An audit released today by the City of Houston Controller’s Office Audit Division concludes that Office Depot Incorporated overcharged the City of Houston millions of dollars on supplies during the contract period March 2006 through December 2010. The $19.1 million contract was part of U.S. Communities, a government purchasing cooperative, and was an agreement among the City of Houston, Los Angeles County and Office Depot.
The Controller’s Office Audit Division identified two significant issues:
· Overcharges that ranged from $1,722,334 to $6,599,908 based on the information provided by Office Depot and application of relevant contract terms.
· Data provided by Office Depot was incomplete, inconsistent, and contained anomalies that could not be reasonably or reliably explained as reflected below:
– $5,716,877 of purchases did not have a corresponding price list representing what the City of Houston should have paid;
– $2.3 million of purchases had neither the price list or the Manufacturer List Price to allow the City of Houston to appropriately validate the contractually agreed discount terms; and
– More than 1,000 different products changed classifications throughout contract period, often times resulting in an increase/change in price not in compliance with contract terms.
“Clearly, the data provided to us during the audit was incomplete to the extent that we had to modify our testwork,” says Controller Ronald Green. “It’s also evident that the City has incurred substantial overcharges for the merchandise purchased throughout the contract term. We applied three different approaches and they revealed overcharges that ranged from $1.8 million to $6.6 million. Regardless of the methodology, the City is owed a significant amount of money from the vendor.”
The audit was performed in accordance with the Generally Accepted Government Auditing Standards as promulgated by the Government Accountability Office (GAO), and those issued by the Institute of Internal Auditors, known as “The International Standards for the Professional Practice of Internal Auditing.”