Vendor bankruptcy costs Library $500k
- By Florence Olsen
- Feb 08, 2004
Because of a vendor's bankruptcy, the Library of Congress will lose about $500,000 from an intragovernmental fund that pays for subscriptions to online databases, periodicals, and other library and information services.
General Accounting Office officials have ruled that the library fund must absorb the $500,000 loss resulting from a subscription vendor's bankruptcy. The decision prevents the library from assigning the loss to federal agencies on whose behalf the library had paid in advance for subscription orders.
The revolving intragovernmental fund, called the Federal Library and Information Network, or Fedlink, negotiates volume discounts with publishers for online and print publications and places subscription orders on behalf of other federal libraries. Before the default, the library had paid the vendor, RoweCom, nearly $3.5 million in advance for subscriptions. RoweCom has since between acquired by EBSCO Industry Inc.'s Information Services, which provides electronic and print publications to government and academic libraries.
While the Library of Congress expects to recover $3 million of the total amount directly from the publishers, most of whom who have agreed to make good on the prepaid subscription orders, the library will have to pay the remaining $500,000 out of Fedlink's administrative reserve fund.
GAO's attorney ruled that the $500,000 loss is a legitimate cost of doing business.