Procurement reform starts with the printers

The latest version of the controversial proposed federal printer procurement policy has won a qualified endorsement from a value-added reseller association. 

“It’s not a perfect document,” said Herman Yeh, president of the Canadian Information Technology Providers Association, which represents 29 resellers who deal with Ottawa, “but it’s a huge improvement from the previous NMSO (national master standing order).”

In an attempt to save the federal government money, Public Works has been redrafting the NMSOs, which are the rules under which public servants buy everything from desks to desktop PCs from approved lists of suppliers and their resellers.

But the work blew up in the faces of bureaucrats in the spring with the release of the proposed printer NMSO, which VARs and vendors saw as trying to limit the number of suppliers and squeeze them on prices. 

After vigorous lobbying the government was forced to make major changes to the proposal, including the elimination of the concept of reverse auctions between winning bidders. 

The latest version of the printer offer, released in the middle of last month, would see Ottawa expand the number of designated suppliers. However, their prices have to be kept within 15 per cent of the winning bidder. That supplier would be chosen under a “best value” formula that includes not only price but also factors such as lifecycle cost, printer performance and usability. 

Interested parties had until last week to submit comments on this version of the proposal.

In an interview after the deadline, Yeh, who is president of Ottawa solution provider Northern Micro, said “the majority of obstacles (raised by the association) have been removed.”

Now his association largely has to push the government to clear up details, such as the removal of ink jet printers from the proposed list of approved printers. How, he wonders, will a federal department buy such machines if they want them?

Linda Jellicoe, Public Works‘ lead procurement officer for printers, said that resellers and suppliers still have one more opportunity to comment on the proposed NMSO. 

The latest version differs from the original NMSO and a revised version suggested in September in several ways, she said: 

  • reverse auctions have been eliminated;
  • so-called “call up” limits have been changed to favour buying the top-ranked supplier;
  • the categories of printers, which had been split in September into two groups to encourage more manufacturers to bid, would split monochrome and colour laser printers within Group 1. By creating more categories the government hopes more vendors will bid;
  • the term of the “active” list has been changed. While several manufactures can have approved products, only the lowest bidder is “active” supplier on the list of companies departments can buy from within a set time period.

Under the current rules, every two weeks other eligible manufacturers can submit bids to become active. The original proposed NMSO called for the active list to extend for six months. The latest version puts it at one month — and in what Jellicoe called the most significant change from the original plan to have one main and one alternate supplier, any approved supplier whose bid is within 15 per cent of the winner can be on the approved active list of suppliers. 

“We’re aiming to have our clients (the departments) pay no more than a 15 per cent premium over the best value offer,” she said. 

When Public Works began revising the printer NMSO, it said the goal was to improve accountability and transparency, as well as generate savings to taxpayers. It has denied it wants to cut down on the number of manufacturers – and VARS — it buys from.

But for the first time Jellicoe said there’s another factor in Public Works’ strategy: It is trying to find a way to ensure buyers don’t favour one manufacturer. 

“It had always seemed to be unfair we’d get really good prices from some suppliers, but they didn’t get the business that came with being best value,” she said, without identifying vendors.

“For those suppliers not to be chosen didn’t seem fair, so that’s why we wanted to tighten up the competition.” 

That might explain, for example, why the active list had been proposed to extend from two weeks to six months —  and why, under pressure from vendors and VARs, it’s been dropped to one month.

After the industry uproar and extensive consultations with industry in August and September, the printer NMSO is “in a state that we consider final now,” Jellicoe said, save for one more round of questions.

“I think it’s very fair this way.” 

Yeh won’t got quite that far, estimating that 75 per cent of it is in good shape. “Hopefully,” he added, “we will get 90 per cent.” 

Meanwhile, manufacturers and VARS are bracing themselves for an NMSO covering desktop PCs, laptops and servers. Preliminary discussions with Public Works have already started.

However, the victories won by the providers’ association have eased some worries. “We did have concerns, particularly when they (Public Works) were looking at things like reverse auctions and looking to largely eliminate the channel,” said Ralph Hyatt, vice-president and general manager of Toshiba of Canada‘s information systems group.

“But recently we’ve seen them back away from some of those more extreme positions. We’re hopeful.”

The industry will have a while to get its points across. Hyatt said the PC NMSO will likely appear after March 31, following the end of the government’s fiscal year.

Comment: info@itbusiness.ca

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