U.S. ANTIDRUG AGENCY RECONSIDERS AD ACCOUNT WITH OGILVY & MATHER

The recent overbilling scandal involving Madison Avenue ad agency Ogilvy &
Mather is neither gone nor forgotten.

The powerhouse agency, a unit of WPP Group of London, earlier this month
agreed to pay $1.8 million to settle charges that it overbilled the Office
of National Drug Control Policy, the White House agency behind the
prestigious and controversial advertising campaign linking drug use to
terrorism.

But in New York, a criminal probe into whether employees at Ogilvy altered
time sheets on the antidrug account is gaining steam, according to people
familiar with the situation. And Tuesday, Washington lawmakers asked the
nation's new drug czar whether the venerable advertising agency should
continue to work on the account.

At a congressional-subcommittee hearing to enlist support for the National
Youth Antidrug Media Campaign, the drug czar, John P. Walters, touted the
commercials created by Ogilvy. The controversial advertising effort helped
raise awareness of the dangers of drug abuse among young people, he argued,
citing the recent broadcast of two of the antidrug commercials during the
Super Bowl, one of television's most widely watched events.

But in that same hearing on drug-control strategy, lawmakers questioned Mr.
Walters about Ogilvy's future role in the ad campaign. Rep. Bob Barr, a
Republican from Georgia who couldn't attend the hearing, also submitted his
own list of written questions, asking the drug czar why Ogilvy, which
estimates that it overbilled the government by $850,000, should continue to
keep the prestigious antidrug assignment.

In another blow to the program, the U.S. Department of the Navy surprised
the White House antidrug office Tuesday when it said would quit its work as
an auditor on the antidrug advertising project so it could focus on Navy
priorities. The drug czar's office is relatively small and lacks experience
with government contractors. Now, it will have to enlist another government
agency as partner to audit the bills for its advertising campaign.

Ogilvy had hoped its settlement three weeks ago would put it in good stead
by ending the Justice Department's civil investigation into whether it had
overcharged the so-called drug czar's office in 1999 and 2000 by inflating
its labor costs. In the settlement, Ogilvy said it would pay $689,744 to
the Office of National Drug Control Policy. The agency, whose clients
include International Business Machines and American Express, also agreed
to give the antidrug agency a credit of about $1.5 million to use against
its bills in the three-year antidrug contract.

"Why is the government continuing to deal with this company when we don't
have answers about what happened with all the money we gave them?" Rep.
Barr said in an interview. "Frankly, I don't think that any company that
behaved this way should continue to keep the government work."

In New York, agents with the Federal Bureau of Investigation are continuing
their own probe of the matter with the U.S. attorney for the Southern
District of New York. In recent weeks, the FBI has sought information in
interviews with both current and former Ogilvy employees, some of whom were
accused of bad billing on the account, these people say.

Meanwhile, Ogilvy's rivals are making a grab for the high-profile business,
which generates roughly $150 million in billings. Contenders include
Interpublic Group's star agency, McCann-Erickson, as well as Saatchi &
Saatchi, a unit of Publicis Groupe of France. Late last year, the U.S.
antidrug office agreed to consider their proposals for the account.

Jennifer de Vallance, a spokeswoman for the antidrug agency, said the
office expects to make a decision next month. "We have received written
proposals and oral presentations from agencies that were to be considered
for the work," she said. Three panels now will evaluate the bids.

"Ogilvy continues to believe it is the best and most qualified vendor for
this contract," said Ira Raphaelson, a defense lawyer working on behalf of
the agency.

"Ogilvy not only is anxious to do the work but hopes it will re-win the
contract," he added. Mr. Raphaelson noted that the agency doesn't believe
its employees committed a crime. Rather, he said, Ogilvy thinks it made an
honest mistake and was forthright about the problem.