“Based on a tip received March 2009, the OIG analysed office supply purchases between July 2006 and November 2009, as well as the contract language. Based on the contract language, which guarantees most favoured public entity pricing, the OIG determined that the office supply company overcharged DPS $5.2 million when compared with the City and County of San Francisco contract.”
While Office Depot is not referred to by name, the allegations relate to DPS’s US Communities office supplies contract with Office Depot.
On Sunday, a Dallas County auditor report alleged that Office Depot’s failure to honour its most favoured public entity pricing clause had led to overcharges of around $1.6 million between 2005 and 2010.
Depot denied the allegations, saying that they were based on “a fundamental misunderstanding and inappropriate application of certain terms” of the US Communities contract.
Depot has paid out several refunds over the last 12 months related to its US Communities contract – without admitting any wrongdoing.
However, these settlements were related to a different pricing plan that public agencies were switched to without their consent.
Judging by the Dallas and Detroit reports, overcharging claims based on the most favoured pricing issue are significantly higher than the pricing plan switch claims.
Where things go from here probably depend on how committed the public agencies are to entering into a legal battle. Depot is sure to dispute the Detroit findings as any admission of not offering best public sector pricing on the US Communities contract could open the floodgates in terms of further claims.