NCJ Number
195715
Date Published
2001
Length
9 pages
Annotation
This testimony by a representative of the U.S. General Accounting Office (GAO) before the U.S. House Subcommittee on Criminal Justice, Drug Policy, and Human Resources of the Committee on Government Reform summarizes the GAO's report entitled "Anti-Drug Media Campaign: Aspects of Advertising Contract Mismanaged by the Government; Contractor Improperly Charged Some Costs" (GAO-01-623, June 25, 2001), which presents the findings from a review of the Office of National Drug Control Policy's (ONDCP) advertising contract for Phase III of the National Youth Anti-Drug Media Campaign.
Abstract
The GAO study found that the advertising agency (Ogilvy & Mather) with whom the contract was made did not properly charge the Federal Government for some of its labor costs incurred under the contract. Its submission of time sheets that claimed hours that some employees reported they did not work on the anti-drug media campaign was clearly improper. In addition, the company did not make substantial progress toward restructuring its accounting system to meet Federal requirements until nearly 2 years after the contract was awarded. The Government poorly managed aspects of the award and administration of the contract. The U.S. 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. The GAO recommends that the Government not exercise the next contract option year with Ogilvy unless substantial progress has been made toward resolving these issues and ONDCP has considered both Ogilvy's administrative and technical performance under the contract to date. Further recommendations are offered for improving HHS' compliance with contracting procedures, such that cost-reimbursement contracts are not awarded to companies that lack adequate accounting systems to support this type of contract. Recent actions taken on these recommendations are reported.