Office Depot’s Performance Is Reviewed at the State Level
On August 28, 2008, the Department of General Services issued critical audit findings of Office Depot, Inc. (Office Depot) for compliance with the pricing and commercially useful function of Contract No. 1 S-06-75-55 (contract). The agreement with the office supply giant was entered into to provide office supplies to the state of California and local government agencies. Listed below is a brief summary of the findings identified in the report:
· Office Depot sold a large quantity of products to customers under the contract without application of the agreed discount.
· Office Depot did not effectively prevent purchases of items specifically prohibited in the contract. The “off-limits” items include, but are not limited to, office technology, televisions, and digital cameras.
· Office Depot overcharged for items approved under the contract.
· Office Depot continued to sell items that should have been discontinued under the terms of the contract. And higher prices were charged to the contract customers for products that should have been discontinued.
· Office Depot’s online system did not promote economical decisions by ensuring that the best-value core items appeared first when searched by contract customers.
Go to http://www.documents.dgs.ca.gov/dgs/pio/ODAudit.pdf to see the audit report in its entirety.
From a local level perspective, many school and community college districts are utilizing just-in-time purchasing with Office Depot or similar companies. Although the audit report’s findings are specific to the state, school districts can benefit from the audit findings to ensure that they are maximizing the advantages of their purchasing arrangements. Districts should review items purchased from their office supply provider to determine that: (1) prices are in accordance with the agreement, and (2) items purchased are office supplies and not items that are classified as noncapitalized equipment.
These checks and balances may be performed by in-house staff from the purchasing, business, or internal audit departments. The number of items to research, as well as the frequency, could be determined by the district’s comfort level that the office supply provider is fully complying with the agreement.
We are aware that district staff has a laundry list of tasks to complete on a daily, weekly, monthly, and annual basis. However, finding a way to weave these steps into existing procedures may help districts as they strive to get the most out of their limited resources.
—Lewis Wiley, Jr.