Audit: Office Depot overcharged N.C. agencies
Posted September 10, 2008
Raleigh, N.C. — Office Depot overcharged North Carolina state agencies by more than $294,000 over a six-month period, according to a state audit released Wednesday.
The contract, negotiated by the Division of Purchase & Contract (P&C), did not protect the interests of the state, and P&C’s monitoring of the online “punch-out” catalog was ineffective, State Auditor Leslie Merritt wrote in a news release.
“There are numerous reports that Office Depot has engaged in a pattern of overcharging and violating state contracts in Georgia, California, Nebraska, Florida, and now North Carolina. But the difference in North Carolina is that P&C had advance warning and every reason to increase their monitoring efforts and become more skeptical of Office Depot’s explanations concerning price discrepancies,” Merritt wrote.
The audit examined six months of purchases and identified $294,413 in net overcharges through direct testing of purchase orders.
Office Supplies were offered through a Web-based catalog that prevents state agencies from identifying overcharges during ordering. P&C administrators have the responsibility to monitor Office Depot’s actions.
Office Depot overcharged the state agencies in four different ways, the audit found:
- Office Depot inflated retail prices on Office Depot brand items so that they could offer a higher discount to win the bid. Private individuals could pay less for merchandise purchased directly from Office Depot than state agencies paid through the P&C contract.
- Office Depot added 24,284 unauthorized items to the state’s Web purchasing system at lesser discounts or no discounts at all.
- State agencies purchased items through Office Depot that could have been purchased at a much greater discount from other contracts and vendors. For example, standard alkaline batteries cost state agencies 411 percent more from Office Depot than purchasing like items through Batteries Plus, the state contract-holder.
- Office Depot changed and reused style numbers, often substituting private brand merchandise for branded merchandise covered in the bid, causing the state to pay more than planned.
“The bottom line is that P&C has the responsibility to protect North Carolina taxpayers through effective monitoring of identified problem areas with the Office Depot contract. P&C dropped the ball, and the taxpayers picked-up the bill," Merritt wrote.