City of Sydney poised to reject outdoor tender proposals

Australia’s most populous local government area, home to the largest out-of-home advertising contract in the country – the City of Sydney – is proposing to reject the remaining application put forward during its outdoor tender process.

The process of recruiting a new outdoor provider has been a long one, kicking off in December 2017, with the City saying the timeline has been further complicated by consolidation in the sector. The contract up for grabs is for 10 years, with the possibility of a five-year extension.

The City of Sydney wants to negotiate directly with the outdoor market

The City of Sydney awarded its outdoor street furniture contract to international giant JC Decaux back in January 1997 ahead of the Sydney 2000 Olympic Games.

After 20 years with the company, however, the City opened up Expressions of Interest (EOI) noting how significantly the needs of the City and its population had changed.

The contract would include installing and operating kiosks, toilets, shelters, communications pylons, seats, bins and WiFi services. It also includes outdoor display advertising on these assets.

Expressions of interest were set to close on 6 February, 2018.

In July, however, the City went back to the drawing board, again calling for EOIs. At the time, the City denied the second attempt was driven by significant consolidation in the sector – with JC Decaux snapping up the second-largest local player, APN Outdoor, and Australia’s largest OOH operator, Ooh Media, absorbing street furniture business, AdShel. Instead, the City suggested the second stage would enable those pitching for the business to bring a refined offering to the table, and more adequately respond to the complex nature of the contract.

JC Decaux’s contract with the City was extended for another year to accomodate the delays. The contract with JC Decaux will now expire on 31 January, 2020.

In September, the list of contenders was whittled down to a shortlist, with the companies subsequently invited to tender for the contract. The shortlist included JC Decaux, APN Outdoor, and Ooh Media-owned Adshel.

APN Outdoor withdrew from the contest in October, on the basis JC Decaux had taken full ownership of the company.

In November, however, JC Decaux revealed it was no longer pursuing the business, due to the contract terms. It said the risks involved in submitting an offer were too great.

This left only Ooh Media Street Furniture – formerly AdShel – in the running for the business.

Now, after more than two years, the City of Sydney is proposing to decline the bid it received.

A report will be put to the City of Sydney’s CEO, asking for the authority to explore alternative options.

Its understood the City wants to go direct to market to negotiate an outcome.

Justifying its proposal, the City said a “major change in market conditions” – including significant consolidation and the advent of digital advertising – meant the tender process had not led to the ideal outcome.

“Due to these changes in conditions, City staff have recommended a cancellation of the current proposal for the contract, as we strive the best outcome and return of investment for ratepayers,” a statement provided to Mumbrella said.

The City said a return to tender would not yield a satisfactory result.

The proposal will be discussed by the Council on 6 May, with a final decision to be handed down on 13 May.


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