While the Bookstore
Committee has generated a recommendation, no decision has been made regarding a
choice of vendor. We are taking steps to extend the current agreement to allow
sufficient time for additional input from the campus community and to avoid any
disruption in services.
As originally signed, the
University of North Florida Bookstore contract with Barnes & Noble would
have expired at the end of June of 2001. To address this situation, we embarked
on a process to select or retain a bookstore contractor. This process involved
a comprehensive review of our Bookstore operation, soliciting proposals from
the current, and other bookstore contractors and, upon approval, will entail
the generation of a new contract.
Part of this effort
included the selection of individuals from the UNF campus community to sit on a
committee to oversee this process. This committee consists of:
· Diana Tanner, Instructor, Accounting & Finance
· Karen Reedy, Director of Freshman and Sophomore Advising
The Bookstore
Committee, in an effort to enhance service and maximize revenue, initiated an
analysis of the UNF Bookstore operation. This evaluation included an assessment
of University of North Florida priorities and initiatives, demographics,
interest level of potential bookstore contractors, customer surveys, volume
data within UNF and comparable agreements at other universities.
Based on the
results of this process, the Committee concluded that an Invitation to
Negotiate (ITN) process was the best approach to engage Bookstore contractors
in a competitive bidding process for serving the Bookstore needs of the
University of North Florida. Consequently, an Invitation to Negotiate for the
UNF Bookstore operation was issued. The Invitation to Negotiate was sent to all
primary higher education bookstore contractors in the United States.
The Bookstore
ITN was issued, in part, to enhance the services provided to students, faculty
and staff. The overall objective being to provide the best services, to enhance
the quality of life of our campus community and to provide revenue to
supplement University programs. Barnes & Noble and Follett responded to the ITN.
Both contractor
proposals were comprehensive, thoughtful and complete. Competition was
vigorous, involving multiple offers. Ultimately, Barnes & Noble offered nearly
$1.2 million more in added contract value versus Follett’s over the life of the
agreement. If we decided to sign a contract with Barnes & Noble, the University
of North Florida would be guaranteed nearly $8 million in contract value over
the life of the contract - no matter what the future sales volume of our store.
However, a closely divided UNF Bookstore Committee selected Follett as the
provider that it recommends. The Committee felt that current UNF Bookstore
management and service under Barnes & Noble has been so poor, as
demonstrated by negative customer service surveys and other factors that the
Committee leaned toward recommending that we go with Follett. Note that Barnes
& Noble was informed of this concern and has agreed to replace its UNF
Store Manager and the UNF Regional Manager if they get the contract. The
Committee was aware of this fact and was aware of all related financial
comparisons.
Overall, the Barnes & Noble offer to operate our
University of North Florida Bookstore would represent a 66% increase in overall
term-of-the-contract value to the University of North Florida versus that
provided by our current Bookstore agreement. The Barnes & Noble agreement
would provide an average annual additional cash flow of nearly 40% to the
University and represents more than a $3.1 million increase in return over the
life of the 10-year agreement - versus the current Bookstore contract. Furthermore,
Barnes & Noble has agreed to replace current management, agreed to an
aggressive used book program, and to take other
actions to enhance service. Additionally, the Barnes & Noble offer would
give UNF the option of potentially gaining additional funding by renegotiating
and extending our Bookstore contract when we are ready to move to the expanded
Student Union. The Follett offer does not give us this option.
Because of the importance and complexity of this
decision, it was deemed necessary to seek to extend the existing Barnes &
Noble agreement on a 30-day, month-to-month basis to give adequate time for
faculty, staff and student input into this decision. Consequently, the deadline will no longer be June 30, 2001, but
will be extended for 30 days.
Believing strongly in consultation and in the opportunity for those consulted to have a separate voice, the president asked the Bookstore Committee to produce a separate written recommendation, outlining their primary concerns. At the request of the president, the Bookstore Committee prepared this separate written recommendation. This paper outlines their primary concerns. This document is a direct, unedited recommendation from the Committee. Their recommendation is in paper format. Please let me know if you would like to receive a copy of this separate recommendation.
The University of North
Florida Bookstore contract with Barnes & Noble will expire in June of 2001.
To address this situation, we embarked on a process to select or retain a
bookstore contractor. This process involved a comprehensive review of our
Bookstore operation, soliciting proposals from the current, and other bookstore
contractors and, upon approval of a recommendation, will entail the generation
of a new contract.
In conjunction with this effort, The Bookstore Committee, in an effort to enhance service and maximize revenue, initiated an analysis of the UNF Bookstore operation. This evaluation included an assessment of University of North Florida priorities and initiatives, demographics, interest level of potential bookstore contractors, volume data within UNF and comparable agreements at other universities.
Based on the results of this process, the Committee concluded that an Invitation to Negotiate (ITN) process was the best approach to engage Bookstore contractors in a competitive bidding process for serving the bookstore needs of the University of North Florida. The Invitation to Negotiate was sent to all primary higher education bookstore contractors in the United States.
The Bookstore ITN was issued, in part, to enhance the services provided to students, faculty and staff. The overall objective being to provide the best services, to enhance the quality of life of our campus community and to provide revenue to supplement University programs.
In relation to the Bookstore selection process, David Wesse attended a Faculty Association Executive Committee meeting. At this meeting Mr. Wesse provided members of the Faculty Association Executive Committee with information related to the Bookstore initiative. He detailed the charge and composition of the committee that was formed. This group had many suggestions and ideas.
This is the first time since
contracting the UNF bookstore (10 years ago) that UNF has been involved in this
type of vendor selection process for its Bookstore. There are two major
companies in the market that have the resources for a school our size - Barnes
& Noble and Follett’s – the “Pepsi” & “Coke” of college bookstore contractors.
As indicated, UNF issued an “Invitation to Negotiate” for our UNF Bookstore.
Both B&N and Follett’s responded.
As part of our interaction
with B&N and Follett’s, we mentioned that the Bookstore would eventually be
placed in the expanded UNF Student Union – perhaps becoming a part of a phased
construction project. We explained that this was a long-term future option, but
felt that they should at least be aware of this possibility. Additionally, we
mentioned that we were considering some type of Starbucks type of coffee
operation going into a separate location in the expanded Student Union.
Follett gave their
presentation on our campus on Friday, March 16, while Barnes & Noble was on
campus to give their presentation on Thursday, March 29. (Note that we videotaped
these presentations as documentation and for use by any interested parties).
Under the new State of Florida Invitation to Negotiate procedure, face-to-face
negotiations with the two potential UNF Bookstore contractors took place on a
number of occasions in April 2001.
The Committee carefully and comprehensively reviewed each firm’s
proposal on the basis of specific evaluation criteria presented to each
contractor. The most important financial issue related to our Bookstore
negotiation process was the potentially negative impact of technology on future
Bookstore sales. Therefore, one key objective and strategy was to lock-in as
much revenue as possible in order to protect the University of North Florida
from possible declining sales caused by competition from the Internet and/or
from digital books. We were in the delicate position of asking for all the
financial backing and financial return we could get now and all we could get in
the future (new store in Student Union).
Barnes &
Noble is offering the University of North Florida $1,000,000 - $500,000 to
eventually place the Bookstore in the expanded Robinson Student Life Center and
a $500,000 gift to the University of North Florida. (Pierre Allaire has
provided assistance related to this gift.) Additionally, Barnes & Noble is
offering $100,000 to fix up our
existing Bookstore, including the installation of a small coffee operation. As of their
final offer, Barnes & Noble wants to put a very small coffee operation in
the trade book section of our existing Bookstore. Later, in the expanded
Student Union, they would look to put in a larger coffee operation. The Barnes & Noble offer represents
a net $3,108,785 increase in overall
term-of-the-contract value versus that provided by our current Bookstore
agreement. Overall, the Barnes & Noble offer to operate our Bookstore
represents a 66% increase in value to the University of North Florida versus
that provided by our current Bookstore agreement. All furnishings and equipment
installed by Barnes & Noble would become the property of the University of
North Florida at the end of the proposed contract.
Note that the above total projected value of the B&N offer
does not include any matching funds. If we decide to use the donations
for some non-Student Union purpose, and have this $500,000 matched, another
$500,000 would be generated as a result of this possible deal - resulting in an
the added value of 76%.
If funds for the
Student Union expansion can be achieved by other means, the $500,000 Barnes
& Noble donation could be used for other purposes. Of course, we also have
the option of banking the $500,000 and
earning interest until we are ready to use these funds for the expanded Student
Union. We anticipate using contract language that is very non-specific and
non-committal regarding when, exactly, the Bookstore would be placed in the
expanded Student Union and how the donated funds will be used - Pierre is
assisting with this point. Barnes and Noble is offering us this $500,000
donation as a $250,000 gift on the first day of the second year of the contract
and a $250,000 gift on the first day of the third year of the contract.
The Facilities Enhancement
Matching Grant Program (Courtelis) is not available for the Student Union. The
Courtelis program is limited to facilities that support instruction or research
activities. UNF could look at other academic facilities that are matchable to
take advantage of the matching program.
We could place Barnes & Noble’s name in the new Student Union even
though their gift helped some other part of our instruction or research
facilities. Consequently, this $500,000 could be
invested and used to expand the Student Union when we are ready for this expansion or it could possibly
be used for some other non Student Union UNF purpose that would be eligible for
Courtelis matching funds - giving us the $1,000,000.
It should be noted that the
Bookstore offer, as described above, is based on a minimum guarantee. We are
guaranteed the value indicated even if our Bookstore never sells another book.
Comparisons are based on a kind of
"worst case" scenario. The deal would be based on the
guarantee, or the tiered commissions, whichever is greater. We certainly expect
that the tiered commission structure, over time, will generate more revenue for
the University than that provided by the guarantee. When this tiered commission
kicks in, the value of the deal will exceed what is indicated above.
The contractor is
recommending a bookstore of 25,000 square feet, on two levels, in some rectangular
form of floor plan, for a headcount enrollment of 17,000. They say that this
square footage should be appropriate up to a headcount enrollment of 27,000
students.
Technology is starting to
outstrip the profitability of traditional bookstore operations. Many students
purchase their books on their own over the Internet and electronic books may
soon see significant expansion in their use. What does this mean for our
Bookstore? - It’s now or never, the future looks like a Bear Market for
traditional college bookstores - and we need to cut as long and as good a deal
as we can now. Future Bookstore contracts will most likely offer us less.
Consequently, we looked for the best deal, in a longer-term contract now - in
anticipation that our negotiating position will not be as good in the future.
Comparison of Bookstore
Proposals:
|
Barnes & Noble
College Bookstores |
Follett Higher
Education Group |
|
Term: 10 years |
Phase 1: Terminate by
7/30/05, not to exceed 10 years |
|
Commission
of sales: 10.1% to $4,000,000 11.1% from $4,000,000 to
$6,000,000 12.1% from $6,000,000 to
$7,000,000 13.1% over $7000,000 OR a guaranteed payment of
$500,000 (B&N will pay the
stated commission or guaranteed payment, whichever is greater.) Guaranteed payment will
increase 5% each year. Year 1 - $500,000 2 - $525,000 3 - $551,250 4 - $578,812 5 - $607,753 6 - $638,140 7 - $670,047 8 - $703,550 9 - $738,727 10-$775,664 Payment of Guaranteed
Payment: To be paid in 12 equal
monthly installments. Guarantee will increase 5% each year providing UNF’s
FTE does not decrease by 5% or greater in any given year. |
Commission of all gross
revenue: 10.25% up to $4,000,000 11.25% between $4,000,000
and 5,000,000 12.25% between $5,000,000
and $7,500,000 13.25% over $7,500,000 OR a minimum of: $450,000 annually years 1
through 3 $500,000 year 4 $510,000 year 5 Follett will pay whichever
is greater in any year. Phase II-commencing with
bonding, construction and occupancy of new bookstore to commence by 7/30/05
to terminate ten years from commencement date. Will pay commission on all
gross revenue: 9.10% up to $3,500,000 9.25% between $3,500,00 to
$5,000,000 10.25% between $5,000,000
to $7,500,000 11.25% over $7,500,000 OR a minimum of: $600,000 annually, years 1
through 10 Follett will pay whichever
is greater in any year. |
|
Renovation
to Current Bookstore: $100,000-during 1st
year |
$100,000-during 1st year |
|
POS: $90,000 - Will move
immediately to install Total Store POS System. (Includes one check-out on 1st
level only.) Will examine feasibility
of having UC Store linked to POS. |
$160,000 for JDA Win/DSS
POS System – will install during 1st yr.--normally wait awhile
after transition to install, but if we want it, they would do earlier. (Includes check-outs on 2 levels in new
store.) Agreed to link POS to UC
Store. |
|
Donation
for On-line Registration: B&N will do
in-house—no extra cost to them. |
$10,000 Investment to develop a
mutually agreeable software integration between the JDA System & UNF
Business Services Management System & to create the on-line Registration
Integration. |
|
Student
Financial Aid and Accounts Receivable System: Included in POS System |
See above investment. |
|
Contribution/Donation/Gift: $500,000— in two $250,00
installments, on the first day of years two and three of contract. |
$250,000 upon
groundbreaking for expanded Student Union |
|
Investment
for new UNF bookstore facility: $500,000 |
$640,000 (for
approximately 20,000 sq. ft of retail) Any balance not invested
in the form of materials or labor will be donated to UNF at expiration of
ten- year term. |
|
Textbook
Scholarships: Ten per year up to $350
each ($3,500 annually) |
$3,000 annually |
|
Campus
Donations: $10,000 annually (Includes advertising for
orientation and registration.) |
$10,000 annually (minimal
commitment and budgeted amount that may certainly increase upon budget
conditions or other revelations) Advertising for orientation and registration
would be in addition to this. |
|
Discount
to Faculty and Staff: 20% on bookstore
purchases, excluding course books, rings and software. |
20% on non-textbook and
software items. |
|
Discount
to Departments: 25% on bookstore
purchases, excluding course books, rings and software. |
20% on non-textbook and
software items. |
|
Used
Book Percentage Target: 30% at end of year one
& will increase 2% per year through year 5 and level off at 40%. |
Did not offer a target
used book percentage for UNF (36.2% nationwide, FCCJ 40%) |
|
Penalty
if % of used books is not met: $5,000 annual payment to
students in any year percentage of used book sales does not meet agreed upon
target. |
Did not offer this. |
|
Utility
Costs: $15,000 in year one &
will increase $2,000 per year for the first five years & then be
re-evaluated. |
Included in commission. |
|
Coffee Operation: Barnes
& Noble wants to put a very small coffee operation in the trade book
section of our existing Bookstore. Later, in the expanded Student Union, they
would look to put in a larger coffee operation. |
Follett has no plans for coffee in the existing Bookstore, but
is willing to put in a coffee operation in the expanded Student Union. |
Bookstore Offers: Value over 10 Year Term of Agreement
|
|
Barnes & Noble |
Follett |
|
Annual Guarantee |
$6,288,939 |
$5,360,000 |
|
Capital Investment in
Current Bookstore |
$100,000 |
$100,000 |
|
Capital Investment in new
store (Student Union Expansion) |
$500,000 |
$250,000 |
|
Gift – B&N Investment for new UNF
Bookstore facility - Follett |
$500,000 |
$640,000 |
|
Installation of POS System
in current bookstore |
$90,000 |
$160,000 |
|
Annual utility
reimbursement |
$210,000 |
(Included in commission) |
|
Textbook scholarships |
$35,000 |
$30,000 |
|
Campus donations |
$100,000 |
$100,000 |
|
TOTAL |
$7,823,943 |
$6,640,000 |
$4,715,154 – Value of
current UNF Bookstore contract projected for 10 years.
$7,823,943 – Ten-year UNF Bookstore contract value under
B&N’s proposal.
|
Current Contract
Projected Value |
Proposed Contract Value |
Difference |
Percentage Increase |
|
$4,715,154 |
$7,823,943 |
$3,108,789 |
66% |
Overall, the Barnes & Noble offer to operate our University of
North Florida Bookstore represents a 66% increase in overall
term-of-the-contract value to the University of North Florida versus that
provided by our current Bookstore agreement. This represents more than a $3.1 million increase in return over the life
of the 10-year agreement – versus the current UNF Bookstore contract.
Both contractor proposals were comprehensive, thoughtful and
complete. Competition was vigorous, involving multiple offers. Ultimately,
Barnes & Noble offered nearly $1.2 million more in added contract value
versus Follett’s over the life of the agreement. If we decided to sign a
contract with Barnes & Noble, the University of North Florida would be
guaranteed nearly $8 million in contract value over the life of the contract -
no matter what the future sales volume of our store. However, a closely divided
UNF Bookstore Committee selected Follett as the provider that it recommends -
even though B&N is offering UNF $1.2 million more than Follett over the
term of the contract. The Committee felt that current UNF Bookstore management
and service under Barnes & Noble has been so poor, as demonstrated by
negative customer service surveys and other factors that the Committee leaned
toward recommending that we go with Follett. Note that Barnes & Noble was
informed of this concern and has agreed to replace its UNF Store Manager and
the UNF Regional Manager if they get the contract. The Committee was aware of
this fact and was aware of all related financial comparisons.
Overall, the Barnes & Noble offer to operate our University of North Florida Bookstore represents a 66% increase in overall term-of-the-contract value to the University of North Florida versus that provided by our current Bookstore agreement. The Barnes & Noble agreement provides an average annual additional cash flow of nearly 40% to the University and represents more than a $3.1 million increase in return over the life of the 10-year agreement - versus the current Bookstore contract. Furthermore, Barnes & Noble has agreed to replace current management, agreed to an aggressive used book program, and to take other actions to enhance service.
Because of the
importance and complexity of this decision, it was deemed necessary to extend
the existing Barnes & Noble agreement on a 30-day, month-to-month basis to
give adequate time for faculty, staff and student input into this
decision. Consequently, our deadline
will no longer be June 30, 2001, but will be extended for at least 30 days.
Who we choose does impact our decision time frame. Since Barnes & Noble is already here, if we decide to go with them, they would not have to be notified as quickly. However, since Follett is not here, if we choose Follett, the transition between contractors would be a much, much more cumbersome and time consuming task. If we change to Follett we are dealing with significant transitioning issues between the contractors and need every moment of advance time possible. Once we make a decision, by law, we need to make an announcement and post the results for 72 hours.
Believing strongly in
consultation and in the opportunity for those consulted to have a separate
voice, the president asked the Bookstore Committee to produce a separate
written recommendation, outlining their primary concerns. At the request of the president, the
Bookstore Committee prepared this separate written recommendation. This paper
outlines their primary concerns. This document is a direct, unedited
recommendation from the Committee. This recommendation is in paper format. Please
let me know if you would like to receive a copy of this separate
recommendation.