5.504 Use of advertising agencies
Source: FAR 5.504 on acquisition.gov
FAR 5.504 ensures government advertising agreements with agencies are structured to maximize cost savings and clarify payment terms, especially regarding media commissions and allowable services.
Overview
FAR 5.504 outlines the procedures and requirements for using advertising agencies to assist the government in producing and placing advertisements, particularly when multiple ads will be placed across various publications and national media. The regulation covers the types of services advertising agencies may provide, such as media selection, contacting media outlets, placing orders, copywriting, and preparing layouts. It distinguishes between commission-paying and noncommission-paying media, specifying how agreements should address each scenario. The section also allows for the inclusion of art work, supplies, and incidentals in the agreement, but excludes printing services.
Key Rules
- Use of Advertising Agencies
- Agencies may be engaged via basic ordering agreements for a range of advertising services when significant advertising is required across multiple media outlets.
- Commission-Paying Media
- Agencies can often provide placement services at no extra cost to the government, as they receive commissions or discounts from the media that are not available to the government directly.
- Noncommission-Paying Media
- If agencies do not receive commissions, agreements must specify whether the agency will place ads at no cost, allow the government to place orders directly, or set a fee for agency placement.
- Art Work and Incidentals
- Agreements may include provision of art work, supplies, and incidentals (like phone calls and postage), but not printing.
Responsibilities
- Contracting Officers: Must structure basic ordering agreements to address commission and noncommission media, specify payment terms, and define allowable incidentals.
- Contractors (Advertising Agencies): Must comply with agreement terms regarding placement services, cost arrangements, and provision of incidentals.
- Agencies: Oversee compliance with agreement terms and ensure proper use of advertising agency services.
Practical Implications
- This section ensures transparency and cost-effectiveness in government advertising by leveraging agency commissions and clarifying payment structures.
- It helps avoid unnecessary costs and clarifies what services can be included in agreements.
- Common pitfalls include failing to specify terms for noncommission media or improperly including printing services in agreements.
(a) General. Basic ordering agreements may be placed with advertising agencies for assistance in producing and placing advertisements when a significant number will be placed in several publications and in national media. Services of advertising agencies include, but are not limited to, counseling as to selection of the media for placement of the advertisement, contacting the media in the interest of the Government, placing orders, selecting and ordering typography, copywriting, and preparing rough layouts.
(b) Use of commission-paying media. The services of advertising agencies in placing advertising with media often can be obtained at no cost to the Government, over and above the space cost, as many media give advertising agencies a commission or discount on the space cost that is not given to the Government.
(c) Use of noncommission-paying media. Some media do not grant advertising agencies a commission or discount, meaning the Government can obtain the same rate as the advertising agency. If the advertising agency agrees to place advertisements in noncommission-paying media as a no-cost service, the basic ordering agreement shall so provide. If the advertising agency will not agree to place advertisements at no cost, the agreement shall-
(1) Provide that the Government may place orders directly with the media; or
(2) Specify an amount that the Government will pay if the agency places the orders.
(d) Art work, supplies, and incidentals. The basic ordering agreement also may provide for the furnishing by the advertising agency of art work, supplies, and incidentals, including brochures and pamphlets, but not their printing. "Incidentals" may include telephone calls, and postage incurred by the advertising agency on behalf of the Government.