Printing suppliers cry foul as government plans to shrink pool

Shared Services Canada says new system will increase size order and lower prices

The number of approved suppliers who sell printers to the federal government is being reduced from 12 to three, according to several people familiar with the initiative who argue the move is “bad business” for taxpayers and limits competition.

Shared Services Canada is aiming to cut back the number of companies that are able to sell printers, photocopiers and printing services to the federal government in a bid to increase order size and lower prices.

However, opponents of the plan say reducing competition in the space will lead to higher prices and slower service.

The federal government currently posts requirements for its printing and photocopying needs to a public website where as many as 12 companies can bid on the purchase and compete for a contract.

The federal government is the largest purchaser of printing and photocopying services in the country, accounting for an estimated $60 million in spending annually.

“We believe this is moving towards an oligopoly-type environment,” said Sam Yoshida, senior vice-president and general manager of the imaging systems group at Canon Canada Inc. “We think it’s bad business for the federal government, bad business for taxpayers. It’s basically limiting competition, from our standpoint. We think this whole process is an anticompetitive process.”

Shared Services Canada said it changed the procurement policy to better streamline federal purchases and negotiate stronger deals with suppliers. By limiting the number of companies, Shared Services could negotiate better rates for technology by buying in bulk for multiple departments and agencies.

The department said it believes the process it has taken to implement the new initiative is fair and transparent and in the best interests of Canadians.

“The process to buy printing devices and managed print services for the Government of Canada is open, transparent, fair and competitive,” said Monika Mazur, a spokeswoman for Shared Services.

“The process began with extensive industry engagement from July 2015 until March 2016,” she said. “Through the process, SSC pre-qualified the top-five respondents based on a set of criteria that included proven skills and experience in implementing and providing printing products and managed print services across Canada.”

Mazur said Shared Services plans to award contracts to three vendors in the coming weeks, which will allow federal departments to buy printers, photocopiers and print services from one of three pre-approved vendors.

Yoshida from Canon isn’t alone in his objections.

Sharp Electronics of Canada is also questioning why the field for potential sellers is thinning out, and questioned the method through which Shared Services is selecting the top vendors.

“We were being locked out of this process on an ongoing basis because of the mandatory requirements that Shared Services was putting in place,” said Hugh Ralph, director of direct sales with Sharp. “They had to do with the size and scale of your current existing business in Canada.”

To qualify as a seller, Shared Services now requires prospective sellers to have more than 45,000 commercial printers and photocopiers already in use in companies across Canada. Ralph said the requirement immediately narrowed the field down from 12 suppliers to two, although Shared Services said it is hoping to qualify a total of three bidders.

When other potential suppliers asked how they can qualify under the strict quota, Ralph said they were told to partner with other sellers and submit a joint application to the government.

Canon and Sharp said a partnership would create a series of competitive problems between two companies that have traditionally found themselves bidding against one another for work.

The change in Shared Services’ procurement policy could also be the death knell for hundreds of smaller dealers who have been contracted by big multinational companies like Canon and Sharp to sell, service and deliver their products in smaller towns and cities.

“Canada is a huge country and we have a direct presence in 10 or 12 locations, but all of the other cities and markets are covered by authorized dealers who help us install, service and market the products in those markets,” said Canon’s Yoshida.

“These dealers will lose that business overnight.”

Shared Services Canada, created in 2011, was initially tasked with streamlining the government’s technology needs in a bid to simplify information systems and reduce costs. But it’s experienced issues with core projects behind schedule and over budget.