Office Depot accused of overcharging city

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HOUSTON - An office supply store has been accused of overcharging the city of Houston by millions of dollars.

The city of Houston Controller's Office Audit Division said Friday that Office Depot overcharged the city from March 2006 through December 2010.

An audit of the $19.1 million contract showed that the overcharges ranged from $1,722,334 to $6,599,908, city officials said.

City officials said that data provided by Office Depot was not complete, inconsistent and contained anomalies that could not be reasonably explained.

More than $5.7 million of purchases did not have a corresponding price list and $2.3 million worth of purchases had neither the price list or manufacturer list price, city officials said.

City officials said more than 1,000 different products changed classifications throughout the contract period, which often result in a higher price that was 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."

Office Depot officials said the company has not done anything wrong.

"The City of Houston auditor's assertion that the City was entitled to certain additional discounts is simply wrong. The auditor's report rehashes old claims originally made by a disgruntled former employee, that are based on inaccurate legal interpretations of Office Depot's former contract that the City was not a party to and which contract expired at the end of 2010. These very claims were considered and expressly rejected by the Florida Attorney General's office back in 2010, after it conducted a two-year investigation into the same allegations. Office Depot cooperated with the City of Houston's auditor and appreciated the City's patronage of Office Depot on the contact," said Brian Levine, vice president of corporate communications.

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