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Audit: Office Depot overcharged N.C. agencies

Posted September 10, 2008

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— 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.

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  • ContinuityMan Sep 11, 2008

    Here's yet another example of what happens when one political party has a monopoly. Sharing power usually forces accountability, if only to avoid giving the other side ammunition.

  • saltnsanddefenderofdamiddleclass Sep 10, 2008

    republicans control little or nothing in this state's politics. Until you end the budget process of "if you don't spend it you won't get the money next year" nothing will change. it's called baseline budgeting and every taxpayer, regardless of party, should be for a revision in this practice. it's not a glamorous topic but this is how our money is spent.

  • Joy Sep 10, 2008

    This is what happened when the State of NC decided to go to this eProcurement mess. Vendors have to pay 1.75% of the money the make to somebody in order to do business with the State of NC. I'm not sure who gets the money and what is done with it. I know that a company called Accenture was who NC worked with in order to get eProcurement up and running. Someone's getting a kickback somewhere!!

  • pbjbeach Sep 10, 2008

    so what else is new these state agency's are part an parcle to all of this fraud on the behalf of the republicans in this state can you say privitaziation , contracts on top of contracts an then more contracts an every time there is another contract let it is just to farther enhance another republican business enterprize i say enough is enough fire all every single one an start fresh

  • Like that Sep 10, 2008

    The state should not even be dealing with a company like Office Depot anyway, they should deal with wholesale warehouses like Sams, Costco, and BJs because items bought in bulk are cheaper!

  • Space Mountain Sep 10, 2008

    This sounds like the deal with the Wake County bus department.

  • delilahk2000 Sep 10, 2008

    If there was no waste we all would have alot more money to take home. They must have taken lesson from the Pentagon charging 1200.00 for a hammer that you could buy for 8.00 at Lowes. BUT WHO CARES IT IS NOT THEIR MONEY WE TAXPAYERS ARE A BOTTOMLESS PIT FOR THEM TO KEEP TAKING FROM AND THE H>>> WITH WHAT WE NEED. THEY ALL DO IT HOSPITALS.INS. ETC........

  • familyfour Sep 10, 2008

    What a surprise!

  • thnkb4uspk Sep 10, 2008

    When I read stories like this (I am a teacher, I wonder who in the heck is getting to SPEND state money at OD??????? TEACHERS would love to be overcharged IF THEY HAD ANY SUPPLY MONEY TO SPEND.

  • Bob3425 Sep 10, 2008

    Why not just give each agencies a budget, a credit card and when it gone it's gone, have auditor look over their purchases. Do away with contracts, with the time and cost spend creating them the discounts are gone anyway.

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