Congressional Controversy - Drug office shocker: Ogilvy stays

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In a stunning decision, the White House anti-drug office is keeping its $150 million account with WPP Group's Ogilvy & Mather. That's an enormous vote of confidence for the agency-but one that could create political problems for the drug office while leaving Ogilvy open to further congressional attack.

Almost as soon as word that Ogilvy would retain the account surfaced last week, the White House Office of National Drug Control Policy sought to deflect expected congressional criticism. It said the U.S. Navy, which conducted the review on behalf of the drug office, chose to retain Ogilvy, distancing itself from the decision.

An office spokesman noted that Ogilvy, which settled for $1.8 million accusations that it overbilled the government on the account, had altered its billing practices to comply with government billing standards. "It is important to keep in mind that Ogilvy did respond to the criticism and changed their practices, and did comply with all the recommendations in the [General Accounting Office] report," said Tom Riley, the office's public affairs director. "Since Ogilvy was not debarred, it would have been illegal for us to have excluded them from the competition. The Navy made the evaluation."

Mr. Riley acknowledged there were people in Congress critical of Ogilvy's performance and said the Navy did take into account Ogilvy's past performance. He said the contractors felt Ogilvy had "remediated" its past performance and the award was justified.

That's not expected to mollify Capitol Hill critics including Sen. Byron Dorgan, D-N.D., chairman of an appropriations panel that oversees the drug office's budget, or Rep. Bob Barr, R-Ga., who has repeatedly criticized Ogilvy. Neither could be reached for comment but both had said they would be watching the award closely. Rep. Barr warned he would oppose the ad program if Ogilvy were chosen. Congressional support is important. The contract is for one year, and can be extended another four years if Congress votes to reauthorize it.

The award was announced July 3 shortly after 5 p.m. while Congress was out of Washington for the holiday. Navy officials could not be reached for comment.

Besides Ogilvy, review contenders included Interpublic Group of Cos.' Foote, Cone & Belding Worldwide, New York, pitching with Initiative Media; Interpublic's McCann-Erickson Worldwide, New York, pitching with Universal McCann; Cordiant Communications Group's Bates Worldwide, New York, pitching with Zenith Media; and Publicis Groupe's Saatchi & Saatchi, New York, also with Zenith. Zenith is owned by Cordiant and Publicis.

delighted

"We are delighted to continue to work with [the drug office] as its strategic, research and media partner in the very important work on behalf of the anti-drug campaign," Ogilvy said in a statement.

Ogilvy, which has drawn praise from the drug office for its efforts, does research for ads and buys media with sibling shop Mindshare. Most creative comes via the Partnership for Drug Free America.

The award to Ogilvy comes as the drug office faces a congressional battle over its budget and the ad contract because of a recent report suggesting the campaign has not been effective at targeting youth. A House appropriations panel recently moved to cut the program's budget by $10 million, with its chairman saying the drug office is spending too much on administration and not enough on media. The chairman of the House Government Reform committee panel said splitting with Ogilvy could help quiet the storm (AA, July 1).

The current contract gives the ad agency a $1.7 million annual fee plus some $12 million a year for labor, $6 million for subcontracts and $6 million for product. The remainder goes to paid media.

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