Lee superintendent orders full audit of Office Depot purchases to look for overcharges

As it prepares to conduct an extensive internal audit of its dealings with Office Depot and potential overpayments, the Lee County School District may be in line for a refund from the office supply giant.

If it gets a refund, the Lee district would become the fourth government agency in Southwest Florida to receive a credit from Office Depot in relation to the company’s government contract pricing.

That’s out of at least seven other government agencies in Collier and Lee counties — and more than 10,000 agencies and nonprofit organizations nationwide — that have spent and in some cases continue to spend millions on the exact same contract with Office Depot.

Lee schools Superintendent James Browder said Friday the district will now launch a “full-scale investigation” of its contract with Office Depot.

He said the district will be looking at everything, and didn’t rule out the possibility that district officials may have acted inappropriately.

Browder said he also learned a lesson from the other agencies’ dealings with Office Depot.

Browder: Will investigate Office Depot

Does he regret waiting?

Superintendent James Browder smiles while being interviewed by media representatives in his office in early 2008.

Photo by MICHEL FORTIER

Fort Myers resident and disgruntled former Office Depot employee David Sherwin has been airing allegations of overcharging on the company's contracts since being fired in April 2008. "It's been a disaster," says Sherwin. "I'm as close to broke as you can be without being legally broke. But it's like poker, once you're all in you don't walk away from the table. Sherwin hopes to have an investigation of Office Depot in all 50 states. Michel Fortier/Staff

“That should tell you that we’re not communicating with each other, because after the first one, we should have known,” Browder said Friday, referring to the other agencies that have received a credit. “I believe I have learned a valuable lesson inside of this.”

However, it wasn’t just that the other agencies didn’t contact the district. The superintendent, Lee School Board members and district officials involved with purchasing and auditing had all been sent e-mails for more than a year and a half with concerns about the contract.

Those came from David Sherwin, a Fort Myers man who is the former Office Depot account manager that sold the contract to the district.

Office Depot’s government contract practices are being investigated by seven states. Four federal agencies are involved in investigations of the company, as well. Sherwin has provided documentation from the Florida Attorney General showing he is listed as a whistle-blower in the state’s investigation. He estimates the Lee district is eligible for a credit of more than $240,000.

Read the Naples Daily News' profile on David Sherwin.

Browder did take some action after first learning of allegations against Office Depot. In fact, Browder did so before Sherwin began airing his concerns, by initiating a new arrangement that allows district employees to purchase office and school supplies from four different vendors, Office Depot, OfficeMax, Corporate Express, and Fort Myers-based Wallenbrock Office City.

“When we realized there were allegations of controversy, our first step was to re-bid,” Browder said. “Every time I get something on e-mail I forward it to folks inside and say ‘check this out.’ On multiple occasions, I was told we were OK.”

Sherwin said he was contacted by a member of the district’s Professional Standards and Equity Department earlier this week with questions about district employees’ dealings with Office Depot.

Browder acknowledged Friday that district internal auditor Robert Brown had “been brought in late” in regards to examining the allegations.

Asked Friday if any employees had been disciplined in relation to their handling of the allegations, Browder said “not at this time.”

Using his background as a former Air Force and Florida state agency auditor, Sherwin said he came across problems with the massive piggy-backing contract while an account manager with Office Depot in 2006. Though his allegations into the contract are many, he is most vocal about a pricing switch he said increased prices to the government agencies that signed onto it.

Office Depot asserts that the second pricing option was sold to agencies as a simpler way to check prices. Sherwin says he also was told to sell it as a cost savings, something he says was fraudulent.

Brown told the Daily News last week that in its earlier, random spot checks, the district didn’t compare the prices between the two pricing plans. After being told about Sherwin’s allegations, Brown said he would look into the difference between the two pricing options.

But Browder said he decided to conduct the audit announced Friday after discussing the issues with area public officials, including Lee County Clerk of Courts Internal Audit Department Director Chuck Short. In the new audit, Browder said his employees may be working with others outside the district, but couldn’t confirm who that might be.

Lee School Board Vice Chairman Steven Teuber wasn’t critical of Browder’s decision to wait for a full-blown audit until now. He said new information received from Sarasota and Charlotte counties, which Sherwin has said both buy from Office Depot, changed everything for the district, not Sherwin’s dozens of e-mails sharing details about the allegations he first leveled publicly in April 2008.

“I have been reading what he would send us,” Teuber said, after noting that he had never spoken with Sherwin. “But until you get that different perspective, you don’t see it. And when they told us, it really opened up some opportunities for us to look at some things in some new ways ... that really got us to the point where we can find what Mr. Sherwin was trying to tell us in a nondescript way.”

Though the Lee County School District spends more than any other local agency on office and school supplies, about $2.5 million a year, other agencies also purchase from Office Depot.

Those included are Collier County Public Schools, the city of Naples, Lee County government, Edison State College, the Lee County Port Authority, the city of Fort Myers and the city of Cape Coral.

Lee County had Short conduct an audit on the pricing switch. The audit reported about $58,000 in overcharges and credit was received from Office Depot. After simply contacting Office Depot with concerns about the pricing switch, Cape Coral received $51,603 and Edison State College received $24,234.

A statement provided by Office Depot in response to questions relating to the credits acknowledged that the company issued them when asked for.

“As part of our commitment to customer satisfaction, Office Depot extended credits to each entity for the estimated difference between Option 1 and Option 2 pricing based on their spend(ing),” the statement said.

Office Depot denies its pricing is fraudulent or in violation of any contract. Furthermore, the company is quick to point out that Sherwin was fired for workplace misconduct after sending a profane e-mail to company executives.