10 | Follow-up of Contract No 2022-003 with NAPA Auto Parts and Cooperative Purchase Request Contract with Sourcewell November 2024 Closed Conditions and Follow-Up Results A total of 5 of the 6 conditions identified in the original report for Contract No 2022-003 have been closed. 1. Plan Pricing Summary (Contract 2022-003) Current Status, Follow-Up Audit dated November 2024: Current Contract, No. 2022-003, outlines a new, consistent “Gross Profit” Rate of 8% across all NAPA product costs, non-NAPA product costs, and “Outside” products or services. IAD tested 62 COPAR Invoice Packets that were paid during the period of January 1st, 2023- December 31st, 2023. Based on IAD calculations, an average gross profit rate of NAPA and nonNAPA transactions is at, or slightly below, the contracted 8%. No material issues were identified during the audit process and IAD considers Opportunity for Improvement No. 1- Plan Pricing Summary as, closed. Original Audit Observation, Report dated April 2021: In Exhibit B of the Agreement, the “Fee Schedule”, refers to a Price Plan Summary which outlines the net profit rate that the contractor is to bill the County for product costs. Language in the contract states that NAPA product costs and Non‐NAPA product costs are to be billed to the County at a 10% gross profit rate, unless the Non‐NAPA product cost is listed as an “outside” product or service. Any “outside” purchase would result in either an 8% or 6% gross profit rate, based on the amount of the invoice. However, directly underneath the language that states a 10% gross profit rate, a calculation is also provided that states the gross profit is to be calculated by the “acquisition cost divided by .9”. The auditor determined that the gross profit rate is actually 11.1% when using this calculation. Original Recommendations, Report dated April 2021: The County should review the contract and determine which gross profit rate was intended and then the language and calculation should be modified so that they are both in alignment.
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