School’s out for Depot and US Communities

School's out for Depot and US Communities as ties are severed on public sector schools supplies contract.

Office Depot’s recently cancelled US Communities classroom supplies contract was achieving just over a quarter of the sales originally estimated.

The RFP documents issued by the lead public agency Fairfax County Public Schools (FCPS) at the beginning of 2010 estimated the volume of the contract to be around $150 million per year.

Ron Hull, Acting Director of the FCPS Office of Procurement Services, confirmed to OPI that national sales figures for the Depot classroom supplies contract for the 2011 calendar year were about $42 million, just 28% of the original estimate, while sales under the contract to FCPS customers were just $300,000.

The original $150 million figure was based on spending from FCPS and the 22 members of the US Communities advisory board – which committed to purchasing classroom supplies from the contract – and other sales at that time from the US Communities programme.

The fact that it never achieved anything like that figure is no doubt related to Hull’s answer to a question about whether FCPS intended to rebid on its school and classroom supplies contract.

“Probably not,” he stated. “Classroom supplies tend to bleed into other categories such as office supplies, so we’re not sure that a standalone category for classroom supplies is needed at FCPS.”

Depot’s commitment to US Communities in general must also be questionable after its $500 million office supplies contract came to an end in December 2010 and it looked to move customers on to other cooperative contracts such as TCPN.

Conflict of interest

There was also no doubt a conflict of interest for the US Communities advisory board members between the classroom supplies contract held by Depot and the office supplies contract that was awarded to Independent Stationers (IS) with effect from January 2011.

Advisory board member Fairfax County, for example, is currently the largest purchaser of office supplies under the IS-held contract, so it was likely that this cannibalised sales on the classroom contract.

“The categories of office supplies and school supplies are hard to segregate,” explained Hull. “I’m sure we’re buying some of these products through IS, but we also have other contracts in place with providers of items such as clay or paints.”

US Communities’ Bryan Shumey expressed a similar view to OPI.

“They [FCPS] have used the US Communities contract with IS for office supplies for the last 18 months and that contract has enabled them to meet the majority of their requirements for school supplies for the system.” 

Ron Hull also confirmed that it was FCPS that took the lead in ending the classroom supplies contract.

“FCPS deemed it to be in its best interests to cancel the Office Depot classroom supplies contract,” he said. 

He added that the contract was cancelled for “convenience and not for cause”, but that this did not mean that any financial compensation had to be paid out to the supplier.

The classroom supplies contract was set up early in 2010 and was seen as a spin-off of Depot’s larger office supplies contract which was attracting an increasing number of overcharging allegations.

Originally, Depot shared the new classroom supplies contract with School Specialty, but the latter pulled out after just 12 months in order to focus public sector sales on its agreement with educational purchasing consortium AEPA.

FCPS also has links to AEPA, serving as the consortium’s Virginia representative. This means that FCPS awards all approved AEPA contracts so that these are available for use by other public bodies in Virginia.

Interestingly, two AEPA contracts for classroom and school supplies are held by Staples, but Hull said that FCPS doesn’t currently use these.

“FCPS is not currently buying office or classroom supplies from the Staples AEPA contract,” he stated. 

“Additionally, FCPS is not actively marketing or suggesting use of the Staples AEPA contract to former Office Depot classroom supplies customers.”

Office Depot told OPI that the agreement with FCPS had been ended “cordially”.

It stated: “We strongly support this decision and we look forward to continuing to provide outstanding value to FCPS after 30 March 2012 as a customer outside of its legacy role as lead agency of this cooperative.”

Depot plans to transition customers on the contract to another agreement, but with $42 million in annual sales up for grabs, there is sure to be some stiff competition.