Request for Proposal #7984 Marketing Promotions and Point-of-Sale Services November 18, 2013 CALIFORNIA LOTTERY 700 NORTH 10TH STREET SACRAMENTO, CA 95811
TABLE OF CONTENTS Page I. GENERAL INFORMATION A. Purpose... 1 B. Background... 1 C. Opportunity... 1 D. The Challenge... 2 E. Minimum Qualifications... 2 F. Issuing Office and Agency-Initiated Contact... 3 G. Projected Timetable... 3 H. Examination of All Requirements... 4 I. Amendments to the RFP... 4 J. Intent to Bid and Future Communication... 4 K. Written Questions... 4 L. Player Direct Architecture Conference... 5 M. Joint Proposal... 5 N. Proposal Consideration... 5 O. Proposals are Public Records... 6 P. Conditions of Submission... 6 Q. Rejection of Responses... 6 R. Nonmaterial Deviation... 6 S. Contract Execution... 6 T. Hiring of Lottery Personnel... 7 U. Governing Law and Regulations... 7 V. Verbal Communication... 7 II. PROPOSAL REQUIREMENTS A. Phase I Submittals... 8 1. Transmittal Letter... 8 2. Agency Profile (DVD)... 9 3. Agency Capabilities (Written Format)... 9 4. Agency Case Histories (DVD and Written Format)... 10 5. Attachment 1, Agency Fact Sheet... 10 6. Attachment 2, Résumé Form, and Agency s Lottery Account Team (Written Format)... 10 7. Attachment 3, Certification... 11 8. Attachment 4, Guaranty... 11 9. Attachment 5, DVBE Participation... 12 10. Attachment 6, Small Business Participation... 12 11. Attachment 7, Major Contractor Disclosure... 13 B. Phase I Evaluation Process... 13 C. Phase II Finalists Competition... 13 1. Finalist Briefing... 14 2. Finalist Work Session... 14 3. Finalist Work Assignment Presentations... 14 4. Finalist Request for Staff Plan and Compensation Proposal 14 D. Phase II Evaluation... 15 i
III. PROPOSAL EVALUATION PROCESS A. Ratings... 15 B. Best Value Analysis... 15 IV. NOTICE OF INTENT TO AWARD... 16 V. PROPOSAL PACKAGING AND DELIVERY... 16 EXHIBITS Exhibit A Scope of Services... 18 Exhibit B Draft Contract Terms and Conditions... 22 Exhibit C California Lottery Act - Disclosures... 48 Exhibit D Cost Audit Guidelines... 51 Exhibit E Quality Assurance Plan... 53 Exhibit F California Lottery District Offices & Distribution Centers... 56 ATTACHMENTS Attachment 1 Agency Fact Sheet... 57 Attachment 2 Résumé Form... 59 Attachment 3 Certification... 60 Attachment 4 Guaranty... 66 Attachment 5 DVBE Participation... 68 Attachment 6 Small and Microbusiness Participation... 73 Attachment 7 Major Contractor Disclosure... 80 Attachment 8 & 8A Staff Plan and Compensation Proposal Worksheet... 94 ii
I. GENERAL INFORMATION A. Purpose The California Lottery (Lottery) is inviting proposals from qualified agencies to provide marketing promotions and point-of-sale (POS) services that include: strategic planning; recommending, developing, designing, and providing promotional programs and opportunities; producing consumer collateral and permanent POS materials for all Lottery products; developing and supporting digital content and applications; providing fulfillment services; and providing research services. The overall objective of this request for proposal (RFP) is to identify the agency that can best deliver an integrated and holistic approach to Lottery marketing in order to maximize net revenues. The Lottery will consider proposals from partnerships and joint ventures. The initial contract term is four years, with the option to extend for up to three years under the same terms and conditions. For additional information about the Lottery, please visit the Lottery s website at www.calottery.com. B. Background The Lottery began in 1985 as a way to generate supplemental funding for public education. From its inception to date the Lottery has generated more than $70 billion in sales and contributed over $27 billion in funding for California schools. Retailers who sell lottery tickets have received over $4.6 billion in compensation, and an estimated $36 billion has been won by lucky lottery players. The Lottery currently employs over 750 people statewide and has nine district offices. There are two distribution centers, one located in West Sacramento and one in Rancho Cucamonga. The Lottery s current retailer network base is over 21,500. The successful agency will work with Lottery staff and other contractors to produce a cohesive consumer marketing program. The agency may work in cooperation with contractors that provide Scratchers tickets and related services, communication and advertising services in general market, African-American, Asian, and Hispanic markets, the Lottery s online 2 nd Chance program, and future programs such as consumer loyalty/rewards. Currently the Lottery executes 8-10 statewide collateral POS campaigns per year. C. The Opportunity The Lottery seeks to identify a strategic agency capable of helping it approach the consumer in a fresh, new way and addressing the following critical business strategy questions: 1. How can the Lottery increase sales? 2. Where should the Lottery take its brand and messaging? 3. How should the Lottery engage new players and re-engage lapsed players? 4. How can the Lottery effectively address its audience and broaden its player base? RFP #7984 1 Marketing and POS Services
5. How can the Lottery ensure consumers are talking about and engaging with the Lottery so it becomes a part of their social experience? D. The Challenge As technology has changed consumer behavior and marketing realities, the promotional and advertising landscape has also dramatically changed. Perhaps the greatest change has come in the last two years. The Lottery is reviewing its business strategy to ensure it has the best products available to maximize player engagement and gaming revenue growth. Critical roles for the successful agency will be understanding player motivation and helping the Lottery to better differentiate and position its games and brands. The agency must be able to combine rigorous and insightful account planning and strategic development with brilliant creative solutions that drive sales and are highly visible in today s cluttered retail environment. The Lottery expects the successful agency to function as a true partner and lead the way to meaningful strategy and communications solutions that drive brand and product demand. Finally, the Lottery is interested in increasing player engagement opportunities, harnessing the role that web marketing and digital devices play in the lives of its consumers, and executing direct consumer promotional programs. E. Minimum Qualifications This RFP is open to all agencies and joint ventures that at the time Phase I submittals are due: 1. Have a minimum of five years experience as legal business entities designing and implementing marketing promotions and producing consumer collateral and permanent POS materials at levels comparable to those described in Exhibit A, Scope of Services; 2. Have a minimum of 50 employees and at least $12 million in annual billings; 3. Have an office in California; 4. Are licensed to do business in California; and 5. Provide the mandatory documentation required by RFP Section II. A., Phase I Submittals. RFP #7984 2 Marketing and POS Services
F. Issuing Office and Agency-Initiated Contact This RFP is issued by the Lottery s Contract Development Services office. Issuance of this RFP does not constitute a commitment by the Lottery to award any contract. The issuing office is the sole point of contact relative to this RFP. Any and all communication pertaining to this RFP must be directed to: California Lottery Contract Development Services Attn: Susana Sanchez 700 North 10th Street, Sacramento, CA 95811 ssanchez@calottery.com Phone: (916) 822-8064 FAX: (916) 737-4275 TDD: (916) 345-4275 No contact regarding this RFP is allowed between bidding agencies and members of the Lottery evaluation team, Lottery Commissioners, or Lottery staff with the exception of the Lottery contact person named above. Any such contact may disqualify a bidding agency from further consideration. Requests for clarification by agencies will be allowed provided that such requests are made through the above contact. G. Projected Timetable The following projected timetable is set forth for informational and planning purposes. The dates may change. Action Date Time RFP Issued November 18, 2013 Intent to Bid and Written Questions Due December 2, 2013 3:00 p.m. Player Direct Architecture Conference (Optional) TBD Proposal Due January 6, 2014 3:00 p.m. Identification of Finalists Mid-January 2014 Finalists Briefing Finalists Work Assignment Presentations TBD TBD Identification of Apparent Successful Agency March 2014 Commission Approval to Award Contract to Successful Agency TBD Projected Contract Effective Date July 1, 2014 RFP #7984 3 Marketing and POS Services
H. Examination of All Requirements Bidding agencies should thoroughly examine this document and become fully aware of the scope of services required. Proposals must be based solely on the information and materials contained in this RFP, any amendments or other subsequent written materials issued by the Lottery, and any answers the Lottery provides in response to agencies requests for clarification. Agencies are to disregard any other information, including draft material they may have received, newspaper advertisements or articles they may have read, and oral representations made. If a bidding agency discovers an error in this RFP and fails to notify the Lottery, the agency submits a proposal at its own risk. If awarded the contract, the agency will not be entitled to additional compensation or time by reason of the error or its later correction. The Lottery in its discretion may refuse to accept a proposal for failure to furnish all required information or follow the format specified in this RFP. I. Amendments to the RFP The Lottery may cancel or amend this RFP at any time. The Lottery will post a notice to the Lottery s website if the amendment or cancellation occurs prior to the due date for Phase I submittals. The Lottery will directly notify agencies who submitted Phase I submittals if the amendment or cancellation occurs after the due date for Phase I submittals, and Finalists exclusively if the amendment or cancellation occurs after Finalists have been identified. All notices, amendments, and/or cancellations will also be posted on the Lottery s website (www.calottery.com/vendors). J. Intent to Bid and Future Communication Agencies must submit a written Intent to Bid (via fax, e-mail or US mail) to the Lottery by the date and time specified in the projected timetable if they wish to receive further direct communications regarding this RFP. If an Intent to Bid is not filed a proposal may still be submitted; however, any further RFP-related communications issued by the Lottery will only be sent to agencies that have an Intent to Bid on file. All agencies may, however, continue to access communications and amendments issued by the Lottery regarding this solicitation on the Lottery s website at www.calottery.com under Vendor Opportunities. After the proposal due date, direct communications will be sent only to those agencies that have submitted a proposal. After Finalists have been identified, direct communications will only be sent to Finalists. K. Written Questions Questions regarding this RFP must be submitted in writing via fax, e-mail, or U.S. mail to the Lottery contact person specified above no later than the date and time specified for written questions in the projected timetable. It is the sole responsibility of the interested party to verify receipt of questions submitted. Responses to all questions submitted will be provided to each agency that filed an Intent to Bid. Responses will also be available on the Lottery s website. The Lottery may in its sole discretion respond to questions received after the specified time. RFP #7984 4 Marketing and POS Services
L. Player Direct Architecture Conference As part of the Lottery s Digital Program Strategy, the Lottery has recently introduced a new Player Direct Architecture (PDA) platform that provides secure, effective communications and interactions with Lottery players, ensuring the best experience possible. The PDA provides player management capabilities that include single sign-on and a centralized player data repository. In addition, it provides capabilities for managing 2 nd chance submissions and promotional draws. These capabilities are provided to 3 rd parties through a set of standard Application Programming Interface (APIs) for easy and secure integration with the PDA. Plans are underway to further expand the PDA in order to provide even broader and deeper access to Lottery functionality from 3 rd party digital channels and applications. As a potential 3 rd party vendor that may be responsible for providing digital services or applications that will harness the PDA, the Lottery may invite all bidding agencies to an optional conference that will provide a detailed overview of the current PDA and roadmap. This is a non-mandatory conference and bidding agencies will not be evaluated based on their participation in the conference or on any PDA knowledge they may obtain during the conference. The Lottery will notify agencies that have filed an intent to bid for this RFP of the scheduled date and time once established. All agencies may, however, verify the conference date and time, by visiting the Lottery s website at www.calottery.com under Vendor Opportunities and clicking on the corresponding RFP #7984, Marketing Promotions and Point-of-Sale Services. M. Joint Proposal If the contract for marketing promotions and POS services (Contract) is awarded to two or more independent entities that offered a single, joint proposal, the Contract will be deemed one indivisible Contract. Each entity will be jointly and severally liable for the performance of the entire Contract. The joint entities must designate in writing a single individual authorized to represent all joint venturers in all matters relating to the Contract. NOTE: If a joint proposal is submitted, at least one of the bidding agencies must meet all minimum qualifications listed in Section I, Minimum Qualifications. N. Proposal Consideration By submitting a proposal, each bidding agency agrees that: 1. The Lottery is not liable for any costs it incurred in preparing or submitting a proposal in response to this RFP; 2. Its proposal constitutes the agency s binding offer to the Lottery; and 3. Its proposal is irrevocable for 180 calendar days from the date proposals are due. RFP #7984 5 Marketing and POS Services
O. Proposals are Public Records Pursuant to the California Public Records Act, California Government Code 6250 et seq, except for Attachment 7, Major Contractor Disclosures, all data, materials, information, and documents submitted to the Lottery by a bidding agency may be incorporated into a publicly-available contract and may otherwise be subject to disclosure upon request by competitors and members of the public. The Lottery will process all Public Records Act requests in accordance with the laws of the State of California. A bidding agency s labeling of any proposal materials as confidential or otherwise exempt from disclosure is not binding on the Lottery, and the Lottery will not be liable to the agency or to any other person or entity for disclosing any portion of the agency s proposal as required by law. P. Conditions of Submission Proposals and presentations in response to this RFP must be submitted with the most favorable terms the bidding agency can offer. After an agency submits a proposal to the Lottery, the proposal cannot be replaced, changed or modified in any way except as specified in this RFP or in response to a subsequent amendment to this RFP or a written request for clarification from the Lottery. An agency will be allowed to withdraw its proposal provided that such withdrawal is actually received by the Lottery prior to the deadline for final submission. Requests to withdraw must be submitted in the same manner as proposals. Q. Rejection of Responses The Lottery reserves the right to reject any response that is conditional or incomplete or contains any material deviations. Any provisions of this document which are identified as requirements are mandatory. In the interest of promoting competition, the Lottery may allow a bidding agency to correct a deficiency related to any requirement upon the Lottery s written request. If all agencies fail to meet a mandatory requirement, the Lottery may choose to continue evaluation of the proposals and select the response which most closely meets the requirements specified in the RFP. R. Nonmaterial Deviation The Lottery may waive any nonmaterial deviation in a proposal. The Lottery s waiver of a nonmaterial deviation does not modify the RFP requirements or excuse the successful agency from full compliance with the Contract s requirements. S. Contract Execution The Lottery Director will make the final determination of Contract award, subject to Commission approval. In making this determination, the Director will be assisted by an evaluation team. The Lottery may cancel any or all elements of a procurement or rescind an announced award at any time prior to contract execution. RFP #7984 6 Marketing and POS Services
T. Hiring of Lottery Personnel At all times during the proposal evaluation period and continuing through to Contract award or rejection of all proposals, agencies are prohibited from officially or unofficially making any employment offer or proposing any business arrangement whatsoever to any person involved in the evaluation of proposals. Any agency making such an offer or proposition will be disqualified from further consideration. U. Governing Law and Regulations The Lottery s governing law and regulations, including its Procedures for Procurement of Goods and Services, are available on the Lottery s website (www.calottery.com). It is the bidding agency s responsibility to be familiar with applicable laws and regulations. V. Verbal Communication Any verbal communication with a Lottery employee concerning this RFP is not binding on the Lottery and will in no way alter a specification, term, or condition of this RFP or resulting Contract. II. PROPOSAL SUBMITTAL REQUIREMENTS All proposals and other requested documents must be organized in the same order and with the same lettering/numbering format as shown in the following subsections; submitted in a 3-ring binder, on 8 ½ x 11 inch paper, printed on one side only, using at least 12 point size font, consecutively numbered with sections clearly marked or labeled; and provided on a compact disc (CD) compatible with Microsoft Office 2010 Suite and Adobe Acrobat Reader X (v10.1.7). Bidding agencies must provide the Lottery with as much information as necessary for the Lottery to adequately evaluate their proposals. At a minimum, proposals must be fully responsive to the specific requirements stated in this RFP. Agencies must identify any requirements of this RFP they cannot satisfy. Clarification may be requested from bidding agencies about any component of their proposal during any phase of the evaluation process. RFP #7984 7 Marketing and POS Services
A. Phase I Submittals With the exception of Attachment 5, Disabled Veteran Business Enterprise Participation and Attachment 6, Small Business and Microbusiness Participation, all documents required in this section must be submitted. Failure to submit the required documentation may, at the Lottery s discretion, result in disqualification of an agency. If all bidding agencies fail to meet one or more of the requirements, the Lottery may choose to continue evaluating the proposals. 1. Transmittal Letter 2. Agency Profile (DVD) 3. Agency Capabilities (Written Format) 4. Two Agency Case Histories (DVD and Written Format) 5. Attachment 1, Agency Fact Sheet 6. Attachment 2, Résumé Form, and Agency s Lottery Account Team (Written Format) 7. Attachment 3, Certification 8. Attachment 4, Guaranty 9. Attachment 5, Disabled Veteran Business Enterprise Participation (If Applicable) 10. Attachment 6, Small Business and Microbusiness Participation (If Applicable) 11. Attachment 7, Major Contractor Disclosures 1. Transmittal Letter Each bidding agency must submit a cover letter indicating that it is responding to this RFP and that all of the RFP requirements have been met. The letter must be signed by the representative identified in Attachment 3, Certification, as legally authorized to bind the bidding agency. If agencies are submitting a joint proposal, all of the information required for each of the entities comprising the joint venture must be submitted with the proposal. The transmittal letter must state the name of the representative who is legally authorized to bind the joint venture and must be accompanied by proof of authorization from each entity (e.g., by-laws, minutes or resolution of board of directors of corporation or association, written trust instrument, partnership agreement). If a bidding agency is not submitting a joint proposal, it must provide a written statement to that effect. Bidding agencies must disclose whether they consulted with others in the preparation of their proposal. If others were consulted, they must identify those with whom they consulted and provide contact information. Any change or addition to those consulted while this RFP is pending must be reported to the Lottery. Failure to do so may result in a decreased rating or rejection of a bidding agency s proposal. The Lottery may contact consultants. Under no circumstances may an agency submitting or considering the submittal of a proposal consult with a competitor agency. If the bidding agency did not consult with others in the preparation of its proposal, it must provide a written statement to that effect. The bidding agency must also disclose any potential, actual or apparent conflicts of interest that may exist between any current client and the Lottery. Because of the complexities involved in defining conflicts of interest, the Lottery will make a final determination as to whether a disqualifying conflict exists. If there are no known conflicts, the agency must provide a written statement to that effect. RFP #7984 8 Marketing and POS Services
Evaluation Criteria for Phase 1, submittal #1: Transmittal Letter Pass/Fail 2. Agency Profile (DVD Format) Each bidding agency must submit an agency profile on DVD, not to exceed eight minutes in length, at the time of proposal submission. Think of this as a story about each agency as illustrated by its work. Context helps the Lottery assess each agency s relevant work and experience. The profile should address agency positioning, vision, and philosophy, and answer the following questions: a. How does the bidding agency differ from the agencies with whom it usually competes? b. What vision does it have for the future? c. Where does the agency expect to be five years from now? d. What overall philosophy or credo does it operate by? e. What are the agency s particular strengths? f. How does the agency see its clients role in the strategic and creative development process? 3. Agency Capabilities (Written Format) Each bidding agency must provide a written description (five pages maximum) of its capabilities in the following areas: a. Strategic thinking and planning, long term and short term; b. Development and execution of creative programs in a cost-efficient manner (including a description of its work process and any particular practices employed that help it produce consistently effective campaigns); c. Quality assurance of deliverables; d. Management of integrated campaigns; e. Account services (including budget/cost management and invoicing); f. Distribution services (including examples demonstrating the ability to deliver to a number of warehouses and retail distribution points); g. Storage, kitting (repacking of goods), distribution and order fulfillment; h. Development and production timelines (schedule in working days) from placement of order to receipt at final destination; i. Telemarketing and prize fulfillment capabilities; j. Experiential/event planning, execution and management; k. Secure digital/online/social media programs and assets (development, programming, execution, management, and integration with the overall marketing campaign); l. Insights and research on emerging trends and implementation of marketing campaigns (including merchandising practices and resources, shopper and retailer-based marketing); and m. Performance and measurement analytics. RFP #7984 9 Marketing and POS Services
4. Agency Case Histories (DVD and Written Format) Two Agency Marketing Campaign Case Histories Bidding agencies must provide two marketing campaign case histories from the office submitting the proposal, preferably developed by staff that would be assigned to the Lottery account, describing fully-integrated campaigns that were developed and produced within the past three years and that included employment of point-ofsale, promotional/experiential, and digital extensions to address specific marketing challenges or opportunities. Especially relevant are campaigns for products sold in convenience, liquor, grocery, or drug stores, or gas stations. The succinct description must be included in both a DVD and a written format, not to exceed two pages per case history. For each case history, bidding agencies are to include: a. Name of client and product; b. Dates of the campaign; c. Identification of each member of the creative team that developed the project/campaign; d. Description of campaign elements including budget; e. Statement of overall marketing objective and strategy; f. Description of implementation strategy and why this strategy was selected; g. Description of strategic concept, identification of promotion implementation problems and the opportunities explored; h. A range of promotional strategies and executions (e.g., tie-in partnerships, POS applications, consumer purchase incentives, retail trade incentives, digital, online, social media and experiential events); and i. Description of actual results and campaign evaluation. 5. Attachment 1, Agency Fact Sheet Attachment 1, Agency Fact Sheet must be completed by each bidding agency and included in its Phase I submittal package. If bidding agencies are submitting a joint proposal, each agency comprising the joint venture must complete and submit a separate Attachment 1, Agency Fact Sheet. 6. Attachment 2, Résumé Form and Agency s Lottery Account Team Personnel (Written Format) Each bidding agency must describe how it will staff the Lottery s account so that the Lottery s specific needs are met. Since the Lottery will be comparing the relative staff quality offered by the various agencies, it is advantageous to identify as many staff members as possible and explain why each is the best for the position. Less consideration will be given when positions are proposed to be filled by to be determined. Each agency is to provide the following: a. An organizational chart indicating reporting relationships of staff to be assigned to the Lottery account; RFP #7984 10 Marketing and POS Services
b. A written narrative (two pages maximum) explaining how its proposed account team will best meet the Lottery s needs. Identify the team members and how the team will produce the best results due to its unique combination of personnel and their levels of experience. Describe staff positions, functions, areas of responsibility, and the proposed location of staff; and c. A résumé must be submitted for each proposed team member using Attachment 2, Résumé Form. The form may be duplicated but must follow the same format. Evaluation Criteria for Phase 1 submittals: #2 Agency Profile, #3 Agency Capabilities, #4 Two Agency Case Histories, #5 Attachment 1, Agency Fact Sheet and #6 Attachment 2, Résumé Form, and Agency s Lottery Account Team Rated (listed in order of importance) 1) Depth of qualifications and experience of the team to be assigned to the Lottery account; 2) Caliber of strategic thinking, clarity, and completeness of description and communication of the opportunity, and execution details; 3) Quality of demonstrated experience in creativity and innovation; 4) Quality of demonstrated capabilities with innovative integrated marketing that drive sales; 5) Quality of demonstrated capabilities for POS merchandising, promotions, digital, social media, and experiential/event marketing; 6) Clarity of agency s vision and philosophy; 7) Relevant experience with gaming, entertainment and/or low-cost consumer goods; and 8) Ability to retain existing accounts while acquiring new accounts. 7. Attachment 3, Certification Attachment 3, Certification must be completed by each bidding agency and included in its Phase I submittal package. Evaluation Criteria for Phase 1, submittal #7: Attachment 3, Certification Pass/Fail 8. Attachment 4, Guaranty Attachment 4, Guaranty must be completed by each bidding agency and included in its Phase I submittal package. Evaluation Criteria for Phase 1, submittal #8: Attachment 4, Guaranty Pass/Fail RFP #7984 11 Marketing and POS Services
9. Attachment 5, Disabled Veteran Business Enterprise (DVBE) Participation Optional Submittal The Lottery has established a new DVBE program. Please read this section carefully. The Lottery recognizes disabled veterans for their service by establishing a Disabled Veteran Business Enterprise (DVBE) Participation Program. The program is intended to further veterans participation in Lottery contracting, promote competition and encourage greater economic opportunity. The Lottery has established participation goals for DVBEs, as defined in Military and Veterans Code, of at least 3% of overall dollars expended for Lottery contracts annually. The Lottery determines whether to include DVBE participation requirements in specific solicitations based on the availability of contracting or subcontracting opportunities within the scope of services of the particular contract. While the Lottery has not established a DVBE participation requirement for this solicitation, in order to encourage DVBE participation, the Lottery has applied a DVBE incentive. Please see Attachment 5, Disabled Veteran Business Enterprise (DVBE) for further information and instructions. Attachment 5, Disabled Veteran Business Enterprise (DVBE), is optional. If provided, it will be considered during Phase II. 10. Attachment 6, Small Business and Microbusiness Program Participation Optional Submittal Based upon the nature of the goods and services to be utilized under this solicitation (as outlined in the Scope of Services, Exhibit A), the Lottery has set a Small and Microbusiness Participation goal of 25% for utilization of small or microbusinesses as subcontractors under the contract resulting from this solicitation. The Lottery encourages small business participation. An agency who qualifies as a small or microbusiness has met this participation goal by virtue of their small business status. For bid evaluation purposes, where there is at least one non-small business Agency subcontracting at least 25% of its bid amount to one or more small businesses, the Lottery will calculate the preference by computing an amount not to exceed 5% from the lowest, responsible bid of a non-small business Agency that is not subcontracting to a small business. The preference amount will be deducted from the bids of the non-small business Agency s subcontracting at least 25% of their bid amounts to small businesses. For bid evaluation purposes, where there is at least one small business Agency, the Lottery will calculate the preference by computing an amount not to exceed 5% from the lowest, responsible bid of a non-small business Agency that is not a small business. The preference amount will be deducted from the small business bid amount. During the Contract term, the Agency s SBP compliance will be calculated based on the Agency s completed work as verified by an audit of Agency s invoices and Agency s payments to designated subcontractors. RFP #7984 12 Marketing and POS Services
Small and Microbusiness Participation (Attachment 6) if applicable must be completed by the Bidder at the time of proposal submission and included in its proposal package. Attachment 6, Small and Microbusiness Participation form, is optional. provided, it will be considered during Phase II. If 11.Attachment 7, Major Contractor Disclosure Attachment 7, Major Contractor Disclosure must be completed by each bidding agency and included in its Phase I submittal package. Bidding agencies are required to disclose certain information pursuant to California Government Code section 8880.57. Any individual or entity in an agency s organizational chain and any of the agency s subcontractors may also be required to disclose similar information. The Lottery may refuse to enter into a contract based on the results of these disclosures. In addition, in order to ensure integrity, security, and honesty in its operations the Lottery will conduct a thorough background check. This may include fingerprinting and a review of financial information. The Lottery may disqualify any bidding agency if its related entities or their directors, officers, employees, or owners refuse to participate. The successful agency will be required to notify the Lottery in advance of the identity of potential subcontractors and may be required to periodically update disclosure requirements. Note: The information provided in Attachment 7 is confidential and not subject to disclosure under the California Public Records Act. Evaluation Criteria for Phase 1, submittal #11: Attachment 7, Major Contractor Disclosures Pass/Fail B. Phase I Evaluation Process The Agency Fact Sheet, Agency Profile, Capabilities, Agency Case Histories, Lottery Account Team Personnel and Résumé Forms will be reviewed and evaluated by the Lottery evaluation team using the rating chart shown in Section III. After review and evaluation of the Phase I rated submittals, those agencies receiving a minimum overall rating of exceeds will advance to Phase II as Finalists. Agencies receiving a minimum of meets may, at the discretion of the Lottery evaluation team, be advanced to the Finalist phase. C. Phase II Finalists Competition The Lottery will contact Finalists to schedule a group briefing day, individual Finalist work sessions, and Finalist presentations. At that time, the Lottery will also provide the following: Finalist work assignment (Finalist agencies will be asked to complete and present a strategic, creative, and integrated work assignment); RFP #7984 13 Marketing and POS Services
Key Marketing Deliverables for preparation of Staff Plan and Compensation Proposal (Attachment 8 and 8A); Finalist evaluation criteria; and Finalist instructions. At least two business days before the group briefing session, Finalists will be required to submit a list of questions they wish to discuss. The Lottery will have final approval over the group briefing agenda. 1. Finalist Briefings Approximately one week after announcement of the Finalists, the Lottery will hold a group briefing at Lottery Headquarters to respond to Finalists questions, followed by one-on-one briefing sessions with each Finalist. The Lottery will not provide input about specific creative strategies. Finalists will not be evaluated at these briefings. 2. Finalist Work Sessions The Finalist work sessions will include a face-to-face meeting between the Lottery evaluation team and each Finalist at the Finalists offices. These meetings will be scheduled by the Lottery. The objective of the work sessions is to meet with the people that manage each Finalist agency and the specific team members that would lead the Lottery account in order to assess the depth of each Finalist s resources, measure its strategic smarts, and evaluate the intensity of its interest and its level of commitment to the Lottery s business. At the work sessions the Lottery will check on each Finalist s progress in addressing the work assignment. Finalists may present their planned approach to developing an integrated campaign solution to the challenge provided in the work assignment. The Lottery evaluation team will provide feedback on the presentation. 3. Finalist Work Assignment Presentations Finalists will present the strategic, creative, and integrated solutions they have developed in response to the work assignment s call for an integrated marketing campaign to include POS, promotions with extensions such as digital/social media, and experiential events. Presentations will be scheduled by the Lottery and will be conducted at each Finalist s offices in front of the Lottery evaluation team. Presentations must include both a written narrative and an oral presentation. Written copies of the entire presentation must also be provided to Lottery evaluation team. 4. Finalist Request for Staff Plan and Compensation Proposal Each Finalist will receive a packet outlining Key Marketing Deliverables (to be used for bidding purposes only) for the Lottery account. The packet will include instructions for organizing the proposed staff plan and corresponding compensation proposal. The objective of this portion of the Finalist Phase is to evaluate each agency s staff and compensation proposal on both a stand-alone and comparative basis to facilitate an agency-to-agency evaluation. RFP #7984 14 Marketing and POS Services
D. Phase II Evaluation Finalists work assignments will be reviewed and evaluated by the Lottery evaluation team using the rating chart provided in Section III. The Staff Plan and Compensation Proposal (Attachments 8 and 8A) will be assessed by the Lottery evaluation team after the Finalists presentations are completed. DVBE, Small and Microbusiness Participation forms, if submitted will also be considered in this Phase. III. PROPOSAL EVALUATION PROCESS A. Ratings The Lottery will conduct a fair and impartial evaluation of proposals received in response to this RFP. Proposals will be evaluated in comparison with other submitted proposals. Clarification may be requested from bidding agencies about any component of their proposal during any phase of the evaluation process. Rated submittals will be evaluated using the following ratings: Rating Superior Significantly Exceeds Exceeds Meets Meets with Exceptions Does Not Meet Definition Proposal exceptionally exceeds performance or capability requirements; proposal demonstrates extraordinary strengths that will more than significantly benefit the Lottery. Proposal significantly exceeds performance or capability requirements; proposal demonstrates exceptional strengths that will significantly benefit the Lottery. Proposal exceeds performance or capability requirements; proposal has one or more strengths that will benefit the Lottery. Meets specified minimum performance or capability requirements necessary for acceptable contract performance. Proposal demonstrates weak performance or capability standards necessary for minimum contract performance; proposal has one or more weaknesses that offset any strengths. Fails to meet specified minimum performance or capability requirements. Proposals with an unacceptable rating are not awardable. B. Best Value Analysis For the purposes of this RFP, the best value proposal will be the proposal that provides the most overall value to the Lottery and is the most likely to result in a contract that supports the Lottery s mandate to maximize supplemental funding to public education while ensuring integrity, security, honesty, and fairness in the operation and administration of the Lottery. In accordance with the best value principle, the Lottery may award a contract based on the proposals as submitted or establish a competitive range among Finalists and hold discussions with each Finalist in the range with the intent of allowing each the opportunity to revise its proposal only in those specific areas identified by the Lottery. Those areas may include but are not limited to price, technical capabilities, and level of service to be provided. RFP #7984 15 Marketing and POS Services
IV. NOTICE OF INTENT TO AWARD The apparent successful agency will be issued a Notice of Intent to Award. Within 14 days of the notice of intent, the agency must prepare and provide to the Lottery the following documents: A. Business Continuity and Disaster Recovery Plan The apparent successful agency must submit a Business Continuity and Disaster Recovery Plan for Lottery approval. Each plan must cover a minimum of four topic areas: (1) summarization of strategy for managing disaster situations; (2) distinct management and staff assignment of responsibilities immediately following a disaster and continuing through the period of re-establishment of normal operations; (3) prioritization for the recovery of critical applications; and (4) operational procedures documented in a systematic fashion that will allow recovery to be achieved in a timely and orderly way. The plan must be adapted to suit the Lottery s needs. B. Security Plan A Security Plan must be provided by the successful agency per the requirements set forth in Exhibit B, Contract Terms and Conditions. V. PROPOSAL PACKAGING AND DELIVERY All proposals must be received by the Lottery no later than Monday, January 6, 2014, 3:00 p.m. Fax or electronic transmissions will not be accepted. Mail or deliver all proposals to: California State Lottery Contract Development Services 700 North 10th Street Sacramento, CA 95811-0393 Attention: SUSANA SANCHEZ Response to RFP #7984 DO NOT OPEN IN MAILROOM Postmark date will not constitute timely delivery. Proposals received after the above date and time will not be considered. Bidding agencies are solely responsible for ensuring timely receipt of their proposals. The original proposal must be marked "Original" and have original signatures. Any RFP attachment and/or form that requires a signature must be signed in ink (preferably in a color other than black) by a person who is authorized to bind the bidding agency. RFP #7984 16 Marketing and POS Services
Responses must be submitted in a sealed package addressed as above and clearly identifying the bidding agency. Within the sealed package, the bidding agency must include two separately labeled and sealed packages clearly identifying the contents and the bidding agency s name and address: Package 1 must contain one copy of the following Phase I submittals on CD and one original and five paper copies of: Transmittal Letter Attachment 3, Certification Attachment 4, Guaranty Attachment 5, DVBE Participation Attachment (if applicable) Attachment 6, Small Business Participation (if applicable) Attachment 7, Major Contractor Disclosures Package 2 1) Must contain one copy of the following Phase I submittals on CD and one original and five paper copies of: Attachment 1, Agency Fact Sheet Attachment 2, Résumé Form and Agency s Lottery Account Team Agency Capabilities Two Agency Case Histories 2) Must contain three copies of the following Phase I submittals on a DVD using a menu format: Agency Profile Two Agency Case Histories Package 3 must contain one original and one copy of Attachment 7, Major Contractor Disclosures. Package 4 must contain one original and one copy of Attachment 5, Disabled Veteran Business Enterprise Participation and Attachment 6, Small and Microbusiness Participation (if applicable). RFP #7984 17 Marketing and POS Services
Exhibit A SCOPE OF SERVICES The marketing promotions and point-of-sale agency (Contractor) must provide all services required for California Lottery (Lottery) marketing, promotions, and point-of-sale (POS) initiatives, as outlined herein. The Contractor must maintain and demonstrate a keen understanding of the Lottery s products and the creative insight necessary to produce consistently superior quality work and ensure a positive, engaging consumer experience. The Contractor is expected to provide an all-inclusive, 360 degree point of view when providing services, beginning with strategic support and continuing through execution of Lottery programs. The Contractor may also be required to provide additional services that are within the general scope of this contract (Contract). 1. MANAGEMENT AND PLANNING The Contractor must provide strategic counseling, planning, and creative executions as new target markets are identified and products and programs are developed. The Contractor must incorporate industry trend analyses and insights on emerging trends, targeted markets, brand positioning, past performance metrics, and Lottery goals to present fresh and captivating concepts. The Contractor shares responsibility for planning, coordinating, and executing specific portions of the Lottery s short and long-term promotion strategy, merchandising, and collateral POS programs. Additionally, the Contractor is required to provide assistance with long-range plans and specialized programs as requested by the Lottery. 2. RESEARCH The Contractor must manage and conduct consumer insight research, concept testing, trade channel research, and shopper marketing research to provide insights for the promotion of Lottery products and the development of POS materials. The Contractor must analyze research results, present findings to Lottery, and, when necessary, solicit and evaluate competitive bids for research projects. The Contractor is expected to develop, maintain, and share knowledge of merchandising trends, issues, and opportunities used by other high-volume consumer product providers and other lotteries across various retail trade styles. The Contractor must provide expertise on all types of POS and retail merchandising materials related to purchase, placement, and sales-effectiveness. The Contractor is required to provide performance metrics of programs implemented. Periodically, the Contractor must conduct retailer research to develop an understanding of how Lottery products are merchandised at retail and to gain consumer insights in terms of motivating purchase. Research modalities may include traditional research methods, mystery shopper surveys at selected retailers, and participation in ride-alongs with Lottery staff. 3. CREATIVE The Contractor must provide expertise and support in the design, development, and execution of creative assets. Creative support in areas such as direct marketing, interactive, digital media, event support advertising, free-standing inserts, and direct mail services may be required. RFP #7984 18 Marketing and POS Services
4. NON-MEDIA CREATIVE The Contractor is responsible for managing the procurement of POS materials and for securing installation services for various POS components. The Contractor must also provide campaign conceptualization to placement, order fulfillment, name logo design for products, and sponsorship services. 5. COLLATERAL POINT-OF-SALE a. The Contractor must design, develop, produce, procure, and deliver collateral POS materials, including retail communications and in-store and exterior merchandising materials. Installation services may be requested for specific collateral POS projects. Installations may require tracking and reporting. The Contractor may also be required to deliver specific completed materials to designated locations as shown in Exhibit F, California Lottery District Office & Distribution Centers. b. The Contractor may be required to produce specialty premium items including hats, cups, shirts, and similar items. c. Upon direction from the Lottery, the Contractor must arrange for and manage translation services for some collateral materials. Lottery collateral materials are produced in English, Spanish, Korean, Cantonese, Mandarin, Vietnamese, and Arabic. d. All deliverables provided by the Contractor must comply with California and federal accessibility laws. 6. PERMANENT POINT-OF-SALE a. The Contractor must design, develop, produce, procure, and deliver permanent POS materials, including ticket dispensers, play slip holders, ticket in-counter units, interior and exterior signage, product displays, brochure holders, and wireless electronic signage at Lottery distribution centers and/or retail locations. Installation services may be required for specific permanent POS projects. Installations may require tracking and reporting. The Contractor may also be required to deliver specific completed materials to designated locations as shown in Exhibit F, California Lottery District Offices & Distribution Centers. b. All deliverables provided by the Contractor must comply with California and federal accessibility laws. 7. MEDIA The Contractor may be required to purchase non-traditional media placements such as instore chain accounts digital advertising, supermarkets carts signage, and similar retailbased media. The Contractor must also provide a post-buy analysis of all media buys. The Contractor must directly contract with media brokers to execute all media plans in various trade channels. 8. PROMOTIONS a. The Contractor must develop, maintain, and provide innovative, state-of-the-art promotion and merchandising services and must provide the Lottery with: promotional RFP #7984 19 Marketing and POS Services
implementation insights; promotional software; digital assets, copy, and programs; direct player engagement opportunities such as loyalty programs; promotional tie-in opportunities with high-volume consumer products; social media promotions; and management services for all promotions. Promotions include but are not limited to contests, prizes, retailer incentives, cross-promotions, partner identification and negotiations, and newsletters. Experiential marketing events, tradeshows, and exhibits are areas in which the Contractor is expected to strategize, design and execute with the utmost efficiency and cost-effective expertise, engaging consumers and potential consumers. The Contractor is responsible for the design, development, and maintenance of Lottery website features, assets, and copy supporting promotions and events. b. The Contractor may be required to identify tie-in partners and negotiate tie-in promotions and programs on behalf of the Lottery. Media may also be placed by the Contractor. c. The Contractor may be required to provide promotional elements, staff resources and training to support Lottery events (e.g. street teams ). d. The Contractor must provide cost-effective services to adapt and modify Lottery-owned vehicles so they engage the consumer, are compliant with California and federal accessibility laws and are able to provide self-contained walk-through experiential events on wheels. e. The Contractor must plan, design, and execute short and long-term promotional campaigns to help the Lottery achieve goals and grow playership. f. The Contractor must provide summaries and recaps of events and promotions upon request. g. The Contractor is responsible for compliance with California and federal accessibility laws for all promotional and event activities for which it provides services and the Contractor must procure all insurance required for such activities. 9. DIGITAL AND ONLINE SERVICES a. The Contractor may be required to design, develop, and maintain creative digital content and applications to support the Lottery s marketing and promotional efforts. The Contractor must be prepared to provide: Website design, development, implementation, and maintenance; Rich internet applications such as web-based tutorials and casual games (i.e. play for fun ); Mobile application and/or content design, development, and maintenance; E-blasts, including digital newsletters; Development of digital assets, copy, and programs; Collection and transfer of consumer interaction data; and Annual digital and online service planning. RFP #7984 20 Marketing and POS Services