Monitor Contract Prices of Supplies
Public entities often enter into contracts to purchase supplies based upon the prices offered by the vendor on those supplies. When the supplies are actually purchased, the public entity should confirm that the prices charged by the vendor match the prices offered by the vendor when the original contract was signed.
In the past, allegations have been made in other states that vendors switched government customers from one pricing plan to another plan without the customers’ full understanding or knowledge. In 2014, for instance, Office Depot entered into numerous settlements with various states to resolve allegations of overcharging governmental customers; the settlement with the State of California alone was for $80 million. More recently, in 2020, the wireless carriers AT&T and Verizon agreed to pay a total of $127 million to 300 state and local government entities in California and Nevada to settle allegations that the carriers violated contractual promises to charge the entities “the lowest cost available.” Comparing contract prices or charging promises to the actual prices charged and raising questions as needed may help detect or prevent overpayment.
Date this Avoiding Pitfall was most recently published: 05/28/2021