HomeMy WebLinkAboutAudit - Other Publications - Public - Ethics Hotline Complaint - Public Facilities, Recreation and Special Events Advertising Contract - 7/11/2017
_____________________________________________________________________________________
1 Advertising Contract
Date: July 11, 2017
To: Kevin R. Phelps
From: Candace MacLeod, City Auditor
Subject: Ethics Hotline Complaint – Public Facilities, Recreation & Special Events
Advertising Contract
The City Auditor’s Office administers Glendale’s Ethics Hotline program. The primary
objective of the Ethics Hotline is to provide a means for employees to report activity or
conduct related to City personnel, resources or operations for which they suspect
instances of ethical violations, fraud, waste or abuse.
Background
On May 2, 2017, an employee (complainant) requesting to remain anonymous
contacted the Ethics Hotline regarding alleged issues with advertising placed by the
City with Apple Promotional Products, LLC. (APP). In 2015, the Community Services
director was approach by APP to place City ads in the Glendale Chamber of
Commerce’s Community Profile and Business Directory (Directory). In June 2016, the
City entered into a small purchase contract with APP for bi-annual advertising in the
Directory at a total cost of $9,173. The ads featured City facilities including the Adult
Center, Civic Center, Library, and Foothills Recreation and Aquatics Center and were
paid for out of the Community Information and Services Administration general fund
budget.
The complainant alleged the following regarding the APP advertising contract:
• The deadline for the swim lessons in the ad placed with APP had expired before the
Directory was distributed.
• The cost of the APP advertising was too high for the size of the ads.
After receipt of the complaint, the auditor met with staff from the Public Facilities,
Recreation and Special Events Department and the Procurement Division, and
reviewed associated documentation. The following observations were noted:
Observations
1. Incorrect Procurement Method Used
The City entered into a contract with APP in 2016. However, in accordance with the
Procurement Policy, a special procurement should have been initiated through the
Procurement Division due to the specialized nature of the advertising. Furthermore, the
City did not conduct research to determine the circulation or number of subscriptions
_____________________________________________________________________________________
2 Advertising Contract
for the Directory. Lack of compliance with the Procurement Policy or failure to analyze
the benefits of ad placements reduces accountability and increases the risk that City
resources are not utilized in an efficient or effective manner.
Recommendations
Public Facilities, Recreation and Special Events should train staff to ensure procurement
is conducted in accordance with City policy and analysis is performed prior to
purchasing advertising.
Management’s Response
Concur and completed. The purchase and placement of department advertising was
addressed via Council approval of a new linking agreement for such activities with On
Advertising, Inc. on April 14, 2017 and again on June 13, 2017 with RAX Direct Marketing,
LLC, for the “Glendale @ Play Magazine” (selected through an RFP). Both were
approved with the understanding metrics will be used to determine success/failure,
distribution rates and target markets. Any future ads made outside of these
agreements will use the proper sole source documentation, per the approval of the
Procurement Division. Per the Chamber, 12,000 copies of the 2016 summer edition were
mailed and an additional 4,000 printed for general distribution, upon request. A
subsequent review of 2016 aquatics patronage was conducted and there was no
increase noted.
2. City Was Unable to Verify When the Directory Was Sent Out
One ad placed in the Directory was for the Parks and Recreation Splash Book. The
Splash Book included time sensitive registration dates for recreation programs and swim
lessons. However, the City was unable to confirm when the Directory was distributed,
increasing the risk that program deadlines may have expired before the ads reached
the public.
Recommendations
Public Facilities, Recreation and Special Events should develop controls to ensure
distribution dates of publications are obtained prior to approving advertising for City
programs.
Management’s Response
Concur and completed. The ad in the 2016 Chamber Directory was not the actual
Splash Pad publication; rather, it referenced key dates for registration and certain
summer 2016 swim opportunities. The actual entire 2016 Splash book was printed and
_____________________________________________________________________________________
3 Advertising Contract
available for distribution and web posting by May 6, 2016. The ad in the Chamber
Directory was sent out after the start of the 2016 aquatics season. Time sensitivity has
been addressed in that with the approval of the RAX Direct Marketing agreement, a
new online portal for information has been created, along with specific deadlines for
the submission of Splash Pad and information. Upon final review and approval by the
department’s Marketing and Communications Program Manager, it will be published
and distributed to meet established deadlines.
cc: Michael D. Bailey, City Attorney
Lisette Camacho, Assistant Director Budget and Finance
Tom Duensing, Assistant City Manager
Vicki Rios, Director Budget and Finance
Erik Strunk, Director Public Facilities, Recreation and Special Events