45. (Cost control) The California State University system once placed a purchase order (PO) for a book published by a small New Canaan, Conn., company, The Information Economics Press. The following is a copy of the letter the Press sent back to the California procurement officer:

We have your eight page PO#940809 for one copy of our book “The Politics of Information Management.” We are unable to fill your $49 order for the following reasons:

• In the Purchase Order Terms and Conditions you wish us to waive any infringement of our copyrighted materials by officers, agents and employees of the California State University. We cannot agree to make available a valuable Copyright for the price of a book.

• You will withhold all payments or make a 38% withholding in order to file a year-end 1099 form. We are unable to handle the paperwork of a separate 1099 for every book we sell. That would double our paperwork.

• You are requiring us to file a Vendor Data Record (form 204) which is largely identical with your Vendor Information form. Filing both forms takes excessive amounts of time.

• We are a small business, and therefore you require that we submit a copy of the OSMB Small Business Certification. We do not have an OSMB Certification and we do not know where to get one.

• Your attachment to form 204 specifies that I obtain a determination with regard to my being classified either as resident or non-resident subject to California tax withholdings, to be reclaimed by filing at year-end California tax returns. We do not plan to make any tax filings in California.

• Your contract rider contains a Privacy Statement on unspecified disclosures that makes us liable for penalties of up to $20,000.

• As a condition of our filling out the order you are asking us to post statements notifying all employees of compliance with Code Section 8355 and certifying as to our adopting a four point Drug-Free Awareness program that complies with California law. Deviations are punishable as perjury under the laws of the State of California. Please note our firm has only two employees, who do not take even an aspirin.

• Your Minority/Women Business Enterprise Self Certification Form 962 requires detailed statistics on ethnic characteristics of our firm, defining each ethnic group according to their stated geographic origins. To assist in making such distinctions you provide a check-list of ethnic identity of the owners of this firm, leaving us by default with only one open choice, Caucasian, which you do not define. My husband and I do not know of any ancestors who may have ever been in the proximity of the Caucasian mountains, and therefore we are unable to comply with your requirement to identify our ethnic origin according to your geographic rules.

We therefore suggest that you purchase our book at a bookstore.

Mona Frankel Publisher SOURCE: Mona Frankel, “Just Go to the Bookstore and Buy One,” The Wall Street Journal (October 18, 1994), p. A20.

Reprinted by permission of The Wall Street Journal, © 1994 Dow Jones & Company, Inc. All Rights Reserved Worldwide.

Permission conveyed through the Copyright Clearance Center.

a. What cost control strategy was the author of the preceding letter employing in her decision to reject the book order? Explain.

b. What appears to be the source of most of the complexity associated with the purchase order? Explain.

c. What does the letter suggest about the opportunity for improved cost control in the California State University purchasing system? Explain.