As reported earlier, New Jersey recently entered into an exclusive contract with Staples to provide office supplies, which many local businesses were upset by. In a posting on NJBiz.com, the state has been seen to uphold its decision to proceed with the risky single-source contract:

While the companies say they can compete with Staples’ prices, state officials dispute whether the local vendors offer lower prices. A Treasury spokesman provided a list of roughly 450 items for which Staples generally offered lower prices than New Jersey vendors. The suppliers contend their list of 10,000 products shows Staples has higher prices for similar products.

Chatham Superintendent of Schools Jim O’Neill expressed concern that the contract would mean Staples would have no competition, and said Staples’ prices were unclear.

The locals bring up a valid point: while Staples may be able to provide lower prices on paper for a handful of items, there’s simply no substitute for the free competition of multiple vendors. Also, if Staples is hiding anything in its pricing policies, odds are good that the state will lose millions before they ever find out. New Jersey is playing with fire here, and it makes me sad that the little guys are the ones who get burned.

According to NJ.com, New Jersey members of the National Office Product Alliance (NOPA) are suing the state over their decision to shift office supply contracts from the hands of individual vendors to one company, Staples:

The state’s office supplies contract, worth about $10 million, shifted from 17 individual contracts to Mass.-based Staples Advantage on Sept. 1.

The move will save the state about $2.25 million and could also generate savings for municipalities, counties and school boards that choose to purchase office supplies through the state contract, according to the state Department of Treasury.

But New Jersey members of the National Office Product Alliance are seeking to put the new contract on hold, claiming the decision to go with Staples was based on an unfair analysis of product costs that favored the larger company.

This is another in a line of moves that seem out of character for government purchasers. All the evidence points to the single-source contract as being a recipe for disaster, and this has nothing to do with my distaste for big-box retailers. When one company is in charge of all your office supplies, it leads to a lack of competitive pricing and the potential for abuse, as seen in the numerous Office Depot state-contract lawsuits.

I’m also always in favor of sticking with little guy, but that’s neither here nor there. Single-source contracting is bad news, plain and simple.

According to the website Inside the Bay Area (a division of the Oakland Tribune), a Fremont man, claiming he lost his job at Office Depot because he refused to falsify data that showed the company overcharged the city of Berkeley hundreds of thousands of dollars, is suing the office-supply giant in federal court.

Earl Ante, a former Office Depot salesman, seeks unspecified damages for lost wages, benefits, mental distress and punitive damages. He filed the suit in federal court in San Francisco about the same time the owner of a rival office-supply store in Hercules used purchasing records she obtained through a public records request to show Berkeley officials that Office Depot overcharged the city $289,000 from early 2007 to early 2009.

Berkeley officials conducted their own investigation of the city’s contract with Office Depot and came to the same conclusion. Office Depot paid back the city in April.

Three cheers for whistle-blowers, I say. This is just the latest in a string of Office Depot horror stories, but at least this one has a quasi-happy ending: the man didn’t do it. It’s despicable that Office Depot would not only overcharge their government customers, but also that they would ask someone to lie about it on paper. Not that OD asking employees to lie is anything new, but this is a pretty desperate move from a company that’s already facing allegations of misconduct in over five states.

I want to be clear: when OnTimeSupplies.com started this blog, we didn’t set out to specifically trash Office Depot every week. They just keep feeding me material.

According to EarthTimes.org, “Office Depot has disclosed on its investor website that the Attorneys General of California and Ohio have launched civil fraud investigations into its $700 million dollar “U.S. Communities” national contract that thousands of local governments, school districts and public institutions draw upon to purchase office and school supplies. California and Ohio join Colorado, Florida, Missouri and Texas in opening such investigations.”

According to today’s article, the National Office Products Alliance (NOPA) called upon the Office of the Attorney General of California to include in its investigation of Office Depot a thorough examination of the role played by the Walnut Creek, CA-based U.S. Communities organization which has allegedly received as much as $20 million in “kickback” payments from Office Depot for sponsoring the national contract now under investigation in six states.

According to NOPA, the article states, these two new investigations (CA and OH) again highlight the inherent problems associated with reliance on a single office supplies contracts by government agencies at all levels. “Strategic sole-source contracting has damaged competitive independent small businesses around the country, reducing vendor choice and raising prices for government customers,” said Chris Bates, President of NOPA. “The idea that sole-source contracting offers a ‘best value’ proposition should be questioned by every federal, state and local government and institutional entity in light of the results from so many audits and investigations.”