Watchdogs reviewing the three-year-old decision by the state Office of Tourism and Business Development to hire a Wisconsin agency to promote Montana to tourists found the office went about the process properly and administrated the contract well, though there have been some concerns with the company's performance.
In August 2016, the tourism office in the Department of Commerce hired Hoffman York, a Wisconsin company, to administer its state marketing contract and has paid it roughly $32 million over the last three years. The previous contract-holder was Bozeman-based MercuryCSC, and two other Montana agencies — Brickhouse Creative, based in Bozeman, and The Wendt Agency, in Great Falls — also applied three years ago.
The contract generated significant media coverage at the time because an out-of-state firm was hired, though the department cannot show preference for companies based on where they are located. Questions were also raised because the cousin of the tourism department's marketing office bureau chief worked for Hoffman York. Back in 2016, procurement officials reviewed potential conflicts caused by that issue and said it was OK because the relative was not directly involved in the firm's proposal; however, they required the tourism office to take some extra steps to ensure there wasn't favoritism.
A recently released report from the Legislative Audit Division found the tourism office followed proper procurement practices in awarding the contract. Auditors examined how the office scored the proposals it received from 11 companies and found documented support for how Hoffman York was picked.
The contract runs seven years with annual renewals. The state paid $10.3 million in the 2017 fiscal year for the contract, $10 million in 2018 and nearly $12.4 million in 2019. Spending, the audit notes, varies by the type of promotional activities the agency does, such as seasonal marketing campaigns to promote skiing.
Auditors also looked at how the tourism office manages the contract and found that while the office stays on top of reviewing Hoffman York's work, there were issues with the agency's performance.
The department conducts an annual review where it grades Hoffman York on 37 performance marks and standards. In the review from May 2018, the department identified some concerns about the agency's performance.
Hoffman York was failing to meet four benchmarks, needed improvement in 13 other areas and met 19 other benchmarks, according to the audit report of the department's assessment.
Some of the issues the department raised were Hoffman York’s unfamiliarity with Montana’s geography and culture and an inability to tap into the Montana brand.
“Department staff indicated there was a lack of deep understanding on the part of the contractor of Montana’s products and experiences, with a lack of familiarity with the state,” the audit reads.
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Tara Rice, director of the Commerce Department, said at a legislative hearing Wednesday that it's not that Hoffman York is problematic, but that the department has high expectations and doesn't want to say Hoffman York is doing a great job just to avoid scrutiny.
"We expect excellence in this contract, and we expect progress toward that over time," Rice said.
Rice said for every taxpayer dollar spent on marketing, Montana communities see between $72-$82 in returns. Last year, 12.4 million tourists pumped $3.4 billion into the state's economy.
The committee that reviewed the contract put Hoffman York on probationary status in 2018 and worked with the agency to create a plan for improvement. The committee still recommended re-upping the contract with Hoffman York, but with the understanding if things didn’t get better it would be terminated.
In December 2018, the department reviewed Hoffman York’s progress and found they had gotten better at going about marketing to align with the Montana brand and values. The review found that Hoffman York did not yet have a senior team member based in their Helena office, something the department said was a priority. The agency does have a Helena office with three employees, Rice said Wednesday.
State Sen. Dee Brown, who chairs the Legislative Audit Committee, said she wanted to see more Montana awareness from Hoffman York.
"I really think that local flavor is best," said Brown, a Republican from Hungry Horse.
The most recent review was in March, when the department renewed Hoffman York’s contract for another year. That review found additional improvements, but still noted shortfalls, including the need to more aggressively use social media to promote Montana to potential tourists.
The department told auditors they’re putting together a new plan to address shortcomings. Auditors said the department was actively managing the contract, but noted in the review that “if contract issues continue, the department may need to consider reissuing the contract in the future.”