According to a Reuters report, Ogilvy & Mather North America has agreed to pay the government $1.8 million to settle claims that it overcharged the U.S. Drug Czar's office for work on anti-drug ads. Government had stated that the agency submitted ‘false paperwork’ inflating the time spent by agencies employee on the account.
Ogilvy, has agreed to pay the government $689,744 in cash and revise its pending charges to the government downward by more than $1.1 million to settle the allegations.
The Drug Czar's office had alleged that Ogilvy charged too much for the ads because it had submitting "inaccurate" time sheets that overestimated the amount of work its employees had devoted to the campaign.
But the ad agency attributed this to "technical timekeeping errors."
"Ogilvy was a first-time federal contractor, and although we outperformed the contract and underbilled the (Drug Czar) for our work, we recognized our responsibility for our billing mistakes, and cooperated fully with the government to resolve them," said an Ogilvy statement.
The federal account is up for annual pitch in March and agency believes that this incidence will not mar its chances.
As Indian agencies move towards variable cost (and billing) regime, they’ll have to be careful to avoid such embarrassments. Time to check those ‘time-sheets’!