Book depository threatens lawsuit over bidding rights

Wednesday, Feb. 12, 2003 | 9:26 a.m.

A Texas book depository claims it has been unfairly shut out of bidding for the lucrative business of delivering textbooks to Nevada's schools -- particularly in Clark County, where the annual bill for new volumes topped $16 million in 2002.

In a letter sent to the Nevada Board of Education in October, DDS Textbook Depository of Dallas warns state officials to either open the bidding process to competition or risk a lawsuit. At the heart of the legal battle is Clark County's clout in the bid award process and allegations of favoritism.

Nevada allows individual school districts to require publishers to place their books with a particular depository instead of letting publishers choose one of their own.

Depositories provide regional storage and shipping facilities for publishers in exchange for a percentage of the purchase payment. The publishers save money on the cost of handling the orders themselves, and the delivery costs for schools are usually significantly lower.

In Nevada, once a textbook has been approved by the board for use, the state negotiates with publishers for the Master Price Agreement required by law -- guaranteeing all districts pay the same amount for titles. The school district that submitted the title for the board's approval gets first choice at designating the depository to deliver the books.

DDS's complaint focuses on the issue of control, Keith Rheault, deputy superintendent of instruction for the Nevada Education Department.

"The publishers don't like being told they don't have a choice in the situation," Rheault said. "And since Clark County is by far our biggest district, it's most often Clark County that submits new books for adoption and chooses the depository. (DDS) doesn't see that as fair."

DDS executives did not return repeated calls for comment.

Clark County officials say being able to designate the depository they want used has saved the district millions of dollars in shipping costs and also resulted in more efficient service.

"We're dealing with one company for all our orders, and given our size that really helps simplify the situation," said Richard Ennes, business manager for the School District. "We know right away who to call if there's something missing from a shipment or if we have questions or concerns."

Since the early 1990s the Clark County School District has relied almost exclusively on the Mountain State School Book Depository, located in Clearfield, Utah, about 20 miles north of Salt Lake City.

Mountain State charges the School District 1.8 percent of the total order price to deliver the books, Ennes said. That compares with the standard 10 percent charged by publishers for delivery, Ennes said.

The depository also sends along workers to help unload the books at individual schools and provides storage for future orders, Ennes said.

If the district lost the authority to designate a depository, it would be an "logistical nightmare," Ennes said.

"Instead of having all our textbooks in one place, we'd see publishers switching back and forth and depositories getting into bidding wars," Ennes said. "We'd end up with more paperwork and more time wasted just trying to track our orders. And we'd probably lose out on the millions of dollars we're currently saving."

In its complaint, DDS claims neither the Board of Education nor local school districts have the legislative authority to demand publishers use a particular depository. The board is expected to address DDS's complaint March 16.

DDS also alleges Clark County is showing favoritism toward Mountain State because two former School District employees now work for the Utah company.

The district prohibits former employees from later soliciting business as vendors, but the two Mountain State employees never worked in sales, Ennes said.

"As far as we're concerned it's perfectly acceptable," Ennes said.

Jan Stanley, who worked for the School District's purchasing department for 19 years before taking a job with Mountain State about six years ago, called DDS's accusation "completely false."

"The School District has very defined parameters of what's appropriate and what's not," said Stanley, a longtime Clark County resident whose husband teaches biology and physiology at Foothill High School. "We are an honest, ethical company, and we follow the rules."