Office Depot - US Communities Contract (Business Division)

On February 23, 2010, the Procurement Department was asked to provide information with benchmarks that would support the decision to utilize the Office Depot – US Communities contract.

We define benchmarking as the process used by management in which organizations evaluate various aspects of their business processes and performance metrics including cost in relation to "like" organizations within their own sector. Therefore, we are benchmarking Florida school districts similar to Hillsborough County Public Schools (HCPS) and one local district: Broward, Orange, and Pinellas.

1. The Office Depot - US Communities contract contains three pricing structures:
   Core - approximately 1,200 deeply discounted frequently used items.
   Price Plan – approximately 19,000 discounted fixed priced items.
   Non-Core – 10% off catalog (items not covered in the above).
   Note: The US Communities contract has provisions for a rebate program where HCPS benefits by 6% of our annual sales. The FY 2008/2009 rebate check exceeded $492,000. This discount is considered in the benchmark calculations.
2. Many schools districts purchase items using the Florida Department of Management Services (DMS) contract, therefore, this will be our primary benchmark comparison. DMS contract prices are the same as the Office Depot - US Communities contract with deeper discounts in one price structure. The Florida DMS contract takes their rebate and spreads it across selected items in the Price Plan group of products. Districts utilizing the DMS contract do not receive rebate checks from Office Depot.
3. Many school districts use product warehouses and distribute heavily used office supply products. Included are the School Districts of Orange, Broward, and Pinellas, who utilize the DMS contract for the balance of their non-warehouse products. Our benchmarks do not consider the cost of warehousing, which typically adds 25-30% to product cost.
4. In 2009, HCPS Office Depot expenditures were $7,628,214, with a monthly average of $635,685 before rebate. We examined the most recent month of expenditures, February 2010, which totaled $749,050 and assumed it would be representative of average purchases.
5. Our P-Card rebate of 1.31% (which equates to $99,929 for 2009 Office Depot expenditures) is not in included in the benchmark calculations.

(Continued on Attachment A)

* Demonstrate best financial practices