Pubdate: Wed, 27 Feb 2002
Source: Wall Street Journal (US)
Copyright: 2002 Dow Jones & Company, Inc.
Contact:  http://www.wsj.com/
Details: http://www.mapinc.org/media/487
Author: Vanessa O'connell

U.S. ANTIDRUG AGENCY RECONSIDERS AD ACCOUNT WITH OGILVY & MATHER

The recent overbilling scandal involving Madison Avenue ad agency Ogilvy & 
Mather is neither gone nor forgotten.

The powerhouse agency, a unit of WPP Group of London, earlier this month 
agreed to pay $1.8 million to settle charges that it overbilled the Office 
of National Drug Control Policy, the White House agency behind the 
prestigious and controversial advertising campaign linking drug use to 
terrorism.

But in New York, a criminal probe into whether employees at Ogilvy altered 
time sheets on the antidrug account is gaining steam, according to people 
familiar with the situation. And Tuesday, Washington lawmakers asked the 
nation's new drug czar whether the venerable advertising agency should 
continue to work on the account.

At a congressional-subcommittee hearing to enlist support for the National 
Youth Antidrug Media Campaign, the drug czar, John P. Walters, touted the 
commercials created by Ogilvy. The controversial advertising effort helped 
raise awareness of the dangers of drug abuse among young people, he argued, 
citing the recent broadcast of two of the antidrug commercials during the 
Super Bowl, one of television's most widely watched events.

But in that same hearing on drug-control strategy, lawmakers questioned Mr. 
Walters about Ogilvy's future role in the ad campaign. Rep. Bob Barr, a 
Republican from Georgia who couldn't attend the hearing, also submitted his 
own list of written questions, asking the drug czar why Ogilvy, which 
estimates that it overbilled the government by $850,000, should continue to 
keep the prestigious antidrug assignment.

In another blow to the program, the U.S. Department of the Navy surprised 
the White House antidrug office Tuesday when it said would quit its work as 
an auditor on the antidrug advertising project so it could focus on Navy 
priorities. The drug czar's office is relatively small and lacks experience 
with government contractors. Now, it will have to enlist another government 
agency as partner to audit the bills for its advertising campaign.

Ogilvy had hoped its settlement three weeks ago would put it in good stead 
by ending the Justice Department's civil investigation into whether it had 
overcharged the so-called drug czar's office in 1999 and 2000 by inflating 
its labor costs. In the settlement, Ogilvy said it would pay $689,744 to 
the Office of National Drug Control Policy. The agency, whose clients 
include International Business Machines and American Express, also agreed 
to give the antidrug agency a credit of about $1.5 million to use against 
its bills in the three-year antidrug contract.

"Why is the government continuing to deal with this company when we don't 
have answers about what happened with all the money we gave them?" Rep. 
Barr said in an interview. "Frankly, I don't think that any company that 
behaved this way should continue to keep the government work."

In New York, agents with the Federal Bureau of Investigation are continuing 
their own probe of the matter with the U.S. attorney for the Southern 
District of New York. In recent weeks, the FBI has sought information in 
interviews with both current and former Ogilvy employees, some of whom were 
accused of bad billing on the account, these people say.

Meanwhile, Ogilvy's rivals are making a grab for the high-profile business, 
which generates roughly $150 million in billings. Contenders include 
Interpublic Group's star agency, McCann-Erickson, as well as Saatchi & 
Saatchi, a unit of Publicis Groupe of France. Late last year, the U.S. 
antidrug office agreed to consider their proposals for the account.

Jennifer de Vallance, a spokeswoman for the antidrug agency, said the 
office expects to make a decision next month. "We have received written 
proposals and oral presentations from agencies that were to be considered 
for the work," she said. Three panels now will evaluate the bids.

"Ogilvy continues to believe it is the best and most qualified vendor for 
this contract," said Ira Raphaelson, a defense lawyer working on behalf of 
the agency.

"Ogilvy not only is anxious to do the work but hopes it will re-win the 
contract," he added. Mr. Raphaelson noted that the agency doesn't believe 
its employees committed a crime. Rather, he said, Ogilvy thinks it made an 
honest mistake and was forthright about the problem.
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