Palo Alto could have saved between $196,484 and $389,426 by more closely monitoring its multi-year office supplies contract with OfficeMax Inc. to ensure it was receiving "reasonably expected discounts at authorized prices," according to a new audit released Wednesday evening.

The review of the contract by City Auditor Jim Pelletier covers the period between November 2007 and May 2011. The city spends an average of $250,000 per year on office supplies for its 13 departments.

OfficeMax overcharged Palo Alto at least $47,563 by applying unauthorized changes to pricing, according to the performance audit, Pelletier's first since joining the city earlier this year. In addition, the city could have received additional discounts for non-contract office supplies ranging from $148,921 to $341,863.

Ten recommendations are outlined in the 66-page audit, including that the city request reimbursement for the overcharges. Similarly, the Administrative Services Division should consult with the City Attorney's Office to see whether the additional discounts can be recovered.

The audit also takes aim at the Administrative Services Division's handling of the office supplies contract and recommends developing formal procedures to more "effectively administer" such agreements.

"I recognize the amount of time and effort the Administrative Services Department committed to this audit," Pelletier said in a statement. "I feel confident that the City can make process improvements in contract administration that will save money and positively impact the entire organization."

The city's chief financial officer, Lalo Perez, called Pelletier's recommendations "reasonable."

"While we have saved significant dollars in other areas such as refinancing our long-term debt," Perez said in a statement, "we can make improvements in the contract services area."

The "Audit of Contract Oversight: Office Supplies" is available on the city's website at http://www.cityofpaloalto.org/civicax/filebank/documents/32054.

Email Jason Green at jgreen@dailynewsgroup.com; follow him at twitter.com/jgreendailynews.