GAO: Pundit contract and video news stories broke spending rules

The Government Accountability Office recently reiterated its stance against the spending of federal funds for prepackaged news stories and positive media treatment, absent an identification of government sponsorship.

In a letter to Kent Talbert, general counsel for the Education Department, GAO officials said a prepackaged news story about the 2002 No Child Left Behind Act and a subcontract with conservative pundit Armstrong Williams to speak favorably about the agency's education initiatives violated the Anti-Deficiency Act, which prevents agencies from spending funds in excess of appropriations.

Annual appropriations bills have long included bans on funding "covert propaganda." The Education Department has argued that its activities did not violate the ban, but GAO rejected that view and included the department's activities in its funding violation database for fiscal 2004.

GAO wrote an opinion last September that a video news release about free, remedial tutoring for students at underperforming schools, for which the department paid $38,421, amounted to propaganda. That release, according to the report, depicted interviews with a parent talking about her son's use of the services and featured a narrator who signed off with the line, "In Washington, I'm Karen Ryan, reporting." The opinion noted that four later news releases, which it did not review, should be evaluated against the same standard.

Education argued that the video in question was not propaganda because it included only factual information. GAO rejected that argument, concluding that, "To constitute a legitimate information dissemination activity that does not violate the publicity or propaganda prohibition, the department must inform the viewing public that the government is the source of the information disseminated."

In the case of the Williams subcontract, the department argued that only the deliverables list, and not the plain language portions of the statement of work, should be considered legally relevant, and that the deliverables included no mention of Williams' favorable commentary. It additionally argued that because Williams' invoices did not specify the nature of the activities charged, payments could not be connected to his commentary.

GAO also rejected those arguments, noting a line in Williams' contract that the primary contractor, global media relations firm Ketchum Inc., "shall arrange for Mr. Williams to regularly comment on NCLB."

"The department's approach … would have us ignore key sentences contained in the statements of work and assign to them no legal significance," GAO lawyers said.

They similarly rejected the argument that, because the invoices were vague, the department could conclude it had not paid Williams for his commentary.