Story Archive

Supply and Demand

The office supply chain Staples really wanted to be the office supplies vendor for the State of New York. The state contract terms are also available to cities, schools, and many charities. Give us the exclusive, three-year contract, Staples promised, and they would price 219 “popular items” at just one cent each. Really? asked the state. “We are committed to the pricing at the highest levels of Staples,” the company replied — in writing. They got the contract. Buyers are taking advantage: a charity serving the disabled ordered 240,000 boxes of Kleenex tissues and 48,000 rolls of paper towels; total price: less than $3,000, including delivery. In the first 15 months of the contract, the orders for the “penny items” ordered from Staples had a list-price value of $22.3 million, with a $9,300 total contract price for those items; everything else ordered on the contract added up to only $8.8 million. “This order alone exceeds the capacity of 10 tractor trailers [and] has a retail value of $399,500,” whined a Staples executive to state officials about the Kleenex order; the chain refused to fill the $2,400 order, and has dropped 163 of the items available for a penny. The state “is still in active negotiations to resolve this disagreement,” said a spokeswoman for the state’s Office of General Services. “Staples did not ask for a limitation in ordering quantities, and OGS would not have accepted such a limitation had it been made.” Staples says it’s “in full compliance” with the contract. (RC/Wall Street Journal) ...We’ll see if the state-employed judge agrees.