Government auditors faulted the controversial consumer finance bureau for mismanaging a $43 million contract with political advertising firm, and the bureau’s Republican director is now trying to get some of that money back.
Various groups have criticized a contract the Consumer Financial Protection Bureau (CFPB) awarded to GMMB, a marketing and advertising firm that did work on election campaigns for former President Barack Obama and other Democratic candidates, for showing hints of political favoritism. (RELATED: Obama’s Top Campaign Ad Firm Got Nearly $60M In Federal Contracts)
In managing the five-year contract, the CFPB did not verify the expenditures GMMB made during its work with the government, particularly on labor costs, and did not always monitor how the advertising firm spent money intended for media purchases, according to a report from the Office of the Inspector General (OIG) of the Federal Reserve released Monday.
“It appears that the Bureau [CFPB] is due a refund of prepaid funds that have been accumulating at GMMB,” the report said. The agency, now under direction of President Donald Trump’s interim appointee, indicated it is seeking to recover the funds in its response to the OIG.
The Daily Caller News Foundation has reached out to GMMB for comment.
The CFPB prepaid GMMB advertising firm for media buys and for labor costs, but the invoices the agency has on record were missing source documentation. “Without reviewing source documents for the liquidation of media placement or invoiced labor-hour charges, the [contracting officer’s representative] could not ensure that the Bureau was accurately charged or paid the correct amount for the goods and services received,” the OIG concluded.
GMMB won a contract to produce various advertising materials for the CFPB in 2013, shortly after the agency came into existence as part of the Dodd-Frank Act. GMMB competed for the contract against three other firms, and at first the contract was supposed to be for $11.5 million for five years. The number grew as the bureau worked with GMMB, eventually reaching $43 million total by February 2018.
Of the 22 task orders the OIG audited — which amounted to $31 million in payments from the federal government — the investigators were able to verify $1.3 million in labor hour charges, unable to verify $2.5 million in labor-related charges. The 67 invoices from GMMB that included labor-hour charges “did not have any details or support to show actual labor hours and rates,” the OIG said.
The auditors were also unable to verify that $27 million prepaid to GMMB for media buys across the country were accurate. Although contracting representatives “were monitoring the liquidation of prepaid media purchases” made by GMMB on the bureau’s behalf, “the monitoring spreadsheet does not appear to be accurate or complete,” the OIG report said.
Since Mick Mulvaney, Trump’s budget director, took over the CFPB following former Director Rich Cordray who resigned in November to run for Ohio governor, he has brought more attention to what he calls the “slush fund” aspects of the agency tasked with protecting American consumers.
Conservative groups have questioned the ethics of hiring a media consulting firm that has worked closely with Obama, and still advertises its work with the Democratic Senatorial Campaign Committee and the Democratic Governor’s Association on its website.
Mulvaney told the House Committee on Financial Services in April that he was in the process of terminating the agreement with GMMB.
“If I thought I were getting a good value for my $43 million, would not have sought to cancel the contract,” Mulvaney said.
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