Worcester Oil Co. Cries Foul Over Consortium Deal
The drop in oil prices has brought relief to many New England residents, but it's also led to a dust up between the Colleges of Worcester Consortium and its oil supplier, C.K. Smith Co. of Worcester.
When the Consortium chose C.K. Smith as a fuel oil supplier for members of its purchasing group for the 2008-2009 heating season, it seemed like a simple deal. For years, the organization has helped arrange discounts on all kinds of bulk purchases for its members - several times with C.K. Smith - and the process usually goes smoothly.
But after C.K. pre-bought enough oil on July 31, 2008 to supply eight consortium members, prices dropped dramatically. In the end, says Fran LaPorte, customer service manager for C.K. Smith, five of the members didn't actually order or pay for the oil the company had purchased, presumably going elsewhere for their heating needs. And now, he says, the company is left with "a couple million gallons" of oil sitting unclaimed at storage facilities.
The Consortium insists that neither it nor its members did anything wrong. The agreement it signed with C.K. Smith specifically says that it doesn't guarantee a volume to be ordered, though it does indicate how much oil the members of the purchasing group used in the previous year.
Contract Talks
To LaPorte, though, the situation clearly violates the intent of the agreement. He said the company had to make its order the moment it was chosen as the Consortium's supplier to avoid future volatility, even though it didn't have signed contracts from the individual members of the purchasing group.
"They gave us the green light, we went out, we purchased the oil," he said.
LaPorte said C.K. Smith soon received binding contracts from three members -- the Bancroft School, Worcester Academy, and Quinsigamond Community College -- which have gone on to buy their usual volumes of oil for the season. Then it sat waiting for five others, Anna Maria College, the Worcester Art Museum, the YMCA of Greater Worcester, the YWCA of Central Massachusetts and Notre Dame Academy.
Representatives from those institutions either declined to comment for this story or did not return phone calls. LaPorte said he never heard from any of them. He said at least one converted to a natural gas heating system before the winter, and others apparently bought oil from other suppliers after prices dropped.
LaPorte said he is particularly disappointed in the situation because he said C.K. Smith President Bruce Fortin warned the Consortium against locking in prices during the summer due to the volatility of the market. But he said the organization didn't listen.
"Because of the volatility they really felt that it was going to skyrocket," he said.
The Consortium offered comment for this story only via e-mail, stating that the terms of the contract with C.K. Smith were very clear and that "quantity is not guaranteed."
LaPorte said C.K. Smith has contacted lawyers about the situation but doesn't know if it will file a lawsuit. He said the company has met with the Consortium and with Anna Maria College but has not yet come to an understanding.
"They were just under the distinct impression that by not signing the contract they were off the hook," he said.
Still, he said the company hopes to reach an amicable agreement with all parties. He said he wants to see the purchasing group members that have not yet bought oil either do so or else pay a fee to terminate the contract.
"We've always had very, very good business relations with those people, and we certainly don't want to cause any kind of a firestorm here to jeopardize this," he said.
WBJ Web Partners
Most Recent
Most Recent
0 Comments