From Capital New York:
The Department of Education is about to approve [official vote will take place in about a month] a $30 million contract with Amazon to create an e-book marketplace for New York City’s 1,800 public schools.
The Amazon deal will be one of the D.O.E.’s most expensive contracts and one of the city’s few significant deals with a leading technology company. The contract will also create the department’s first unified e-book marketplace.
Amazon will provide contracted content, such as widely used textbooks, along with non-contracted content, largely books and texts that individual schools select. Non-contracted content will be purchased directly from Amazon, and the D.O.E. is expecting both types of content to be provided at low prices via Amazon.
All the content can be used on a variety of devices, including smartphones, tablets, PCs and Macs.
Read the Complete Article
From Pages 3 and 4 of the Authorization Document
For cost/price analysis, we compared the pricing offered by Amazon with what was offered by Overdrive, the other viable proposer identified by the evaluation committee.
When DOE provided the electronic content, Overdrive proposed an 8.5% mark-up while Amazon proposed a 15% mark up, with up to a 5% annual rebate should sales volumes increase from year to year.
When the vendor provided the electronic content, Overdrive offered a 35.5% net discount (42.75% minus a 7.25% mark-up) from list price, while Amazon advised that its discount will vary depending upon the wholesale price it negotiates with each publisher, but would always be no higher than its website price (plus a mark-up for electronic content fulfillment which was not defined and covers expenses such as data conversion, storage, maintenance, uploading, distribution and customer service.) We took a sample of 162 publications for which we could locate list prices and, from that subset, we applied Overdrive’s net discount and Amazon’s price from their website. In total, Amazon’s pricing was 22.8% below Overdrive’s. Even after accounting for Amazon’s content fulfillment fee, which would be less than the 15% it will charge when it provides content (as indicated above), we are confident that Amazon’s pricing for vendor provided content falls below Overdrive’s.
As the evaluation committee’s final assessment of the two proposals favored Amazon by a significant margin, the analysis above leads the DOE to conclude that Amazon’s pricing is fair and reasonable.