FAR 5.504—Use of advertising agencies.
Plain-English Summary
FAR 5.504 explains when and how the Government may use advertising agencies under a basic ordering agreement (BOA) to help produce and place advertisements. It covers the core justification for using an agency—especially when many ads will run in multiple publications or national media—and describes the kinds of services the agency may provide, such as media selection advice, contacting media outlets, placing orders, selecting typography, copywriting, and preparing rough layouts. The section also addresses how to handle costs in commission-paying media, where the agency’s services may be effectively free to the Government beyond the space cost, and in noncommission-paying media, where the agreement must spell out whether the agency will provide placement at no cost, whether the Government may place orders directly, or whether a specific fee will be paid. Finally, it allows the BOA to cover art work, supplies, and incidentals such as brochures, pamphlets, telephone calls, and postage, while expressly excluding printing of those materials. In practice, this section is about structuring advertising support so the Government gets efficient media placement, avoids unnecessary fees, and clearly allocates who pays for what before orders are placed.
Key Rules
BOAs may be used for ads
A basic ordering agreement may be placed with advertising agencies when the Government expects to place a significant number of advertisements in several publications and in national media. The rule is aimed at recurring, multi-channel advertising needs where agency support can improve efficiency.
Agency services are broad
Advertising agency services may include counseling on media selection, contacting media on the Government’s behalf, placing orders, selecting and ordering typography, copywriting, and preparing rough layouts. The list is not exclusive, so related advertising support may also be included if consistent with the BOA.
Commission media may cost nothing extra
When media pay agencies a commission or discount that is not available to the Government, the agency’s placement services can often be obtained at no cost to the Government beyond the space cost. The practical point is to capture the benefit of the agency’s commission relationship without paying duplicate service charges.
Noncommission media need explicit terms
If the media do not pay commissions or discounts, the BOA must state how placement will be handled. The agreement must either allow the Government to place orders directly with the media or specify the amount the Government will pay the agency for placing the orders.
No-cost placement must be written in
If the agency agrees to place ads in noncommission-paying media at no cost, the BOA must expressly say so. Silence is not enough; the agreement must clearly document that the service is included without additional charge.
Art work and incidentals may be included
The BOA may also cover art work, supplies, and incidentals such as brochures, pamphlets, telephone calls, and postage incurred by the agency on the Government’s behalf. However, printing of brochures and pamphlets is excluded from this allowance.
Responsibilities
Contracting Officer
Determine whether the advertising need justifies use of a BOA with an advertising agency, ensure the agreement clearly defines the services and pricing structure, and include the required terms for commission-paying and noncommission-paying media. The contracting officer must also make sure any art work, supplies, and incidentals are properly addressed and that printing is not improperly included.
Advertising Agency
Provide the agreed advertising support services, which may include media counseling, contacting outlets, placing orders, copywriting, typography selection, and rough layouts. The agency must follow the BOA terms on whether placement in noncommission-paying media is free, separately priced, or bypassed in favor of direct Government ordering.
Government Program/Marketing Staff
Define the advertising requirements, identify the publications or media to be used, and coordinate content and approvals so the agency can place advertisements efficiently. They should also help verify that requested services and incidental costs stay within the BOA’s scope.
Media Outlets
Provide advertising space and, where applicable, pay commissions or discounts to the agency according to their normal commercial arrangements. Their commission structure affects whether the Government can obtain placement services at no additional cost.
Practical Implications
This section is mainly about avoiding unnecessary service charges and making sure the Government gets the benefit of agency commissions when they exist.
The biggest drafting risk is failing to spell out what happens in noncommission-paying media; if the BOA is silent, disputes can arise over whether the agency may charge for placement.
Contracting officers should be careful not to let the BOA drift into printing services for brochures or pamphlets, because FAR 5.504 allows art work and incidentals but not printing.
Agencies and program offices should distinguish between media placement services and production costs, since typography, copywriting, and rough layouts may be included while other production items may need separate treatment.
Clear BOA language is especially important when ads will run in multiple outlets, because the cost structure can vary significantly between commission-paying and noncommission-paying media.
Official Regulatory Text
(a) General. Basic ordering agreements may be placed with advertising agencies for assistance in producing and placing advertisements when a significant number will be placed in several publications and in national media. Services of advertising agencies include, but are not limited to, counseling as to selection of the media for placement of the advertisement, contacting the media in the interest of the Government, placing orders, selecting and ordering typography, copywriting, and preparing rough layouts. (b) Use of commission-paying media. The services of advertising agencies in placing advertising with media often can be obtained at no cost to the Government, over and above the space cost, as many media give advertising agencies a commission or discount on the space cost that is not given to the Government. (c) Use of noncommission-paying media. Some media do not grant advertising agencies a commission or discount, meaning the Government can obtain the same rate as the advertising agency. If the advertising agency agrees to place advertisements in noncommission-paying media as a no-cost service, the basic ordering agreement shall so provide. If the advertising agency will not agree to place advertisements at no cost, the agreement shall- (1) Provide that the Government may place orders directly with the media; or (2) Specify an amount that the Government will pay if the agency places the orders. (d) Art work, supplies, and incidentals. The basic ordering agreement also may provide for the furnishing by the advertising agency of art work, supplies, and incidentals, including brochures and pamphlets, but not their printing. "Incidentals" may include telephone calls, and postage incurred by the advertising agency on behalf of the Government.