Sometimes, locking in a contract is not a good idea - from the Wall Street Journal:
When Staples Offers Items for a Penny, New York Buys Kleenex by the Pound
Staples Inc. made the State of New York quite a promise: Buy your office supplies from us, and we'll sell you a bunch of things for a penny apiece. This unleashed a rush on the retailer as government offices and qualifying organizations across the state gobbled up the one-cent items.
A Brooklyn charity benefiting disabled people ordered 240,000 boxes of facial tissue and 48,000 rolls of paper towels, according to documents obtained in a public-records request. Rome, N.Y., wanted 100,000 CD-Rs. A State Department of Motor Vehicles office ordered 8,000 rolls of packaging tape.
"We ordered things we didn't even need," said Nancy Sitone, manager of office services at United Cerebral Palsy Association of Greater Suffolk Inc. "I have some products up the yin-yang."
Staples was named New York's official office-supplies vendor in May 2013. Besides state agencies, those able to order under the contract include city halls, schools, police departments and many charities.
To win the three-year contract, Staples agreed to sell 219 popular items at a penny apiece. It hoped to turn a profit from thousands of other items that weren't on sale.
The one-cent bargains ranged from a 12-pack of chalk with a list price of $1.01 to an $1,100 paper shredder, and included products such as a high-capacity computer flash drive and a 72-pack of C batteries.
Enter the law of supply and demand.
Of course, Staples tried damage control - some more:
Two months into the contract, a senior Staples official complained in an email to John Traylor, a state official, about "excessive orders," citing as an example the request for 240,000 boxes of Kleenex, or 5,000 cases at a penny per 48-box case.
"This order alone exceeds the capacity of 10 tractor trailers [and] has a retail value of $399,500," the executive wrote.
Arguing that demand was unreasonably above estimates, Staples never delivered the truckloads of tissues or many other orders, and blocked some items from sale.
The state "is still in active negotiations to resolve this disagreement," a spokeswoman for New York's Office of General Services said. "Staples did not ask for a limitation in ordering quantities," she said, "and OGS would not have accepted such a limitation had it been made."
Staples is "in full compliance" with the contract, a spokeswoman said.
Heh - I wonder what Staples exec will not get their Christmas bonus this year. Bureaucrats behaving badly.
