TITLE: B-305368, Department of Education--Contract to Obtain Services of Armstrong Williams, September 30, 2005
BNUMBER: B-305368
DATE: September 30, 2005
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B-305368, Department of Education--Contract to Obtain Services of Armstrong Williams, September 30, 2005

   B-305368

   September 30, 2005

   The Honorable Frank R. Lautenberg

   The Honorable Edward M. Kennedy

   United States Senate

   Subject: Department of Education--Contract to Obtain Services of Armstrong
   Williams

   This responds to your letter of January 10, 2005, in which you asked that
   we consider the Department of Education's arrangements with Ketchum, Inc.,
   and Mr. Armstrong Williams concerning the "No Child Left Behind" program.
   Your letter was prompted by some press reports about a Department of
   Education contract with Ketchum, Inc., and Ketchum subcontracts with the
   Graham Williams Group (GWG). Among other things, the press reports allege
   that pursuant to these arrangements, the Department paid Mr. Williams to
   promote the No Child Left Behind Act of 2001, Pub. L. No. 107-110,
   115 Stat. 1425 (Jan. 8, 2002). You asked whether, in contracting for the
   services of Armstrong Williams, the Department violated the publicity or
   propaganda prohibition.[1]

   As explained below, we find that the Department contracted for Armstrong
   Williams to comment regularly on the No Child Left Behind Act without
   assuring that the Department's role was disclosed to the targeted
   audiences. This violated the publicity or propaganda prohibition for
   fiscal year 2004 because it amounted to covert propaganda. As a result of
   this violation, the Department also violated the Antideficiency Act, 31
   U.S.C. sect. 1341.

   BACKGROUND

   Consistent with our usual practice, we requested factual information and
   the Department's legal justification for using appropriated funds to
   obtain the services provided by Mr. Williams and his company. Letter from
   Susan Poling, Managing Associate General Counsel, GAO, to Kent Talbert,
   Acting General Counsel, Department of Education, Jan. 28, 2005
   (hereinafter, Poling Letter). The Department delayed its response to our
   request pending completion of work by the Inspector General (IG) on
   whether the Department's arrangements with Ketchum and GWG complied with
   the Federal Acquisition Regulation and other pertinent contract law.

   The IG issued his report on April 15, 2005. ED-OIG Report No. A19-F0007,
   April 15, 2005 (hereinafter, "ED-OIG Report"). The Department "accept[ed]
   the report as drafted and embrace[d] the recommendations" made in it.
   Letter from Margaret Spellings, Secretary, Department of Education, to
   John P. Higgins, Jr., Inspector General, Department of Education, Apr. 15,
   2005. Subsequently, the Department's Acting General Counsel replied to our
   request. Letter from Kent Talbert, Acting General Counsel, Department of
   Education, to Susan Poling, Managing Associate General Counsel, GAO, May
   18, 2005 (hereinafter, Talbert Letter). In determining the facts pertinent
   to this opinion, we relied upon the ED-OIG Report, the Acting General
   Counsel's reply, and the documents provided with them.

   The No Child Left Behind Act (NCLB Act) became law in January 2002. In
   order to disseminate information to the public about the NCLB Act, the
   Department decided to acquire media relations services. On May 14, 2003,
   the Department awarded Ketchum, Inc. (hereinafter, Ketchum) a 1-year
   "indefinite delivery, indefinite quantity" (IDIQ) contract, with three
   renewal options. ED-OIG Report at 8. Over time, the Department issued
   multiple task orders and work requests under the Ketchum contract. ED-OIG
   Report  at 2. Two of those task orders were for the services of Armstrong
   Williams and his company, GWG.

   According to the IG report, Mr. Williams initially approached the
   Secretary of Education in March 2003 with an undated written proposal that
   the Graham Williams Group (GWG) do some work for the Department.[2] Id. at
   5. Mr. Williams told the Department at the time (and later repeated to the
   IG) that he was willing to accept significantly less for his services than
   he would normally charge because "he believed in NCLB." Id. at 6. In
   November 2003, the Department directed Ketchum to arrange a subcontract
   with GWG for a minority outreach program featuring Mr. Williams. Id. For
   this reason, Ketchum submitted a formal proposal to the Department for GWG
   to regularly comment on the NCLB Act during the course of his broadcasts
   and to produce, among other things, two television and two radio
   advertisements for broadcast during Mr. Williams's weekly television and
   radio show, "The Right Side." Id. See also Talbert Letter, Exhibit 1:
   Memorandum from Monica Marshall, Senior Vice President, Ketchum, to John
   Gibbons, Director of Public Affairs, and D.J. Nordquist, Deputy Director
   of Public Affairs, Department of Education, Nov. 17, 2003.

   The Department adopted the Ketchum proposal[3] and, on January 6, 2004,
   issued Task Order No. 9,[4] which amended the Ketchum contract and made
   $113,441.06 available for the conduct of a six-month (from December 2,
   2003, through June 2, 2004) minority outreach campaign using GWG. The
   Statement of Work for Task Order No. 9 states that Ketchum "shall arrange"
   for the production of two television and two radio ads that would run on
   "The Right Side," featuring the Secretary of Education and Mr. Williams
   and focus on the NCLB Act.[5]  It also states that Ketchum "shall arrange
   for Mr. Williams to regularly comment on NCLB."

   The Statement of Work also set out a list of "Deliverables" that included
   two television ads and two radio ads "promoting NCLB," to be broadcast
   during Armstrong Williams's radio and television shows; an option for the
   Secretary and other Department officials to appear from time to time as
   studio guests to discuss the NCLB Act; a 6-month advertising campaign in
   "The Right Side" with Armstrong Williams, with "bonus ads" during Black
   History month and on Rev. Martin Luther King, Jr.'s Birthday; and a
   requirement that Mr. Williams "utilize his long term working relationship
   with America's Black Forum, where he appears as a guest commentator, to
   encourage the producers to periodically address the No Child Left Behind
   Act (67 million viewers; reach 87% of urban market)."

   The Statement of Work required Ketchum to provide monthly reports to the
   Department. After the Department issued Task Order No. 9 to Ketchum,
   Ketchum and GWG entered into a "firm-fixed price subcontract," effective
   retroactively from December 2, 2003, through June 2, 2004, to execute the
   task order. Talbert Letter, Exhibit 2. A copy of the Statement of Work for
   Task Order No. 9 was included as an attachment to that subcontract. Id. On
   May 18, 2004, Ketchum proposed that the Department renew and expand those
   arrangements for an additional 6-month period.[6] The Department agreed
   and on June 25, 2004, issued Task Order No. 16 extending the outreach
   campaign until December 25, 2004.[7] The Statement of Work for Task Order
   No. 16 was nearly identical to that of Task Order No. 9,[8] and Ketchum
   and GWG implemented it in the same manner that they implemented Task Order
   No. 9.

   Over the course of both task orders, GWG submitted to Ketchum a series of
   monthly invoices and reports.[9] Ketchum passed these invoices and reports
   to the Department[10] as part of its billing process. [11] Ketchum's
   invoices included line items for its own administrative expenses, plus an
   additional line item indicating that it had paid GWG's subsidiary, Right
   Side Productions, Inc., along with the date and amount.[12] All of GWG's
   invoices billed for "Professional Services."[13] Some of those invoices
   included a line item for "Ad production,"[14] "Ad costs,"[15] or "Ad
   Campaign."[16] The IG found that the invoices paid by the Department did
   not clearly identify what the Department was paying for.[17] None of the
   invoices provided the Department by Ketchum or GWG specifically referred
   any of the "deliverables" listed in the Statements of Work.[18]

   GWG's monthly reports were organized into two sections. Every report began
   with a list (often lengthy) of what GWG characterized as activities
   undertaken during that month in which "Mr. Armstrong Williams promoted
   NCLB."[19] The activities listed included radio and television shows,
   radio stations, networks, published columns, and other activities. Most of
   those entries for these activities consisted solely of dates and event
   names. Other entries were more detailed. For example, in the report for
   February 2004, GWG included in its list the entry, "Sinclair
   Broadcasting--February 16 & 23, 2004. Two (2) minute commentary devoted to
   NCLB."[20] The January report listed and reproduced in full a column that
   Mr. Williams had published "devoted to NCLB" that appeared in 34
   newspapers.[21] (Mr. Williams did not disclose in the column his
   contractual relationship to the Department.) The monthly reports also
   listed the dates, times, and stations on which the GWG-produced TV and
   radio advertisements ran during that month.[22]

   The IG found that, taken together, Mr. Williams's 12 monthly reports
   listed "168 activities other than ads . . . promoting NCLB." ED-OIG at 15.
   We asked the Department for copies or transcripts of all of the
   interviews, speeches, columns, and other public statements that Armstrong
   Williams made promoting the NCLB Act as result of its subcontracts with
   Ketchum.[23] Other than the one column which GWG reproduced in full as
   part of its Monthly Report for January 2004, see Talbert Letter, Exhibit
   29, the Department did not provide us with copies or transcripts for any
   of the activities listed in the monthly reports. For this reason, we
   searched the internet for copies, transcripts, or press reports of the
   other public statements that GWG listed in its monthly reports. We were
   unable to locate any of those statements on the internet, but we did find
   other columns that Mr. Williams made promoting the NCLB Act during the
   period covered by the Department's task orders.[24] However, we could not
   directly connect these other columns to Task Order Nos. 9 and 16 because,
   while the GWG and Ketchum proposals stated that Mr. Williams would "place
   stories and commentaries on NCLB"[25] in the media, GWG did not list these
   other columns in its monthly reports.

   The Department told us that it has paid Ketchum a total of $188,543.48 for
   Task Order Nos. 9 and 16. Of that amount, $186,000 covered amounts that
   Ketchum paid GWG.[26] Talbert Letter at 9. The Department paid these
   amounts using funds appropriated for "Departmental Management--Program
   Administration" in the Consolidated Appropriations Act, 2004, Pub. L. No.
   108-199, div. E, title III, 118 Stat. 3, 262 (Jan. 23, 2004). According to
   the Department, it has paid eight of the twelve monthly Ketchum invoices.
   Talbert Letter at 10.

   DISCUSSION

   Your letter asked us to determine whether the Department's arrangements
   with Ketchum, GWG, and Armstrong Williams violated the governmentwide
   publicity or propaganda prohibition, as contained in the 2004 fiscal year
   appropriations act.[27] This prohibition states that "[n]o part of any
   appropriation . . . shall be used for publicity or propaganda purposes
   within the United States not heretofore authorized by the Congress."[28] 
   It bars agencies from using appropriations (a) to produce or distribute
   "covert propaganda," (b) for purposes of self-aggrandizement, and (c) for
   purely partisan purposes. E.g., B-304272, Feb. 17, 2005; B-302504,
   Mar. 10, 2004; B-178528, July 27, 1973. In our view, the Department
   violated the publicity or propaganda prohibition when it issued task
   orders to Ketchum directing it to arrange for Mr. Williams to regularly
   comment on the NCLB Act without requiring Ketchum to ensure that Mr.
   Williams disclosed to his audiences his relationship with the Department.
   This qualifies as the production or distribution of covert propaganda.
   This violation, in turn, caused the Department to violate the
   Antideficiency Act, 31 U.S.C. sect. 1341. We explain these findings below.

   Violation of the Publicity or Propaganda Prohibition

   In previous opinions and decisions, we have found "materials . . .
   prepared by an agency or its contractors at the behest of the agency and
   circulated as the ostensible position of parties outside the agency"
   amount to covert propaganda that violates the prohibition. B-229257, June
   10, 1988. A critical element of this violation is the concealment of, or
   failure to disclose, the agency's role in sponsoring the material. E.g.,
   B-303495, Jan. 5, 2005. For example, in B-223098, B-223098.2, Oct. 10,
   1986, the Small Business Administration (SBA) prepared "suggested
   editorials" and distributed them to newspapers. The editorials advocated
   public support for an administration proposal to merge the SBA with the
   Department of Commerce. We found that those agency-prepared editorials
   were misleading as to their origins. The agency intended for the
   newspapers to print the editorials as their own position without
   identifying them as SBA-authored documents. This effort to conceal the
   agency's authorship and make it appear that respected, independent
   authorities were endorsing the agency's position went "beyond the range of
   acceptable agency public information activities" and violated the
   publicity or propaganda prohibition. Id. Similarly, in 66 Comp. Gen. 707
   (1987), we held that newspaper articles and editorials (supporting the
   government's Central American policy) that were prepared by paid
   consultants at government request and published as the work of
   nongovernmental parties violated the prohibition. Again, it was the
   covertness of the government's actions that led to the violation. In that
   case, the government was attempting to convey a message to the public
   advocating the government's position while misleading the public as to the
   origins of the message. Id. at 709.

   In this case, the Department directed Ketchum to subcontract for Armstrong
   Williams to convey a message to the public on behalf of the government
   without disclosing to the public that the messengers were acting on the
   government's behalf and in return for the payment of public funds. The
   Statements of Work for both task orders explicitly stipulated that
   "Ketchum shall arrange for Mr. Williams to regularly comment upon NCLB."
   Talbert Letter, Exhibit Nos. 3 and 5. The Statements of Work also required
   Mr. Williams to "utilize his long term working relationship with America's
   Black Forum . . . to encourage the producers to periodically address the
   No Child Left Behind Act." Id.

   The Department knew when it directed Ketchum to contract with GWG that
   Mr. Williams's commentary and discussion under these Statements of Work
   would endorse the NCLB Act. Both Ketchum and Mr. Williams had stressed to
   the Department that he was willing to accept significantly less than he
   would normally charge for his services because "he believed in the NCLB."
   ED-OIG Report at 6. See also Talbert Letter, Exhibits 1 and 4. In fact, as
   the IG noted, GWG specifically proposed to "win the battle for media space
   [through] favorable commentaries [that] will amount to passive
   endorsements from the media outlets that carry them." ED-OIG Report at 12
   (quoting the GWG proposal presented to the Department in November 2003).

   To meet the requirements of the Statements of Work, Mr. Williams reported
   to the Department on a monthly basis. In those reports he listed the
   activities in which he had "promoted NCLB." The IG counted in those
   monthly reports 168 separate activities in that effort, including
   speeches, interviews, appearances, and a published newspaper column.[29]
   The Department did not provide us recordings or transcripts of those
   activities. We only received the newspaper column from the Department
   because GWG reproduced it in whole in one of its monthly reports. In that
   newspaper column, Mr. Williams praised NCLB, the President, and the
   Secretary of Education.[30] We independently located on the internet other
   activities promoting the NCLB Act that Mr. Williams undertook between
   December 2, 2003 and December 25, 2004, but those activities cannot be
   directly connected to the Department's Task Orders because they were not
   listed in GWG's reports.

   The IG did not opine on whether the activities that it identified violated
   the prohibition on publicity or propaganda.[31] His review was limited to
   "determin[ing] whether the initial award to Ketchum and the subsequent
   work requests involving the GWG were in compliance with the Federal
   Acquisition Regulation (FAR) and other pertinent contract law." ED-OIG
   Report at 1. The IG also evaluated the "effectiveness of the oversight
   function" with respect to the Ketchum contract and the GWG work requests.
   Id. Nevertheless, the IG noted that "because other activities relating to
   commentary were included in the [Statements of Work] and activity reports,
   and because the invoices received and paid by the Department were vague,
   the appearance is that the Department may have been paying for more than
   just the advertising." Id. at 18.

   It is clear to us from the monthly reports and invoices provided by GWG
   that Mr. Williams promoted the NCLB Act at the behest of the Department
   and that he thought it was part of the contract. It is also clear that the
   Department did not ask Ketchum to ensure that the Department's sponsorship
   of Mr. Williams's activities in promotion of the NCLB Act was disclosed to
   his targeted audiences. The Department did not include in its contracts a
   requirement for Ketchum, and hence Mr. Williams, to disclose to intended
   audiences the fact that the Department had retained him to comment upon
   the NCLB Act. In the column promoting the NCLB Act that Mr. Williams
   reproduced in his monthly report for January 2004, Mr. Williams did not
   disclose the Department's sponsorship role.[32] As noted above, we asked
   the Department to provide us copies or transcripts of all of the
   activities that GWG listed in its monthly reports as "promotional" events,
   but the Department did not provide us with any of them--with the exception
   of the one column which GWG included in its January report. For this
   reason, we could not independently verify whether Mr. Williams made
   appropriate disclosures to his audiences and colleagues during the other
   activities listed in GWG's monthly reports.[33] Mr. Williams, however, has
   publicly acknowledged that he did not regularly, if at all, disclose to
   his audiences or the colleagues he was to influence that he had been hired
   at the Department's request to promote the NCLB Act.[34] For these
   reasons, we think it is clear that the Department violated the publicity
   or propaganda prohibition by using appropriated funds to arrange for
   commentary by Armstrong Williams on the NCLB Act without assuring that the
   Department's role in sponsoring that commentary was disclosed to the
   targeted audiences.

   The Department's Position

   In its reply to us, the Department did not dispute that Armstrong Williams
   made favorable commentaries on the NCLB Act during the period covered by
   Task Order Nos. 9 and 16. Nor did it dispute that the Statements of Work
   in the Task Orders required Mr. Williams to comment regularly on the NCLB
   Act. Instead, the Department argued that it contracted only for television
   and radio advertisements featuring Mr. Williams.[35] Talbert Letter at 2.
   The Department offered three points in support of its position: First, the
   only portions of its Statements of Work that have any legal significance
   are the lists of "deliverables." The Department argues that its task
   orders did not procure Mr. Williams's commentary, which meant there was
   nothing for the Department to disclose. Second, the Department did not pay
   any appropriated funds for covert propaganda. Third, the Department's task
   orders represented the legitimate dissemination of information to the
   public. Id. We do not agree.

   The Department's first point is that the only portions of its Statements
   of Work that have any legal significance are the lists of "deliverables."
   Although the Department acknowledges that its Statements of Work contained
   language directing Ketchum to "arrange for Mr. Williams to regularly
   comment upon NCLB," the Department stresses that this language was not in
   the lists of "deliverables" included in the Statements of Work.[36]
   Talbert Letter at 4-5. The Department offers no explanation of the meaning
   or significance of the rest of the language contained in the Statements of
   Work, nor does it offer any precedent in support of its position.

   We identified no case law supporting the Department's position that
   contractual obligations are limited to those enumerated as
   deliverables.[37] On the contrary, the courts have long recognized that a
   "cardinal principle of contract construction [is] that a document should
   be read to give effect to all its provisions and to render them consistent
   with each other." Mastrobuono v. Shearson Lehman Hutton, Inc., 514 U.S.
   52, 63 (1995). See also  KiSKA Construction Corp. v. Washington
   Metropolitan Area Transit Authority, 321 F.3d 1151, 1163 (D.C. Cir. 2003);
   Restatement (Second) of Contracts, sect. 203(a). The Department's
   approach, however, would have us ignore key sentences contained in the
   Statements of Work and assign to them no legal significance. Indeed, the
   Department's own policies and procedures state: "The final Statement of
   Work . . . serves as the nucleus of . . . the contract. It tells offerors
   what [the Department] wants and, after award, it establishes the standard
   for the contractor's performance." Departmental Directive No. OCFO:2-107,
   Acquisition Planning, sect.  VII.G.1.b(3) at 12 (June 10, 1992)
   ("establishing departmental policy and procedures for . . .
   acquisitions").

   The case law and the Department's own directives compel us to conclude
   that the language in the statements of work of these task orders may not
   be casually read out of the contract. Accordingly, we reject the
   Department's suggestion that we ignore the explicit language from the
   Statements of Work that "Ketchum shall arrange for Mr. Williams to
   regularly comment on NCLB." This passage was not rendered nugatory simply
   because the Department did not replicate it in its list of deliverables.
   To determine the "scope" of the Department's arrangements with Ketchum and
   GWG and the "specific work to be accomplished" under them, we must
   construe all of the language of the Statements of Work. 48 C.F.R.
   sect. 37.602-1(a).

   Having concluded that the Department's contract may not be restricted to
   the lists of deliverables, we think the Department's task orders did
   procure commentary from Mr. Williams. "It is widely accepted that the
   plain language of a contract, if unambiguous, is the best source to use to
   interpret it." B-302358, Dec. 27, 2004, citing In re: Crow Winthrop
   Operating Partnership, 241 F.3d 1121, 1124 (9th Cir. 2001); In re:
   Cambridge Biotech Corp., 186 F.3d 1356, 1374 (Fed. Cir. 1999); Kokomo Tube
   Co. v. Dayton Equipment Services Co., 123 F.3d 616, 624 (7th Cir. 1997).
   The Statements of Work, which are the "nucleus"[38] of the Department's
   task orders and which define and identify the "specific work to be
   accomplished,"[39] use clear, plain English: "Ketchum shall arrange for
   Mr. Williams to regularly comment upon NCLB." Having issued task orders
   for Ketchum to arrange for regular commentary by Mr. Williams, the
   Department was obligated by the publicity or propaganda prohibition to
   assure that its role in procuring that commentary was disclosed to the
   target audiences. We can find no evidence in the record that the
   Department took any steps to assure that appropriate disclosures were
   made.

   The Department's second argument is that it did not pay any appropriated
   funs for covert propaganda because none of the invoices reference
   commentary by Mr. Williams. The problem with this argument is that none of
   the invoices actually identified any specific deliverable listed in the
   statements of work.[40] Instead, GWG billed for "Professional Services."
   Some of the invoices mention "ad production," "ad costs," or "ad
   campaign," but the language used in the invoices is not sufficient to
   identify a specific deliverable under Task Order Nos. 9 and 16, such as
   one of the television or radio ads. The Statements of Work do not specify
   unit prices for anything in the task orders that could serve as a basis to
   separately bill for the performance of a particular deliverable. Each task
   order is a firm, fixed price contract for everything in the task order.

   The invoice reference to "Professional Services" is to a package of
   products and services, including commentary that GWG had bundled together
   and offered to the Department at a reduced price. The record shows that
   the proposals Ketchum and GWG made and the Department adopted featured a
   complete package of services, including both ads and favorable commentary
   in the media, at a reduced cost. GWG and Ketchum recommended an
   "integrated marketing campaign" to target audiences through a variety of
   mediums, including commentary by Mr. Williams in other forums he
   frequently appeared. Talbert Letter, Exhibit 4. Ketchum had noted to the
   Department that the typical fee for this level of services would be far
   greater than the amount that the Department agreed to pay under the task
   orders. Talbert Letter, Exhibit Nos. 1, 4. In its proposals to the
   Department, which eventually became the statements of work, GWG had
   offered to provide all of the services as a package at a reduced fee.[41]
   In light of the vague billing, the monthly reports itemizing the number of
   times Mr. Williams promoted the NCLB Act, and the inclusive packages of
   services included in the proposals and statements of work, when GWG billed
   the Department for "Professional Services," these services included the
   commentary that Mr. Williams reported in his monthly reports.[42]

   The Department's third argument is that these task orders are no more than
   the legitimate dissemination of information to the public.[43] In its
   view, the subcontracts to obtain the services of Mr. Williams and GWG
   represented "a concerted effort . . . to inform the public and parents
   about NCLB and the opportunities it offers to them and their children."
   Talbert Letter at 6. Every agency has a legitimate interest in the
   "dissemination to the general public, or to particular inquirers, of
   information reasonably necessary to the proper administration of the laws"
   for which the agency is responsible. 31 Comp. Gen. 311 (1952). See also,
   e.g., B-303495, Jan. 4, 2005. However, while we agree that the Department
   should disseminate information to the public on the NCLB Act, it must
   disclose its role.

   Antideficiency Act Violation

   The Department's use of appropriated funds in violation of the publicity
   or propaganda prohibition also constituted a violation of the
   Antideficiency Act, 31 U.S.C. sect. 1341(a). This act prohibits making or
   authorizing an expenditure or obligation that exceeds available budget
   authority. B-300325, Dec. 13, 2002. Because the Department has no
   appropriation available to procure favorable commentary in violation of
   the publicity or propaganda prohibition, it violated the Antideficiency
   Act, 31 U.S.C. sect. 1341(a). Cf. B-303495, Jan. 4, 2005; B-302710, May
   19, 2004. Under 31 U.S.C. sect. 1351, the Department must report its
   Antideficiency Act violations to the President and the Congress. At the
   same time, a copy must be sent to the Comptroller General.[44]

   CONCLUSION

   The Department of Education violated the fiscal year 2004 publicity or
   propaganda prohibition by contracting with Ketchum for the services of GWG
   to obtain commentary by Armstrong Williams on the NCLB Act without
   requiring Ketchum to ensure that Mr. Williams disclosed to his audiences
   the Department's role. The commentary obtained as a result of these
   contracts violated the publicity or propaganda prohibition because it was
   "covert," in that it did not disclose to the targeted audiences that it
   was sponsored by the Department and was paid for using appropriated funds.
   E.g., B-303495, Jan. 4, 2005; B-302710, May 19, 2004. At the same time,
   because the Department had no appropriation available to contract for
   commentary in violation of the cited publicity or propaganda prohibitions,
   the Department also violated the Antideficiency Act, 31 U.S.C. sect. 1341.
   B-303495, Jan. 4, 2005; B-302710, May 19, 2004. It must report this
   violation to the Congress and the President, and submit a copy of that
   report to the Comptroller General. 31 U.S.C. sect. 1351, as amended.
   B-304335, Mar. 8, 2005.

   If you have any questions regarding this matter, please contact Susan A.
   Poling, Managing Associate General Counsel, at 202-512-2667, or Thomas H.
   Armstrong, Assistant General Counsel, at 202-512-8257.

   Sincerely yours,

   Anthony H. Gamboa
   General Counsel

   B-304228

   Digests

    1. The Department of Education contracted to obtain commentary on the No
       Child Left Behind Act by Mr. Armstrong Williams, but took no steps to
       assure that its role in sponsoring that commentary was disclosed to
       the targeted audiences. This constituted covert propaganda in
       violation of the fiscal year 2004 publicity or propaganda prohibition
       found in the Consolidated Appropriations Act, 2004, Pub. L. No.
       108-199, div. F, title VI, sect. 624, 118 Stat. 3, 356 (Jan. 23,
       2004).
    2. Because the Department of Education had no appropriations available to
       contract for covert propaganda in violation of the publicity or
       propaganda prohibitions found in Consolidated Appropriations Act,
       2004, Pub. L.  No. 108-199, div. F, title VI, sect. 624, 118 Stat. 3,
       356 (Jan. 23, 2004), the Department also violated the Antideficiency
       Act, 31 U.S.C. sect. 1341. It must report these violations to the
       Congress and the President, and transmit a copy of that report to this
       Office. 31 U.S.C. sect. 1351, as amended.

   ------------------------

   [1] Consolidated Appropriations Act, 2004, Pub. L. No. 108-199, div. F,
   title VI, sect. 624, 118 Stat. 3, 356 (Jan. 23, 2004).

   [2] Mr. Williams is a syndicated columnist and commentator. He founded and
   heads GWG, which represents Mr. Williams and owns and produces the shows
   that he hosts. See Armstrong Williams, About Armstrong--The Graham
   Williams Group, at http://www.armstrongwilliams.com (last visited Sept.
   29, 2005).

   [3] The Department's Statement of Work "mirrored the Ketchum proposal,"
   see ED-OIG Report at 7, which was, in turn, based on the GWG proposal
   "with limited modifications." Id. at 6.

   [4] Talbert Letter, Exhibit 3: Contract No. ED-03-PO-1725, Amendment of
   Solicitation/ Modification of Contract No. 7, Jan. 6, 2004 (hereinafter
   Task Order No. 9). This task order took effect retroactive to December 2,
   2003. Task Order No. 9.

   [5] The Right Side is a radio and television show hosted by Armstrong
   Williams.

   [6] Talbert Letter, Exhibit 4: Memorandum re: "Response to Statement of
   Work #16," from "Ketchum" to Janet D. Scott, Contracting Officer,
   Department of Education, May 18, 2004.

   [7] See Talbert Letter, Exhibit 5: Contract No. ED-03-PO-1725, Amendment
   of Solicitation/Modification of Contract No. 20, June 25, 2004
   (hereinafter Task Order No. 16).

   [8] ED-OIG Report at 7.

   [9] See Talbert Letter, Exhibits 28-40.

   [10] Talbert Letter at 4, nn.6, 8; ED-OIG Report at 15.

   [11] In a letter to the Federal Communications Commission (FCC) which the
   Department submitted to us, Ketchum said, "GWG produced invoices detailing
   run times and locations for the ads, which Ketchum forwarded to the
   government for payment." Talbert Letter, Exhibit 47. GWG's monthly reports
   itemized the run times and locations for the ads, but the GWG invoices did
   not.

   The FCC is presently conducting an ongoing investigation into whether any
   laws under its jurisdiction were violated as a result of actions taken in
   this matter. See FCC Press Release dated Jan. 14, 2005,
   at http://hraunfoss.fcc.gov/edocs_public/ attachmatch/DOC-256115A1.pdf
   (last visited Sept. 29, 2005).

   [12] Talbert Letter, Exhibits 7-14.

   [13] Talbert Letter, Exhibits 15-26.

   [14] E.g., Talbert Letter, Exhibit 15.

   [15] E.g., Talbert Letter, Exhibit 16.

   [16] E.g., Talbert Letter, Exhibit 22.

   [17] ED-OIG Report at 15.

   [18] Id. at 1, 18 ("the invoices received and paid by the Department were
   vague").

   [19] E.g., Talbert Letter, Exhibit 29 (Minority Outreach Campaign, Task
   Order No. 9, Monthly Report for January 2004).

   [20] Talbert Letter, Exhibit 30.

   [21] Talbert Letter, Exhibit 29.

   [22] Talbert Letter, Exhibits 28-40.

   [23] Poling Letter.

   [24] Our research revealed several other columns that Mr. Williams
   published on the NCLB Act during this period which were not mentioned in
   the monthly reports. See, e.g., Townhall.com, The Education Costa Nostra,
   originally at http://www.Townhall.
   com/columnists/ArmstrongWilliams/printaw20040301.shtml (Mar. 1, 2004)
   (last visited Sept. 1, 2005); now available at
   http://www.davidstuff.com/incorrect/ williams1.htm (Mar. 1, 2004) (last
   visited Sept. 29, 2005).

   [25] Talbert Letter, Exhibits 1, 4; ED-OIG Report at 7, 12.

   [26] The Department has already agreed to the IG's recommendation that it
   recover some of these amounts. ED-OIG Report at 19; ED-OIG Report,
   Attachment 1 at 6.

   [27] Pub. L. No. 108-199, div. F, title VI, sect. 624, 118 Stat. at 356.

   [28] Id.

   [29] The Department's Statements of Work do not mention the use of
   published columns or other media. However, the IG reported that "there
   were numerous indicators during the formation process that the GWG work
   under the work requests could include providing or attempting to arrange
   favorable NCLB commentary though various media outlets." ED-OIG Report at
   11. For example, the GWG and Ketchum proposals stated that Ketchum and
   Mr. Williams would "work with African-American newspapers to place stories
   and commentary on NCLB." Talbert Letter, Exhibit 1: Memorandum from Monica
   Marshall, Senior Vice President, Ketchum, to John Gibbons, Director of
   Public Affairs, and D.J. Nordquist, Deputy Director of Public Affairs,
   Department of Education, Nov. 17, 2003. See also Talbert Letter, Exhibit
   4: Memorandum from "Ketchum," to Janet D. Scott, Contracting Officer,
   Department of Education, May 18, 2004; ED-OIG Report at 7, 12.

   More importantly, GWG's monthly reports identifying its activities in
   performance of the task orders explicitly notified Ketchum and the
   Department that Mr. Williams was publishing columns and using other media
   outlets to "promote" NCLB in order to satisfy his obligations under the
   contract.

   [30] See Townhall.com, Secretary Paige and Mayor Williams fight for
   change,
   at http://www.townhall.com/columnists/ArmstrongWilliams/aw20040107.shtml
   (Jan. 7 2004) (last visited Sept. 1, 2005). This column stated, among
   other things:

   "President Bush's No Child Left Behind Act was designed to redress th[e]
   `soft bigotry of expectations' [i.e., that `many teachers believe that
   poor students--mostly of color--cannot really do much better' in school].
   . . .

   "[Secretary] Paige has long been at the forefront of the movement to
   increase educational options for underprivileged students. . . .

   . . .

   "Providing children with a decent education is something we can do to haul
   our society along. We may not be able to end all inequality; but we can,
   as individuals, demand that our underprivileged children have options when
   it comes to the greatest single instrument of empowerment--education. This
   is a rather straightforward goal of men like Secretary Paige . . . And it
   is the next great battleground in the fight for social equality."

   [31] Recently, the IG published another report reviewing 15 grants and 20
   contracts that the Department awarded for public relations services during
   fiscal years 2002-2004, but did not include the contract and subcontracts
   at issue here. ED-OIG Report No. ED-OIG/113-F0012, September 2005 at 1.
   This report did consider whether the Department had violated the
   prohibition on publicity or propaganda in the 15 grants and 20 contracts
   that it reviewed. Id. at 3.

   [32] See Townhall.com, Secretary Paige and Mayor Williams fight for
   change,
   at http://www.townhall.com/columnists/ArmstrongWilliams/aw20040107.shtml
   (Jan. 7, 2004) (last visited Sept. 1, 2005).

   [33] As noted above, we found on the Internet several other columns that
   Mr. Williams published on the NCLB Act between December 2003 and January
   2005, the period covered by these task orders, but he did not list these
   in his monthly reports. These columns did not disclose that the Department
   had retained Mr. Williams to comment on the NCLB Act.

   [34] See Media Matters for America, Armstrong Williams's conflicting
   statements on disclosure, at http://mediamatters.org/items/200501110001
   (video recording at http://
   mediamatters.org/static/video/williams-200501100010.wmv) (last visited
   Sept. 29, 2005).

   [35] To the extent that the Department maintains that the advertisements
   were the main deliverables under Task Order Nos. 9 and 16, the IG found
   that the Department "only received two of the eight ads it was supposed to
   receive under both work requests," yet it paid the full invoiced prices
   anyway. ED-OIG at 16.

   We reviewed the GWG-produced television and radio ads that the Department
   provided to us. We found that those ads did not violate the prohibition on
   publicity or propaganda. They clearly disclosed to the target audiences
   that the Department had paid for them.

   [36] As noted above, each list of "Deliverables" specified two television
   ads and two radio ads promoting the NCLB Act ; an option for the Secretary
   and other Department officials to appear from time to time as studio
   guests to discuss the NCLB Act; a 6-month advertising campaign in The
   Right Side with Armstrong Williams, with bonus ads during Black History
   month and on Rev. Martin Luther King, Jr.'s Birthday; and a requirement
   that Mr. Williams utilize his influence with America's Black Forum to
   encourage the producers to periodically address the NCLB Act.

   [37] We also note that the FAR, which does not require deliverables, does
   require that the statement of work define the requirements and specific
   work to be accomplished. See, e.g., 48 C.F.R. sections 37.602-1(a),
   16.504(a).

   [38] Departmental Directive No. OCFO:2-107, Acquisition Planning, sect. 
   VII.G.1.b(3) at 12 (June 10, 1992).

   [39] 48 C.F.R. sect. 37.602-1(a).

   [40] See Talbert Letter, Exhibits 7-26; ED-OIG Report at 15.

   [41] Mr. Williams told the IG that "the cost associated with the level of
   services he provided was well below what he would normally charge. Because
   he believed in NCLB, and wanted the business, [he] agreed to perform for
   the cost the Department was willing to pay." ED-OIG Report at 6.

   [42] Although the ED IG's investigation was focused on contract formation
   and oversight issues, the Inspector General did conclude that the
   Department paid for ads that were never received (ED-OIG Report at 15-16)
   and the ads that were received were of poor quality. ED-OIG Report at 16,
   18. In addition, because commentary was included in the Statements of Work
   and the activity reports, the Inspector General concluded that the
   Department "may have been paying for more than just the advertising."
   ED-OIG Report at 18.

   [43] We note in passing that in each of his monthly reports, Mr. Williams
   claimed to be "promoting" the NCLB Act, not educating the public. The
   column reproduced in the monthly report for January 2004 is the only
   sample provided of those activities. It discussed the political
   controversy surrounding the NCLB Act and the character, roles, and motives
   of the Department, the Secretary, the President, and various other
   interested parties with respect to the enactment and implementation of the
   NCLB Act.

   [44] Recent amendments to 31 U.S.C. sect. 1351 require the Department to
   transmit a copy of that report to the Comptroller General. 31 U.S.C. sect.
   1351, as amended by Consolidated Appropriations Act, 2005, Pub. L. No.
   108-447, div. G, title I, sect. 1401, 118 Stat. 2809, 3192 (Dec. 8, 2004)
   ("[a] copy of each report [required by 31 U.S.C. sect. 1351] shall also be
   transmitted to the Comptroller General on the same date the report is
   transmitted to the President and Congress").

   Office of Management and Budget Circular No. A-11 provides guidance on
   what information to include in Antideficiency Act reports. Agencies must
   report violations found by GAO, even if they disagree with the finding.
   OMB advises agencies, "If the agency does not agree that a violation has
   occurred, the report to the President and the Congress will explain the
   agency's position." OMB Circ. No. A-11, para. 145.8 (July 2004).