Anti-Drug Media Campaign: Aspects of Advertising Contract Mismanaged by the Government; Contractor Improperly Charged Some Costs

This testimony discusses the Office of National Drug Control Policy's (ONDCP) advertising contract for Phase III of the National Youth Anti-Drug Media Campaign. GAO found that the contractor, Ogilvy & Mather, improperly charged the government for some of its labor costs incurred under this contract. Ogivley & Mather submitted time sheets claiming hours that some employees said they did not work on the anti-drug media campaign. In addition, the company made little progress toward restructuring its accounting system to meet government requirements until nearly two years after the contract was awarded. The government poorly managed aspects of the award and administration of the contract. The Department of Health and Human Services (HHS) should not have awarded this cost-reimbursement contract without determining whether the contractor had an adequate cost accounting system. In addition, HHS should have reviewed the appropriateness of the large amount of money that the technical representative recommended be disallowed from the contractor's invoices, or arranged for an audit of the contract. The technical representative appropriately brought allegations of improper billing to the attention of ONDCP management, but ONDCP management did not take prompt action to investigate the allegations. Because the contract has not yet been audited, the appropriateness of the disallowed charges and Ogilvy's actual incurred costs under this contract remains unknown. This testimony summarized a June report (GAO-01-623).