EXCLUSIVE: Obama’s Top Campaign Ad Firm Got Nearly $60M In Federal Contracts
Former President Barack Obama’s presidential campaign advertising agency received nearly $60 million in federal contracts after he took office, according to an analysis by The Daily Caller News Foundation Investigative Group.
The gravy train for the Washington, D.C.-based agency, GMMB, hasn’t slowed since President Donald Trump’s inauguration, the analysis found. The liberal Democratic communications powerhouse was awarded nearly $15 million in a new contract in June, after Trump entered the Oval Office.
GMMB received a total of $58.4 million in federal contracts from 2009 to 2017, according to USASpending, which tracks federal spending through contracts, grants, loans and other forms. GMMB’s annual revenue is an estimated $32.6 million, according to D&B Hoovers, a private business research and rating firm.
Jim Margolis joined fellow Democrat Frank Greer in GMMB in 1985. Since then, Margolis has been one of the Democratic Party’s top media strategists. He was lead advertising strategist and advisor for former Presidents Bill Clinton and Barack Obama, and for the 2016 Democrat nominee Hillary Clinton, which delivered considerable profits for GMMB. Margolis also produced the 2008, 2012 and 2016 Democratic National Conventions, and was the co-producer of Obama’s two inaugurations.
Obama’s presidential campaign, “Obama for America,” disbursed to GMMB upwards of $700 million in media buys for his 2008 and 2012 campaigns combined, according to filings reported by the Federal Election Commission. GMMB confirms this amount on the company’s website, stating Margolis oversaw “each cycle’s half-billion dollar advertising effort.”
The overwhelming majority of the $58 million funneled to GMMB came from the Consumer Financial Protection Bureau (CFPB) created by Democratic Sen. Elizabeth Warren in 2011. The CFPB awarded the agency a whopping $43.7 million, about 75 percent of GMMB’s total federal funding stream.
The second-most lucrative government account for GMMB is a community service agency founded by Bill Clinton, the Corporation for National and Community Service, which awarded GMMB $13.1 million worth of contracts. Other agencies that awarded contracts to GMMB include the Department of Homeland Security ($1.6 million) and the Department of the Interior ($24,000).
The CFPB’s outsized role in payments to GMMB may fuel new controversy about the embattled bureau, which Warren came up with when she worked as an Obama appointee in the Department of the Treasury.
Congress and lower federal courts have charged CFPB’s operation is unconstitutional because its director, former Ohio Attorney General Richard Cordray, can only be removed for “cause.” All other federal department and agency heads serve either at the president’s pleasure and can be removed at his will or for specified terms.
Republicans have also denounced Obama, Warren and the Democratic Congress that created CFPB for housing the agency within the Federal Reserve under the Dodd Frank Act, making it immune from normal congressional oversight.
A federal appeals court delivered a near-death blow to CFPB in October 2016, ruling the agency’s unique independence was unconstitutional. The court ordered Cordray’s powers be curbed and ruled the president can dismiss him.
House Financial Services Committee Chairman Jeb Hensarling, a Texas Republican, also asked the U.S. Special Counsel in a July 28 letter to determine if Cordray’s preliminary steps in his upcoming campaign for Ohio governor mean he “engaged in prohibited political activities” under the Hatch Act, which restricts partisan political activities by federal employees.
Republican Rep. Sean Duffy, who chairs the House Financial Services subcommittee on housing and insurance, told TheDCNF the agency is still unaccountable. “Even though the CFPB’s structure was found to be unconstitutional, it still runs amok, unaccountable to the American people and to Congress, and pushes its murky, far-left agenda,” he said.
He’s not surprised the CFPB would want to dump money into liberal firms supporting liberal candidates, he told TheDCNF. “Those are the very candidates who enable the CFPB’s bad behavior.”
Duffy has urged Trump to fire Cordray, and asked Congress to “rein in” the CFPB and hold it accountable.
“The optics are extremely ugly when you have a major Democratic insider receiving a massive amount of taxpayer money,” Phil Kerpen, president of American Commitment, a conservative political activist group, told TheDCNF. “I think any time a political consultant is getting paid on the political side and with our tax dollars, that deserve an enormous amount of scrutiny.”
“There are many, many good reasons for President Trump to remove Richard Cordray,” he told TheDCNF. “This is another piece of evidence that there’s cause for removal.”
Americans for Tax Reform President Grover Norquist told TheDCNF Congress should examine the sweetheart deals for Democratic insiders.
“It’s important that the Republican Congress do serious investigations into crony capitalism and other abuses over the last eight years,” he said. “You can’t reform government until you admit what the government has done that’s corrupt.”
Cordray initially hired GMMB on a series of smaller contracts in 2013, then in June 2017 awarded the political firm a new, lucrative $14.8 million contract. That award is the largest single government contract won by the Margolis firm since it first did business with the Obama administration.
CFPB spokesman Samuel Gilford said the latest GMMB contract was for direct advertising placement, media planning and media buying, creative development, consumer research and creative testing. The contract expires Dec. 30, 2018.
Other large CFPB contracts for GMMB included a July 1, 2015, contract for a $6.5 million “Agency Identity” program and an Aug. 29, 2014, $2.2 million for an “Agency Identity Media Buy.”
Another $2.7 million went to the firm from CFPB for “Paid Search Marketing,” which Gilford said was awarded because “we want those consumers to easily find our free and unbiased information before they make a financial decision.”
The CNCS paid GMMB $490,000 for its 50th Anniversary expense in a contract signed Jan. 30, 2015. A CNCS spokeswoman defended the contract, telling TheDCNF it included a yearbook, video production, statewide communications and paid advertising.
She also defended paying GMMB $417,000 for “media monitoring,” telling TheDCNF, “I suspect that most agencies also use media monitoring services.” Because the contract is closed, she said she could not provide any information about $856,000 that was paid for its “branding strategy.”
All four of the government departments and agencies claim the GMMB contracts were “competitively bid.” However, a review of 241 contracts show that all but four of the transactions had only a single bidder: GMMB.
Gilford defended the single-bidder process, saying once CFPB initially chose GMMB it was placed under the “Blanket Purchase Agreement” (BPA) federal procurement category. He confirmed all of its contracts were under the BPA since the firm was initially selected in 2013.
The designation permitted CFPB officials to authorize new GMMB contracts without additional public announcements or bid solicitations. Gilford said the BPA expires Aug. 18, 2018. The CNCS spokesman confirmed that its BPA contracting procedures allowed the agency to issue new work, called “call orders” without soliciting outside bids for the work.
Kerpen questioned why CFPB used only GMMB, since the advertising services it provides are widely available elsewhere.
“Media buying and media production are extremely competitive fields with many vendors that are highly competent to engage in them,” he told TheDCNF. “The fact you have a single bidder is prima facie proof that there was not a genuine competitive bidding process where other bidders knew of the opportunity.”
CFPB did have multiple potential choices, as the General Services Administration’s schedule lists 209 registered advertising firms as pre-approved for federal contracts.
Ethan Barton contributed to this report.
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