OFFICE SUPPLIERS SUING STATE OF N.J. DUE TO STAPLES CONTRACT

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http://www.nj.com/business/index.ssf/2009/09/post_7.html
OFFICE SUPPLIERS SUING STATE OF N.J. DUE TO STAPLES CONTRACT
A
group of New Jersey office supply companies that stands to lose
millions in government business is suing the state, trying to block its
new exclusive contract with Staples.
The state’s office supplies
contract, worth about $10 million, shifted from 17 individual contracts
to Mass.-based Staples Advantage on Sept. 1.The move will save the
state about $2.25 million and could also generate savings for
municipalities, counties and school boards that choose to purchase
office supplies through the state contract, according to the state
Department of Treasury.

But New Jersey members of the National
Office Product Alliance are seeking to put the new contract on hold,
claiming the decision to go with Staples was based on an unfair
analysis of product costs that favored the larger company.“We have been
put at a severe disadvantage,” said Steven Gerzberg, president of
Johnson Business Products and Interiors of Secaucus. “One has to
question the competitive nature of this contract.”Even if the state
will save the money it claims it would by going with Staples, the move
will mean more lost jobs and tax revenue, representatives of the New
Jersey companies said during a news conference held yesterday in the
State House.“We’re going to cut our workforce,” said Sonny Arora, owner
of Action Office Supplies in Lakewood.“That’s the reason that we need a
stay,” said Allan Feldman, owner of South Plainfield’s Able Office
Products.

The state announced the deal with Staples in August,
saying the move will save an estimated 23 percent off the annual cost
of purchasing office supplies, which is about $10 million. The contract
was awarded through the National Joint Powers Alliance, a consortium of
28,000 government units seeking better deals from vendors.A 2006 New
Jersey law enabled the state to join such out-of-state cooperative
purchasing consortiums to seek savings on goods and services if the
contracts are competitively bid. The state is joining in the last year
of a five-year contract with Staples that was competitively bid in 2005
by the consortium.Because Staples will ship products directly to state
agencies, state officials believe the new deal will save another
$500,000 by closing warehouse space it has been leasing to store office
supplies.The Department of Treasury issued a statement saying it
disputed some of the price comparisons put out by the state-based
companies and also said the Staples deal does not prevent the companies
from competing for work at the local level.“The new contract in no way
impedes the handful of vendors who have been under contract with local
governments to continue to compete for this office supply work and
service these governments now and in the future,” the statement
said.Last year, the state decided to go with Tenn.-based AutoZone for
its auto parts supply contract instead of the 135 individual New Jersey
dealers that had been supplying parts under the old deal. The new
contract, which was opposed by the in-state businesses, was estimated
to save about $2 million.

http://www.njbiz.com/weekly_article.asp?aID=79448
Officials stand by state’s contract for office supplies
But vendors say bid process was unfair, claim to offer lower prices
While
a group of New Jersey businesses still objects to the state’s
participation in a national office-supply contract, state officials say
this contract and similar national cooperative contracts benefit
taxpayers and small businesses.The office-supply contract is the ninth
multistate cooperative agreement that the state has signed since the
Legislature authorized them in 2006. The contracts range from an auto
parts deal with AutoZone to an industrial supplies contract with
Grainger.Several of the office-supply businesses and Assemblyman Jon M.
Bramnick (R-Westfield) have asked why the businesses weren’t able to
bid on the contract. The group filed an appeal in a state court Sept.
25, asking to overrule the contract awarded to Staples Business
Advantage.On Aug, 17, the state announced the agreement with the
National Joint Powers Alliance to buy Staples products, saying
taxpayers would save roughly $2 million annually from the pact.While
the companies say they can compete with Staples’ prices, state
officials dispute whether the local vendors offer lower prices. A
Treasury spokesman provided a list of roughly 450 items for which
Staples generally offered lower prices than New Jersey vendors. The
suppliers contend their list of 10,000 products shows Staples has
higher prices for similar products.

Chatham Superintendent of
Schools Jim O’Neill expressed concern that the contract would mean
Staples would have no competition, and said Staples’ prices were
unclear.Given the projected savings and the ability to offer discounts
to small, minority- and women-owned businesses, the deal is a “home
run,” Treasury spokesman Thomas Vincz said. In addition to businesses
registered with the state, local governments and schools also will
receive discounts from Staple.Alliance national sales manager Duff
Erholtz said anyone can compete for the contract, which is up for
renewal next year, but they must be able to serve the entire country.
The New Jersey vendors are asking the state to put the portion of the
contract within the state out to bid.Vincz said the cooperative
purchasing agreements run counter to a culture that forces the state to
overpay. He also said the bill allowing the state to join multistate
purchasing cooperatives drew virtually unanimous support because of the
potential for savings.

While local governments must use Staples
if they want the state’s discounts, they can seek other vendors through
competitive bidding. Ocean County Freeholder Joseph H. Vicari said the
county would seek bids and explore breaking its office supplies into
separate contracts for which local vendors could compete.“What we’re
looking for is not only the price, but the quality of the items,”
Vicari said. Some of the New Jersey office-supply business owners have
said they would go out of business if they lost their government
customers.

Small businesses are not excluded from participating
in cooperative purchasing contracts, he said. For example, the state
auto-parts contract with AutoZone prompted some auto-parts sellers to
become AutoZone dealers, Vincz said.Staples will hold a “vendor day”
Oct. 20 for small, women- and minority-owned businesses. These
businesses are eligible to purchase office supplies they need from
Staples, on the same terms as the state.

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October 16, 2009 at 10:38 AM