June 10, 2001

This report discusses the Office of National Drug Control Policy's (ONDCP) advertising contract for Phase III of the National Youth Anti-Drug Media Campaign. The contractor for the advertising portion of the Phase III anti-drug media campaign did not properly charge the government for some of the labor costs incurred under the contract. Ogilvy & Mather's submission of time sheets claiming hours that some employees said they did not work on the anti-drug media campaign was clearly improper. Moreover, Ogilvy should not have been awarded a cost accounting standards (CAS)-covered cost-reimbursement government contract until the company had an adequate cost accounting system to support this type of contract. 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 that met CAS standards. In addition, HHS should have reviewed the appropriateness of the large amount of money that the contracting officer's technical representative (COTR) recommended be
disallowed from the contractor's invoices or arranged for an audit of the contract. The COTR appropriately brought allegations of improper billing to the attention of ONDCP management, but ONDCP management did not take prompt action to investigate the allegations. Moreover, contract administration was impeded because the COTR and contracting officer did not have an effective working relationship.

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