The director of finance of the City of Berkeley says the Office Depot company has overcharged the city by as much as a quarter of a million dollars during the course of a three-year, $550,000-a-year contract to provide miscellaneous office supplies and recycled copy paper to the city.
Finance Director Robert Hicks made the revelation after being questioned by Councilmember Kriss Worthington on the matter at the Tuesday City Council budget workshop.
The Office Depot Media Relations office at the company’s corporate headquarters in Boca Raton, Florida, does not provide a direct telephone number to contact. An e-mail message to the office requesting a comment for the story was not answered by press time.
Hicks’ revelation supported the allegations first made to the City Council last October by Diane Griffin, president of Radston’s Office Plus supply store of Hercules and a member of the board of directors of the Nation-al Office Products Alliance (NOPA).
According to the conclusion of an analysis of more than 100 pages of the Office Depot-City of Berkeley contract provided to the city by Griffin, Office Depot charged the normal retail price on 135 of what it called “core” office supplies, but promised a 55 percent discount to the city for items not on the “core item” list. Griffin says that in fact, Berkeley received only a 39.7 percent discount on those non-core items, the basis for her estimate of the $250,000 overcharge.
Radstons, the 101-year-old office supply company that operated in Berkeley for the first 98 years of its existence, was one of five vendors that bid on the Berkeley office supply contract in the summer of 2006.
Griffin’s analysis only covers the period between July of 2006 and November of 2008 for a contract scheduled to run from July of 2006 through June of this year.
At Tuesday’s budget hearing, Finance Director Hicks said that his office has “been analyzing beyond [the] period of time” in Griffin’s analysis, leaving the possibility that the city’s estimate of the Office Depot overcharges could run higher than $250,000.
Griffin herself said she believes the Office Depot overcharges on its City of Berkeley contract are accumulating at a rate of $8,000 a month.
It is not clear if the city will attempt to collect the money it believes it was overcharged and, if so, if there are any provisions in the contract to do so. Finance Director Hicks did not return a telephone call asking for a comment for this story.
“The taxpayers of Berkeley are lucky that Diane was willing to go line by line on this contract to see what was actually happening,” Councilmember Worthington said by telephone. “When she first brought up the allegations, she got some ridicule because people thought she was just a disgruntled business owner who lost a city contract. But now the allegation is being made by the city itself.” Worthington also said that it was significant that Finance Director Hicks had backed up the original allegation. “He’s well-known for being meticulous in his research,” Worthington said. The councilmember also called it a “positive sign that Berkeley government is not ignoring these concerns, but is going forward with investigating them.”
In explaining how she first got involved in investigating the Office Depot contract, Griffin said by telephone that she was “aware of some irregularities” in the Office Depot bid when the City of Berkeley contract was first decided three years ago, but “put it on the back burner” until last summer, when she became aware of allegations of Office Depot overcharges in contracts in Florida and with the State of California. “That’s when I decided to go back to look and see if Berkeley had actually gotten what they paid for. It was mostly just a curiosity.”
Griffin said that personnel with the city’s Finance Department were “helpful” in providing her with documents relating to the performance of the Office Depot contract, and said that more detailed information was provided after Councilmember Worthington interceded to help with her investigation.
At this point, she says that now that the city Finance Department has taken up the investigation, her role in it is over “unless they want to call me in to give any technical information. But at this point, the ball is out of my court.” She says her purpose in researching the Office Depot contact was twofold. “I’d like the city to get what they bargained for,” she said. “I want the city to get a check. The Finance Department did a good job in negotiating the contract. They got a wonderful contract. It just hasn’t been followed.” Griffin also said that as a member of the national organization of office supply companies, the allegations surrounding Office Depot “are not giving our industry a good name.”