A report released last week by the US government’s General Accounting Office encouraged the Office of National Drug Control Policy to drop ad agency Ogilvy & Mather if it does not develop accounting practices that comply with government billing requirements.

The row stems back to claims by a former agency staffer last year that O&M had overbilled the ONDCP [WAMN: 05-Oct-01]. These were denied by the shop, which blamed the irregularities on its unfamiliarity with federal accounting practices, leading to overbilling in some areas and underbilling in others.

In the report, the GAO found evidence of mismanagement on both sides. The ONDCP, it said, “poorly managed aspects of the award and administration of the contract,” and should have checked whether O&M could accommodate its accounting procedures before awarding the account, worth $684 million in billings over five years, with annual renewal options every January.

The GAO also reported that, when asked by government officials about hours added to time sheets for the ONDCP account, “employees said they did not make those changes…and could not explain who made the changes and why.” In one extraordinary instance, the GAO found an invoice for $11,000 for 15.5 hours work by a freelancer – “an effective labor rate of $716 per hour.”

O&M insists it implemented new billing procedures complying with government practices in March, adding that it accepts “full responsibility as a first-time government contractor for the fact that some of our accounting aspects did not meet the special record-keeping requirements imposed on federal contractors.”

The GAO has referred the matter to the Justice Department to decide whether it should be treated as a civil or criminal affair.

News source: Adweek.com