Pubdate: Thu, 5 Oct 2000 Source: CNN.com (US Web) Copyright: 2000 Cable News Network, Inc. Contact: http://cnn.com/feedback/ Website: http://www.cnn.com/ Forum: http://community.cnn.com/ MISMANAGEMENT ALLEGED IN NATIONAL ANTI-DRUG AD CAMPAIGN Washington (CNN) -- Several lawmakers have criticized the Office of National Drug Control Policy for the way it has responded to allegations of fraud in its anti-drug media campaign. "This...whole program of advertising and bringing more awareness to the youth of America about the perils of using drugs is not working as well as we would have hoped," said a frustrated Rep. John Mica, R-Florida, in a congressional hearing on Wednesday. Mica is chairman of the Government Reform Subcommittee on Criminal Justice, Drug Policy and Human Resources. His subcommittee heard testimony from General Accounting Office investigators who questioned why ONDCP officials did not immediately request an audit of a contract with the largest contractor working on the campaign -- advertising firm Ogilvy & Mather -- when allegations of overbilling and possible fraud first came to light earlier this year. In addition to the management review of ONDCP, the GAO is currently conducting its own investigation into the fraud allegations against Ogilvy and Mather. Agency slow to request audit "There is evidence of false billing here, involving taxpayer monies, and this has been going on for a period of time...you all haven't even ordered an audit. That's why we are concerned about this," said Rep. Bob Barr, R-Georgia. ONDCP Deputy Director Dr. Donald Vereen defended the office's oversight of the contract. "Is the public being gouged? The answer is no. We are diligently protecting the public's purse," he said, but acknowledged that no audit had been requested. Vereen said this was due to a dispute with the Department of Health and Human Services, which administers the five-year, $1 billion Ogilvy and Mather contract. He said the ONDCP has no ability to handle large contracts on its own. However, Vereen noted that the ONDCP has withheld $13.5 million in payment to Ogilvy and Mather over disputed billing claims and had no intention of paying the total owed until an audit had been performed. Advertising firm denies intentional overbilling The allegations against Ogilvy & Mather, which was hired to coordinate advertising for the campaign eighteen months ago, include inflating its labor costs and falsifying timesheets. Ogilvy & Mather denied it had engaged in intentional overbilling or fraud. In a written statement, Bill Gray, the president of Ogilvy-New York, said, "we have charged ONDCP within the necessary industry standard and if we learn of any accounting problems, we will address them and make any necessary adjustments." Alan Levitt, the ONDCP official in charge of the National Youth Anti-Drug Media Campaign, said he was concerned about charges of overbilling or mismanagement, but said at least some of the billing irregularities could have resulted from misunderstandings about what charges are allowed and what are disallowed under government regulations. "In the ad industry, people fly first class. They can't do that in the government," he pointed out. He also said some of the overbilling could have resulted from math errors or other unintentional mistakes. Allegations surfaced in March The fraud allegations initially surfaced in March when an ONDCP contracting officer received a call from a former Ogilvy employee, Dan Merrick, who accused the ad agency of padding its bills. Richard Pleffner, the Office of National Drug Control Policy's project contracting officer, warned the office's director, Barry McCaffrey, in an April 13 memo that he had questions about the billing from Ogilvy & Mather. "Excessive billing irregularities under the Ogilvy contract have led to growing uncertainties with Oglivy's management practices," Pleffner wrote. Also, the GAO fraud hotline received an anonymous call about the situation in July. CNN Producer Beth Lewandowski and the Associated Press contributed to this report. - --- MAP posted-by: Don Beck