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Bidder Claims Company Misled City to Win Lucrative 'Wayfinding' Contract

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By Jorge Casuso

December 12, 2022 -- The runner-up in the bid for Santa Monica's lucrative outdoor kiosk program claims the company poised to win the contract lacks a pertinent track record and made unrealistic financial projections.

The claims made in a protest letter come as the Council is poised to award BIG Outdoor a 20-year contract to install, operate and maintain a network of as many as 50 digital wayfinding and advertising kiosks on commercial sidewalks across the city.

Under the proposed contract, the City would initially receive either 50 percent of adjusted gross revenues or $5 million per year, whichever is higher, staff said in a report to the Council.

Assuming all 50 kiosks are installed, the City would reap an estimated $14 million a year, staff said. BIG Outdoor has also offered the City a $4 million signing bonus before the franchise agreement kicks in.

"We need the money right now," Councilmember Oscar de la Torre said of the proposed contract. "They put forward a very attractive financial package.

"A major lucrative contract such as that has a lot of dynamics going on," which include "legal implications," de la Torre said.

In a protest letter sent to the Council on Friday, IKE -- the runner up among the six companies that bid for the contract -- contends that "multiple legal violations" in the City's evaluation process would void any contract with BIG.

"IKE is filing this Protest because it has never participated in a city evaluation process that departed so drastically from the evaluation criteria and procedures set forth in a city’s request for proposal," wrote Victor De la Cruz, an attorney with Manatt, Phelps & Phillips, LLP, which is representing IKE.

The protest claims that BIG Outdoor "has never produced or operated a single digital wayfinding kiosk of the type contemplated by the City’s Request for Proposal."

It also claims that the company "submitted astronomical financial projections that it clearly could not stand by" and a proposal that copied key features of IKE’s kiosk design.

City Staff, the protest letter contends, was "misled by the completely fantastical financial projections" then "completely ignored all of the RFP’s scoring criteria."

The company also contends that the City's priority changed from providing a wayfinding service to offering what amounts to flashy billboards that will provide nearly non-stop advertising.

IKE cites former Councilmember Kevin McKeown, whose comments at a January 2021 mid-year budget meeting were echoed by several colleagues.

McKeown said he “like[d] the idea of wayfinding kiosks, but they can’t just become digital billboards. You know, they have to have a preponderance of useful information to justify allowing some intermittent advertising to be there as well.”

Bill Tagliaferri, BIG's executive vice president of real estate, said IKE's claims don't have merit.

"Both BIG Outdoor and our software provider Rove iQ have developed and currently operate hundreds of digital kiosks," Tagliaferri said. "All of Rove iQ’s kiosks are wayfinding kiosks and BIG operates many as well."

Tagliaferri also noted that BIG operates the kiosks at Santa Monica Place, making it "the only digital Out-of-Home sign operator in Santa Monica since 2016."

"We understand the market and the demand from the advertising community," Tagliaferri said. "We included a significant guaranteed rent to back up our projections."

In its report to the Council, staff said it conducted "an extensive evaluation process, finalist interviews, and reference checks" before choosing BIG Outdoor as "the best bidder."

The company "offered a financial package that was significantly higher than all other bidders, the greatest community benefits, and kiosk technology and design most appropriate for the culture and aesthetic of Santa Monica," staff said.

"BIG Outdoor’s initial proposal and final offer provided significantly higher financial benefits to the City than any other bidder," staff wrote.

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