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Nov 7, 2009 12:16 am US/Pacific
On The Money: Pricey Paper Trail Pt. 2
SACRAMENTO (CBS13) ―
CBS13 discovered that you and I are often paying less for office supplies than state workers, even though the state signed a multi-million dollar contract with a well-known company that promised lower prices for state workers.
That contract is now the subject of an investigation.
State auditor Elaine Howle is now investigating California's $75 million contract for office supplies with a major national retailer.
"The office depot contract is certainly one of those that we'll be looking at," said Howle.
This is California's second audit of the office depot contract. Last year, California's department of general services scrutinized the contract and found what it concluded were "overcharges" for office supplies.
Office Depot has since paid $2.5 million to the state. The company says it wasn't a refund but "in the spirit of cooperation and customer satisfaction."
The contract was supposed to benefit a group of nine small California businesses that were subcontractors for Office Depot, but state Howle is now exploring why none of those businesses kept records of their role in the contract and why they had little evidence to support the work they did, according to an assembly committee that examined the contract.
There are questions now from small business owners like Jerry Bircher. His company, Express Office Products of Rancho Cordova, was not one of the nine businesses in the state contract, but Bircher says he can still access this website operated by office depot and the small businesses for state workers to order office supplies. The contract with these businesses expired months ago.
"I got on the web site and was able to buy a product as a general consumer on the standard office depot web site, for far less than an invoice the state was receiving for the same product," said Jerry Bircher, Express Office Products owner.
Assemblyman Ira Ruskin has been closely monitoring the situation, and at our request, his staffers were able to document examples of the difference in pricing. In one case a roll of butcher paper is $160.75 through the small business website that was supposed to provide a state discount, but consumers can actually buy that same product for nearly $30 less on the Office Depot website.
"Again, it appears the public is getting a better deal than the state on this," said Susan McEntire, Chief of Staff for Ira Ruskin.
But how can government agencies continue to purchase office supplies on an expired contract?
"We've notified the state agencies that the contract is no longer in place. Unfortunately we don't have the authority to shut this web site down. We can't shut it down. It's operated by private businesses," said Eric Lamoureux, Dept. of General Services spokesman.
At the capitol, there are many critics of the way DGS handled its oversight role.
"They did not do anything. I believe their oversight was almost nil," said Ira ruskin (D), Redwood City assemblyman.
Ruskin accuses Office Depot of overcharging the state by $2.5 million, and says it may have been a lot more.
DGS says it was proactive in getting office depot to pay the $2.5 million in question.
The state auditor's findings will be released next spring.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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