White House Holds Back Payment To Ad Agency

  White House Holds Back Payment To Ad Agency

Posted by FoM on September 30, 2000 at 16:18:27 PT
By Tim Golden 
Source: New York Times 

The White House is withholding millions of dollars in payments to a major advertising firm after allegations that the firm may have overbilled the government for its work on a huge media campaign aimed at discouraging young people from using drugs.The White House drug-policy office, which oversees the media campaign, has held back some $13.5 million in payments on $187 million that has been billed by the firm, Ogilvy & Mather, much of it after one of the company's former employees and a White House project manager questioned the firm's charges, officials said.
In an internal government memorandum, a consultant hired by the White House to assess the charges also found that Ogilvy's costs, particularly for labor, were "dramatically higher than even the high end of what is standard industry practice."Officials of the White House agency, the Office of National Drug Control Policy, emphasized that there was no evidence that the company had engaged in fraud. Ogilvy executives also strongly denied that they had done anything improper, saying that only $10.5 million in payments had been held up and describing the disputes as nothing more than the normal give-and-take between a contractor and the government."It is routine for bills to be negotiated; that's a standard commercial practice," said a spokesman for Ogilvy & Mather, Howard G. Paster. "We clearly expect to be paid for our work. There may be things that have to be adjusted, but we don't anticipate any significant reduction in billing."In response to the allegations of improper billing, the United States General Accounting Office, the investigative arm of Congress, began an inquiry into the contract in July. The agency's Office of Special Investigations has found no evidence of fraud, the director of the office, Robert H. Hass, said, but the agency has now begun a full financial audit of the contract.Ogilvy is the primary government contractor in an ambitious new anti- drug advertising and education effort called the National Youth Anti- Drug Media Campaign.The campaign, which got under way in 1998, is expected to cost nearly $1 billion over five years. It supplants the free advertising that was organized for years by the Partnership for a Drug Free America, a coalition of communications and advertising professionals.That effort was seen to have lost much of its effectiveness as television audiences grew more fragmented and it became harder to reach young viewers through public-service announcements on major networks that were required to carry the announcements. After a long debate, the Clinton administration and Congress decided to spend public money to try to achieve a greater impact with the advertising, while also trying to influence the depictions of drug use in films, television shows and popular music.The new campaign was criticized earlier this year, when it became known that popular television shows were submitting their scripts to the White House drug office in order to get credit for required public-service spots.Under the terms of its contract, Ogilvy buys advertising time and space for the campaign and also negotiates with television networks and others to match the advertising they sell to the government with an equal amount of donated time.Ogilvy and government officials said the agency's costs had been higher than expected in part because it had taken on tasks that were new or not anticipated in its contract, like working with social scientists to prepare television spots, or developing separate advertising campaigns for different ethnic communities."We are certainly concerned about the costs — it is much more expensive than we thought it would be," said Alan Levitt, the director of the media campaign for the White House drug office. "But there are reasons for some of it."Mr. Levitt said that some of Ogilvy's large bills might have been the product of the agency's relative unfamiliarity with government accounting practices.But privately, some other officials of the drug-policy office have raised other, sharper concerns, as documented in a series of memoranda provided to The New York Times by an official who believed that the Clinton administration was not taking them seriously.In an April memorandum the manager of the media campaign, Richard Pleffner, wrote to the White House drug-policy chief, Gen. Barry R. McCaffrey, retired, that Ogilvy's first bill for labor costs, submitted last September, raised questions about "excessive salaries, numbers of stated hours, unallowable compensation and erroneous computation methodology that benefits Ogilvy."Those concerns escalated, he wrote, with each of the other two bills that the firm submitted for work it had done over the same time period.Mr. Pleffner also wrote that a former Ogilvy employee who had been dismissed as a senior manager of the contract had told White House officials that a senior official of the agency had complained to managers in 1999 that the agency was not earning enough from the contract, and that thereafter "time sheets were altered to increase the number of hours worked" on the account."While it may not be unusual for a terminated employee to bring forth allegations against their former employer," Mr. Pleffner wrote in his memorandum, "in this case they corroborate pre-existing concerns." White House officials said they sought to arrange an audit of the contract but were unable to persuade the Department of Health and Human Services — the agency being paid to handle the contracting — to conduct one before the contract was over. White House officials said the administration of the contract would be transferred to an office of the Navy by the end of this year, and an external audit will be conducted soon thereafter.NewsHawk: AnonymousSource: New York Times (NY) Copyright: 2000 The New York Times Company Published: September 30, 2000 Contact: letters Address: 229 West 43rd Street, New York, NY 10036 Fax: (212) 556-3622 Website: Forum: Related Articles:Propaganda for Dollars Script Doctors

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Comment #6 posted by FoM on February 24, 2001 at 11:17:45 PT

Thank You Mary
Thank you for the interesting in receiving news from an email list but I don't have one. I have no idea how to do one either but I can suggest that you bookmark these 3 pages because as soon as I post an article into these archives they show up and you can easily see if there is a new entry. I hope this helps. They are dated.
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Comment #4 posted by Mary Christine on February 24, 2001 at 11:01:27 PT:

receiving cannabisnews
Could you please put us on your email list for receiving information on hemp and marijuana. We are a hemp activist company in New Mexico who also handcraft home furnishings for the interior design markets. Thank you for your great work.Mary Christine
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Comment #3 posted by EdC on October 01, 2000 at 05:29:31 PT:

White House Holds Back Payment To Ad Agency

This whole deal about the government rewarding the media with taxpayer dollars to spin the government's tune on drugs sickens me. It's like to old official Russian newspaper Tass, which we all knew (because we were told)was nothing but propaganda. This is all bullshit. We don't need no stinkin drug war. End it.
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Comment #2 posted by freedom fighter on September 30, 2000 at 17:47:42 PT

What one could do with 

187 million dollars?build more schoolsThink about 90% of deaf folks in LA Calif. being supported by the US welfare system. We could use that money to teach trades and improve the situation.As far as I know, I have never heard or read of a person who said," I did not do drugs because of those ads." Not one! How's that for marketing effort? These so called advertisitings sound so cult-like.OmmmOmmmOmmmOmmm Sounds like just that to me folks!Every time they run these stooopid advertisings, 200million buks in the drain...gee!
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Comment #1 posted by kaptinemo on September 30, 2000 at 16:50:06 PT:

Honor among thieves...and liars.

Now this is rich. The government is trying to cheat the very people contracted to do its' lying for it. Apparently, because the cost of lying is, like government promisies to protect your privacy, health, etc a negotiable item. In short, the government says a lie is only worth so much, and the company says the lie is worth more. The company fully expects to be remunerated for its' job in lying. The governemnt is 'honor bound'.......... (ahh, excuse me, I had to take a break. My stomach hurts so much from laughing and my eyes are full of tears that I just couldn't finish this) (Trying again) where was I? Oh yes, the company has a contract to lie for the government. This they did. But now the government says the lies cost too much. Over and above the agreed price of X amount of dollars for each lie. The company believes it can hold the government accountable for not paying it for telling the lies it has as agreed to. It expects a lying government to honor a contract.And the bad part about it all is that in the scandal dripping halls of Washington, this is not's business as usual. It turns no heads. It ellicits no outrage. Careers don't crash and burn, heads don't roll, governmnents don't fall. Ho-hum.Some days, I am so ashamed of being an American. 
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