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This is definitely a Beaver production.

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Trollfest '07

Jackson Jambalaya is the home of Trollfest '07. Catch this great event which promises to leave NE Jackson & Fondren in flames. Sonjay Poontang and his band headline the night with a special steel cage, no time limit "loser must leave town" bout between Alan Lange and "Big Cat"Donna Ladd following afterwards. Kamikaze will perform his new song F*** Bush, he's still a _____. Did I mention there was no referee? Dr. Heddy Matthias and Lori Gregory will face off in the undercard dueling with dangling participles and other um, devices. Robbie Bell will perform Her two latest songs: My Best Friends are in the Media and Mama's, Don't Let Your Babies Grow up to be George Bell. Sid Salter of The Clarion-Ledger will host "Pin the Tail on the Trial Lawyer", sponsored by State Farm.

There will be a hugging booth where in exchange for your young son, Frank Melton will give you a loooong hug. Trollfest will have a dunking booth where Muhammed the terrorist will curse you to Allah as you try to hit a target that will drop him into a vat of pig grease. However, in the true spirit of Separate But Equal, Don Imus and someone from NE Jackson will also sit in the dunking booth for an equal amount of time. Tom Head will give a reading for two hours on why he can't figure out who the hell he is. Cliff Cargill will give lessons with his .80 caliber desert eagle, using Frank Melton photos as targets. Tackleberry will be on hand for an autograph session. KIM Waaaaaade will be passing out free titles and deeds to crackhouses formerly owned by The Wood Street Players.

If you get tired come relax at the Fox News Tent. To gain admittance to the VIP section, bring either your Republican Party ID card or a Rebel Flag. Bringing both will entitle you to free drinks.Get your tickets now. Since this is an event for trolls, no ID is required, just bring the hate. Bring the family, Trollfest '07 is for EVERYONE!!!

This is definitely a Beaver production.

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