Tighter rules for retailers urged

BILL SUGGESTS PENALTIES FOR FALSE PROMISES
By Kimberly Kindy
Mercury News Sacramento Bureau
Article Launched: 04/09/2008 01:45:13 AM PDT

SACRAMENTO - Big-box companies that land state contracts by falsely promising to farm out a large share of the work and profits to small businesses would be barred from more state contracts and heavily fined, under a new bill that made it through its first hearing Tuesday.

"It appears that some of these contracts may be fraudulent," said Assemblyman Ira Ruskin, D-Los Altos, who wrote the bill. "These contracts can also be allowing the state to be significantly overcharged."

The bill, AB 1942, is designed to prevent the kind of abuse that appears to be raised by a contract for the purchase of office supplies ranging from scissors to toner to copy paper, detailed Sunday in a Mercury News investigation. The article detailed how Office Depot and its subcontractor handle the bulk of the work, and enjoy most of the profit, from a contract that state officials have hailed as a model for helping nine small businesses.

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Mercury News investigation: State deal benefits giant retailer

SMALL BUSINESSES RARELY PLAY ROLE IN SUPPLY CONTRACT
By Kimberly Kindy
Mercury News Sacramento Bureau
Article Launched: 04/06/2008 01:39:00 AM PDT

SACRAMENTO - State officials in 2006 hailed as "unprecedented" their success in getting small businesses involved in selling office supplies to California agencies.

Exceeding even Gov. Arnold Schwarzenegger's ambitious target, small businesses were going to handle a "stunning" 98 percent of the sales of supplies to state agencies. Even better, the state's contract with a partnership of nine small businesses - combined with the purchasing power of Office Depot - was going to cut costs in half.

Two years later, a Mercury News investigation has found that the contract failed on both counts.

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