11 | Follow-up of Contract No 2022-003 with NAPA Auto Parts and Cooperative Purchase Request Contract with Sourcewell November 2024 2. NAPA Product Costs (Contract 2022-003) Current Status, Follow-Up Audit dated November 2024: IAD tested and analyzed 62 COPAR Invoice Packets that were paid during the period of January 1st, 2023- December 31st, 2023. Through this process the following was identified: • Seven (7) COPAR Packets submitted had total amounts that varied from the amount paid out by the County Finance Department due to incorrect freight markup calculations on the original invoices from NAPA. It was determined the Finance Department identified the transactions and adjusted the total amounts. No issues identified. • Several of the COPAR Packets total invoice amounts were slightly different than IAD’s re-calculations. Analysis of the variations show that on average, per individual invoice, the deviation is less than $0.30. However, IAD did note three (3) COPAR Packets that had a total invoice amount variation greater than $10, though the average deviation, per COPAR Packet, calculated at less than $3.00. This does not appear to impact the gross profit rate and IAD considers these deviations to be immaterial. No material issues were identified during the audit process and IAD considers Opportunity for Improvement No. 2- NAPA Products Costs, as closed. Original Audit Observation, Report dated April 2021: In Exhibit B of the Agreement, the “Fee Schedule”, refers to the contractor being able to bill the County at a specified gross profit rate. The contract states that NAPA Product Costs are to be “billed to the County at a 10% gross profit rate.” The contractor provides County staff with access to a live database that shows pricing for over 750,000 parts. After an order is processed, the County is invoiced and the prices are based on the live database prices. The auditor obtained access to the database and reviewed details related to pricing listed in the database. Each part listed includes the List price and the Cost price. The Cost price is what the County pays when they order from the contractor. It appears the County is receiving a discounted rate. However, based on the pricing provided in the database, there is no way to determine if the contractor is yielding a gross profit of 10% on NAPA Product Costs. Additionally, there is no documentation being retained that would indicate the list price at the time of the purchase. Original Recommendation, Report dated April 2021: The County should require the contractor to include their cost for parts listed in the database, or consider modifying the language of the contract to reflect the percentage discount the County is entitled to that would approximately equate to yield a gross profit of ten percent.
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