US Communities to rebid contract
Office Depot has been the supplier for the US Communities cooperative (or "piggyback") contract since 1996 and has successfully rebid for the contract on two previous occasions.
Under the terms of the existing contract the lead agency, LA County, could have extended the contract for a further 12 months beginning in January 2011.
However, the county, which is responsible for issuing the solicitation, evaluating the bids and awarding a new contract, has said that it will not extend the contract when the current extension expires at the end of 2010.
In a news update on the US Communities website LA County said that it was rebidding the contract – which has been in place for five years – due to the general economy and public agency funding issues "in an effort to drive added value for public agencies".
Under normal circumstances, the awarding of the rebid contract to Office Depot would probably have been viewed as a mere formality. However, there are bound to be concerns at US Communities about the reputation of its office supplies contract following a number of high-profile audits, prompted by the actions of whistleblower Dave Sherwin, that concluded that some agencies had been overcharged by Office Depot.
Depot, without admitting that it overcharged customers, has made several refunds – including one of almost $300,000 to Lee County School District – and there are still a number of ongoing audits.
The company has moved swiftly to play down the fact that the contract has been put out to bid and to dispel talk of the contract being "cancelled". Business Solutions Division President, Steve Schmidt, sent out a letter and posted a video on Depot’s information website the day after the news broke.
The new contract is likely to take a slightly different form from the existing contract which includes school supplies. US Communities, via lead agency Fairfax County Public Schools, has a brand new separate five-year school supplies contract which has been awarded to Office Depot and School Specialty.
The US Communities website also lists a separate contract for Print Solutions that is attributed to Office Depot. However, the master agreement number for this contract is the same as the current office supplies contract, so presumably this portion of the contract will be put out to bid separately and not form part of a new office supplies agreement.
It will be interesting to see if Depot’s power channel rivals decide to bid on the new contract.
Staples and OfficeMax both have existing piggyback contracts which, in theory, means that current US Communities customers can switch over to contracts such as the NJPA or OfficeMax’s America Saves programme. However, the chances of enticing around 10,000 agencies to switch are so minute, it would make more sense to go after their business by bidding on the US Communities contract. It appears that there are no restrictions on being a supplier on more than one cooperative contract as long as certain best pricing conditions are met. However, it is questionable whether US Communities would want to appoint a supplier that already has the business for another rival cooperative contract
Having said that, Staples’ NJPA contract itself has just been rebid as it reaches its maximum limit of five years in July this year. There is no guarantee that Staples will be awarded the new contract (though who else could be awarded the contract with the NJPA being based in the town of … Staples, Minnesota?).
Are there opportunities for the independent dealer community?
Any US Communities bid would have to provide for national coverage, essentially ruling out a bid from a single independent supplier. There could also be other contractual and invoicing issues that make it difficult for a single dealer to act on behalf of a group of dealers.
AOPD has the coverage, but historically has worked with the private sector. Any bid would also have to be brokered by AOPD itself and not by one of its members.
This leaves the possibility of a wholesaler-sponsored bid on behalf of dealers, similar to the efforts made by United last June for the State of California contract, although the negative reaction from the dealer community ultimately prevented United from going through with a bid.
Almost a year down the line, however, United may have another go. President of United Stationers Supply, Cody Phipps, recently told OPI that the wholesaler has been developing initiatives to help its dealers win more business in the public sector.
Depot is likely to make winning the new contract a top priority. Losing out would be a big blow to its BSD sales, already down 16 percent last year.
"Office Depot fully intends to compete for the new contract and we view the re-solicitation as an opportunity to affirm and improve the value of our offering to public agencies nationwide," said Senior Manager, Public Relations, Jason Shockley, in an email to OPI.
Despite the negative publicity surrounding its government business, it would appear that Depot still remains in the driving seat. The recent award of the school supplies contract indicates that US Communities still has faith in the company that it has been working with for almost 15 years.
The biggest threat would appear to be if US Communities decides on a multiple vendor award, such as on the schools supplies contract or on its technology products contract which Depot shares with two other suppliers via its Tech Depot division.
LA County said a team of public procurement professionals from agencies across the country will assist it in evaluating responses and that it plans to award the new contract by the beginning of October.