DNC Contracts Stay Inside the Beltway

A long list of inside-the-Beltway contractors working behind the scenes participated in — and profited by — the establishment of the national no-call list, according to Federal Trade Commission expense records obtained by DM News.

DM News received the records by filing a Freedom of Information Act request with the FTC. The no-call list marks its first full year in operation this month, and DM News is running a two-part series on its implementation and impact.

The records cover the period from when the FTC began building the list in 2003 until June 14, 2004. In that time, the FTC entered into contracts connected to the no-call list worth $17.6 million.

That figure represents less than half the total amount of funding that the FTC was allowed by Congress to collect through fees from telemarketers in fiscal 2003 and 2004. The FTC received authority to collect $18.2 million in 2003 and $23.1 million in 2004.

The federal government's fiscal year started Oct. 1. However, Congress has not yet passed a budget for fiscal 2005, and the FTC's funding authority for the year is undetermined.

The actual expenses for the no-call list are higher than the records indicate, said Lois Greisman, associate director with the FTC's consumer protection bureau in charge of the list. The records don't include employee salary and benefits, and the FTC has entered into additional contracts to enhance and modify the system since June 14. Also, expenses for litigation and enforcement of the list, which took effect in October 2003 at the start of fiscal 2004, must be considered.

Most visible among the contractors was AT&T Government Solutions, Vienna, VA, the main contractor for establishing and launching the list. AT&T Government Solutions was responsible for running the registry and the complaint-handling process. It originally was slated to receive $3.5 million in fiscal 2003.

However, the FTC did not receive congressional funding authority to begin building the list until February 2003, Greisman said. As a result, AT&T did not do a full year's worth of work on the list and received only $2.7 million in fiscal 2003.

In fiscal 2004, the AT&'T Government Solutions contract was for $4 million, an amount representing a full 12 months of work, according to Greisman, but an apparent increase over the original contract. Modifications were made to the contract since it was first issued, she said.

For example, Congress enacted a law requiring telemarketers to download updates from the list every month, instead of every quarter under the original rules, Greisman said.

AT&T Government Solutions likely will receive around $4 million for fiscal 2005, she said.

Other IT and database firms that draw much of their business from the government received large contracts as well. Among them was Bearing Point Inc., formerly KPMG Consulting, which began work on the no-call list sometime in 2003. Bearing Point's prior work with the FTC includes helping update the Consumer Information System, a complaint database.

According to the records, as of June 14 the FTC's contract with Bearing Point, McLean, VA, called for a payment of $5.4 million — second only to AT&T. Bearing Point is working to expand the FTC's IT infrastructure to handle the demands of the no-call list, Greisman said.

The registry itself, with 64 million telephone numbers, is the biggest database the FTC has, easily dwarfing its Consumer Sentinel complaint database, which has only 1 million entries, Greisman said. The no-call complaint database, separate from Consumer Sentinel, grew to 500,000 in the list's first year of operation.

“These were huge databases that were growing, and we needed access to them throughout our network,” she said. “The network couldn't sustain it.”

The FTC expense records show the name of each contractor and the amount of money each received but do not describe the nature of the work undertaken by the contractor. When DM News inquired about several of the contractors that received more than $250,000, Greisman said most were involved in back-end database work or “litigation support.”

Marketing firm JDG Communications, Falls Church, VA, received $320,007 in contracts from the FTC through June 14. Though JDG did not return calls for comment, a press release on its Web site said the company created an information-awareness ad campaign to educate the public about the no-call list.

JDG claims that its campaign generated 91 percent public awareness of the list and “2.5 million media value in television [exposure].” However, the FTC had no budget for placing the ads — relying instead on media outlets to run them as public service announcements — and the no-call list received ample news coverage at its launch that generated awareness.

B-roll footage shot by JDG ran on more than 700 television broadcasts, according to an FTC spokeswoman. Major Web site portals, including MSNBC, CNN.com, Lycos and Yahoo, displayed banner ad links designed by JDG for an estimated 31.5 million impressions.

Radio PSAs reached an audience of 8 million, the spokeswoman said. JDG also produced postcards with no-call list information that were available free in public places.

In 2003, the FTC gave $39,000 from its no-call budget to Event Strategies Inc., Alexandria, VA, a planning firm for political and corporate events and conferences. Event Strategies did not return calls to DM News, and Greisman said she wasn't sure what role the company played.

However, she said Event Strategies was not involved in the Rose Garden ceremony June 27, 2003, at the White House to formally announce the list's launch. The FTC paid no money for that ceremony, which was handled by the White House, she said.

“We didn't pay to stage or orchestrate the Rose Garden ceremony,” Greisman said. “There were no banners, no food and it was hot as hell.”

Next week: Why have access fees for the national no-call list increased? Also, a look at the impact of the list on businesses and consumers.

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