Common use of Third Party Audits Clause in Contracts

Third Party Audits. The Contractor shall maintain a Price Accuracy Rate of 98% or greater. The Contractor shall obtain a third party firm at no additional cost to the State to confirm the price accuracy of the Contractor’s Punch-out Catalog. The third party firm (to be approved by the Department) shall perform a quarterly audit with statistically relevant sample of contract items to confirm the accuracy of X.X. Xxxxxxxx Price or MSRP, MSRP % discount, and final sell price. Specifically, the third party firm will verify that the prices displayed on the Contractor’s catalog are less than or equal to the approved contract prices. The Department has defined statistically relevant as a sample in which the confidence level is 95% with a 5% confidence interval. For example, statistically relevant sample for a catalog of 15,000 items would result in a sample size of 375. An example is provided at the following website: xxxx://xxx.xxxxxxxxxx.xxx/sample-size-calculator.html The third party firm shall submit a quarterly report to the Department confirming the Contractor’s Price Accuracy Rate within 15 days after the close of each quarter. The Price Accuracy Rate shall be calculated using the following formula: Price Accuracy Rate = the number of audited items each quarter where the net price is less than or equal to the contract price divided by the number of audited items. Example: Population size (# of items in the catalog) = 15,000 Sample size (from Calculator): 375 Number of catalog prices less than or equal to the approved contract prices = 370 Accuracy Rate = (370/375) = 98.6% At a minimum, the quarterly report will identify items not in compliance with the contract terms, provide the date of the audit, and screenshots of the items on the Contractor’s website that were not in compliance with the contract terms. If the Department deems it is in the best interest of the state, the Department reserves the right to increase the frequency of the Third Party Audit.