Tourism marketing campaign turmoil
Pipar is calling for contract negotiations with M&C Saatchi to be thrown out and for its own tender to be accepted instead; as well as for Ríkiskaup to cover all related legal costs.
The Icelandic authorities decided to commission a major international tourism marketing campaign as part of their COVID-19 emergency response package and Ríkiskaup set up a tender which was given speedy priority treatment, was open to companies across all of the European Economic Area, and took three main areas into consideration in its judging, each weighted differently.
The final result was that M&C Saatchi beat Pipar\TBWA into second place by 0.82 of a point and therefore won the tender.
Pipar claims, however, that public tender laws were broken and that one such breach should have prevented M&C Saatchi even taking part in the competition. As the agency is currently under investigation by financial regulators in the UK, Icelandic law dictates it is ineligible to take part in tender applications, according to Pipar.
The company is not bound by Icelandic VAT regulations and would not need to pay its own VAT for services provided in Iceland as Icelandic advertising agencies do, and that skews their competitive position, Pipar also claims.
Tender details on the Ríkiskaup website state that court convictions preclude applicants from applying, and that offers submitted must take account of VAT.
Halldór Ó Sigurðsson, head of Ríkiskaup, told RÚV news a week ago that Íslandsstofa (the Promote Iceland agency), which commissioned the project, is liable for VAT in Iceland. If the British agency misunderstood that and provided prices excluding VAT in its proposal, it will need to lower its prices to the same level as Icelandic VAT when submitting bills.