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A Presentation to all Ontario Provincial Ministers on the dangers of Ozone in the Public Sector

A Presentation to all Ontario Provincial Ministers on the dangers of Ozone in the Public Sector. This is Part II of a two-part presentation on the Health & Safety, Financial and Political Risks associated with the Procurement of Office Copiers and Printers that release ozone.

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A Presentation to all Ontario Provincial Ministers on the dangers of Ozone in the Public Sector

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  1. A Presentation to allOntario Provincial Ministerson the dangers of Ozone in the Public Sector This is Part II of a two-part presentation on the Health & Safety, Financial and Political Risks associated with the Procurement of Office Copiers and Printers that release ozone.

  2. In this presentation we cover: • How the long-term health of Ontario’s teachers and office workers can be compromised by exposure to ozone gas from copiers as was covered in Part I. • How upwards of $50,000,000.00 per year is being overspent on the procurement and deployment of desktop printers and copiers in the O.P.S. • How any perception of integrity with respect to the procurement of Information Technologies here in the Province of Ontario has been shattered for those of us who market copiers, printers and computers.

  3. In this Part II of our presentation we will provide proofs that: • A. Government Staff: • Purposefully sabotaged a $50,000,000.00 per year money-saving opportunity. • Knowingly awarded a non-compliant vendor. • B. The Deputy Minister, Mr. Ron McKerlie • Knowingly misled his Minister, the Ombudsman, and us all. • Whether government staff acted on their own or were coerced at the highest levels, remains unknown.

  4. OUR INTENT • As our subject matter is complicated and open to derision, we have chosen an “on line” powerpoint format that allows us to affix easily retrievable proof sources. • If you are reading a hard copy of our presentation, please go to www.4office/ozoneandontatrioschools/partII . • Our intent at 4 Office is to solve this problem without bringing it to the public’s attention. • Suffice to say – if we post it on line, we believe it to be true and are prepared to defend it if it does become “public”.

  5. THE PLAYERS • Government Services –Information Technology (IT) group whose vested interests conflict with any downsizing of the government’s printer fleets. • HP, Lexmark, IBM*, who collectively control 90% of the world’s printer market but cannot sell to “Ontario’s” O.P.S. • Xerox, who sell Ontario Ministries remanufactured copiers (that release ozone) as “new models”. • V.A.R.s – Value Added Resellers of computers and printers and copier manufacturers and resellers such as 4 Office Automation Ltd. • Please bear with us as we provide the background needed to understand this complicated problem. *IBM Infoprint printer line marketed by Ricoh Canada

  6. PRINTERS & COPIERSthe fight for control • Xerox’s first production ‘copier’ the ‘914’ was launched in 1957. • HP’s first laser printer, the “laserjet” was launched in 1984. • As printers were connected to computers – Ontario’s Information Technology departments (IT) have traditionally sourced these products. • As copiers were originally not connected, Purchasing departments sourced these products for ministries. • THIS ALL CHANGED IN 2009

  7. PRINTERS & COPIERSThe Health and Safety Risks • In Part I of this two part presentation we learned how: • Ozone in any quantity attacks lung cells and brings on asthma attacks on the young and heart attacks on the old. • Cumulative “indoor ozone” exposure is 14 times more likely to cause deaths than “outdoor ozone” that is generally perceived to be the problem. • Old technology copiers, specifically the ones MGS and the OECM mandate or recommend, ionize air and release ozone which puts Ontario students, teachers and OPS staff at risk. • Although it is not on the North American radar today, expect ozone from copiers to become a major issue once more manufacturers clean up their act and the rest of us learn what most Europeans now know. • To review Part I – go to www.4office.com/ozoneandontarioschools

  8. MARKETING – A generalized overview • PRINTERS • IT staff source • Printers are capitalized • “Consumables” • Toner/drum, fusers, etc. Etc are sourced as needed • Warranty, 1-3 yrs maximums include labour and just the parts that don’t move – the parts that do are called “consumables” • Response time for service is <8 hours. • Numerous Hidden Costs • COPIERS • “Purchasing” sources • Copiers are leased • “Consumables” parts, toner/drums, fusers, etc, are included in “all in” cost/page plans that cover everything and can be extended 6-8 years • Response time for service is <4 hours • No Hidden Costs

  9. The Explosive Growth in Prints Volume of prints or copies produced Printer Volumes • By 1991 the number of prints produced from printers equaled the number of copies produced from copiers. • By 2001 “prints” from printers exceeded copies (or prints) from copiers by 3:1 – and • costs were headed out of sight Copier volumes 1957 1984 1991 2001

  10. THE PROBLEM WITH “PRINTERS” • Desktop printer print costs can be 10 times higher (exclusive of IT network & support) than “copier” print costs – because….. • Capital costs are higher when personal printer volumes are low… • And grow higher when marketing plans promote early replacement. • Toner costs are also high because the printer toner cartridge that gets tossed when empty can contain a drum and up to 100 miscellaneous parts. • In a one year study of over 2,000 desktop printers, York Region DSB proved that their desktop printers cost them nine (9) times more (on a per impression basis) than their copiers (that also print) cost. • Tab __

  11. THE SOLUTION • In 2001 – World renowned Gartner Consulting projected enterprise savings of up to 50% when more copiers, ie multifunctional copiers (print, copy, fax, scan), were added and 80% of an enterprise’s single function desktop printers were removed. Tab ___ • Without truly understanding the vested interests and entrenched marketing forces at play, Gartner incorrectly projected that 70% of North American corporations would also adopt their recommend-ations by 2004 – it did not happen. Tab ___ • Understanding the forces at play can help Ontario Ministries save upwards of $50,000,000 per year even before networking and support costs are factored. Its happening elsewhere, it can happen in Ontario.

  12. THE PROOFS • In 2007, the LCBO: • Hired independent consultants • Added fully-featured multifunctionals (MFDs) that print, copy, scan and fax • Removed about 80% of all desktop printers – and • Published 40% savings by • Moving from a 1:3 ratio of print device to staff to a 1:7 ratio – without a loss of productivity. Tab __ • Federally and in cities and regions across Canada, Governments and corporations are moving to a 1:8 - 1:12 ratio for similar )or greater) savings. Tab __

  13. GARTNER’S COMPLETE SOLUTION • “10 meter rule” – bring fully featured MFDs close to workers – ie add more multifunctional copiers. • Remove desktop personal printers (about 80%) until the device to staff ratio (for all printers and copiers) approaches 1:8. • Demand fast <4 hour service to compensate for the approximately 70% fewer overall devices. • Only source printers or multifunctionals (MFDs) on long term “all in” cost per page service plans with no hidden costs or escalators. • Get senior management “buy in” for success.

  14. $50M/year savings opportunity • Based on Ontario’s (2009) absurdly high 1:2 ratio of print device to staff, outside consultants projected annual savings of $50million/year if Gartner’s recommendations are followed. Tab ___ • But unfortunately, as a downsizing of the print fleet negatively impacted the staff charged with the responsibility of executing it, they (as we will prove) sabotaged it, and the Deputy Minister then lied to the Ombudsman and we believe the Minister* as to why they did what they did. • *We know the Hon. Harinder Takhar supported the downsizing • as he had sent staff to be briefed by the LCBO staff.

  15. As we will prove – MGS staff: • Sabotaged a $50M per year savings opportunity. • Put Ontario’s office workers at risk to exposure from ozone from old remanufactured copiers. • Disqualified – unjustly disqualified – virtually all competition including the world’s top 3 suppliers of printers. • Ignored proofs and added specifications that drove existing costs way up instead of way down. • Awarded contracts to their very favoured #1 supplier of computers, even though they knew in advance that this vendor’s products were non-compliant. • Lied – lied (at the most senior level) to the Ombudsman et al.

  16. ITEM 1: Sabotaging the Savings Plan • As Gartner and the government’s own consultant cautioned: • “Demand fast <4 hour service” on the multifunctional fleet as offices cannot run effectively with 70% fewer devices and tardy service. • What did MGS staff do? • They raised the government 4 hour service standards to an 8 hour service standard (first time in 35 years) • Only provided 4 hour service with an absurdly more expensive 24 hour/7 day option that 99% of the ministry staff will never need.

  17. RESULT Same machine – Federal/Provincial comparison FEDERAL PRICING FEDERAL PRICING as of April 2013 based on 25,000 prints/mo http://canada.nstl.com/CopiersFinancialReport/ Ontario Pays 53.7% More for the exact same machine Xerox WorkCentre 5755 60 month rent @ $113.00 + $6.00 (for fax) 4 hour service @ $.0065/impression Total Cost *$16,890.00 55ppm ONTARIO PRICING Xerox WorkCentre 5755* 60 month rent @ $157.00 (fax included) 4 hour service @ $.01103/impression Total Cost *$25,965.00 55ppm • Ontario Ministry’s “Catch 22” • Choose 8 hrs and kill a downsizing model that could save $50M/yr • Choose 4 hrs and pay 53.7% more than the Federal government.

  18. ITEM 2: Putting teachers and Ontario’s office workers at risk • As Part I of the 4 Office presentation on the dangers of ozone noted, the non-compliant, remanufactured Xerox products ultimately selected by MGS emit very high levels of ozone relative to new technologies. • As EPA tests show ozone levels from copiers can go up 16-33 times (not %) when in the field, the government’s choice of old technologies puts staff at risk. • To review the dangers of ozone, go to Part I at www.4office/ozoneandontarioschools . • To find out more about why Xerox sold off its manufacturing and now relies on the remanufacturing its old technology, go to Tab ___

  19. ITEM 3: Unjustly disqualified virtually all competition • The disqualifying spec was “AES 256” bit hard drive encryption that only one vendor was compliant with. All others offered “AES 128” solutions (including Xerox). • Here is what we know: • Canada’s banking system is protected by AES 128 • Ontario’s data transmission is protected by AES 128 • Seagate – the world’s largest hard drive manufacturer states “Cracking 128 bit would take • 149 million years” Tab __ • To be continued.

  20. ITEM 3: continued • Ontario had over 60,000 PCs (with huge storage) – almost none with encryption, but all easily transported. • Ontario (OPS) had 3,000-5,000 multifunctional copiers which are not easily stolen. • Based on Ontario’s own GO.ITS.25.12 security standard (of 2009), only information stored longer than 2 years need be protected with AES 256. • As most devices with AES 128 encryption can wipe and overwrite daily, nothing can be stored for 2 years – hence AES 256 was an unnecessary spec that disqualified the world’s top 3 printer suppliers, and in addition about ten manufacturers of copiers. • Additional damming proofs to follow.

  21. ITEM 4: Specs that drove costs up instead of down • As noted in slide 9, the cost of ‘prints’ from desktop printers can be 10 times higher than prints from full-sized multifunctionals. • Small tabletop multifunctionals, ie the type called “A4s” that do just 8 1/2 x 14 can also have very high cost per page costs which MGS staff were warned about prior to closing*. • *ie warnings from their own consultants, the LCBO and others. • As proven prior to closing, the break-even (cost-wise) between a small “A4” desktop MFD and a full sized one was just 3833 prints or copies per month Tab ___ • Ignoring these proofs, MGS staff: • Demanded small desktops for volumes from 5,000 – 15,000 prints/month and by doing so further sabotaged a $50 million savings opportunity as noted on the next slide.

  22. THE RESULT(at a 4 hour service response @ 10,000 print/mo) • Ontario Ottawa (Federal) • Xerox WorkCentre 4250 Xerox WorkCentre 5745 • Tabletop Loaded A3 MFD (with finishing ) • Ontario Ministries pay • 49%* more for featureless desktops • vs a fully-featured competitively priced federal option • ANOTHER “CATCH 22” • Ministries jump to the next segment up and pay twice as much. • Ministries keep the A4s and the larger A3s down the hall and lose out on a money-saving downsizing opportunity. “A3” $10,260.00 “A4” $15,304.50

  23. ITEM 5: Awarding of contracts despite pre-tender closing warnings • As written, MGS-PITS-01 was to be awarded to 5 vendors. • In the end, despite numerous written warnings, only two vendors were awarded, of which only one was compliant. • Along with 10 copier brands, the world’s 3 largest printer brands, HP, Lexmark and IBM*, were also disqualified. • Compugen – Ontario’s #1 supplier of computers were awarded even though proofs were supplied in advance that their Xerox products would not be compliant. Tab ___ • *IBM Infoprint (as sold by Ricoh) were disqualified

  24. Awarding of contracts despite post-tender proofs of non-compliance • 4 Office advised the Ministry that non-compliant Xerox WorkCentre 5600 Series copiers (currently sell 5800 Series) had been awarded. • Non-compliant re AES 256 See Tab __ • Letter to Minister Takhar • Attachments #1 & 2 • Non compliant re definition of new See Tab ____ • Letter to Minister Takhar • Attachment #3 • The ministry’s solution to this problem was to postpone implementation of the contract for 1 year past closing, ie until new compliant products could be released.

  25. ITEM 6: Lies to the Ombudsman • As Government Services I.T. staff ignored industry protests, 4 office took its case to the Ombudsman, who, after consultation, advised that MGS’s DM, Mr. McKerlie had: • Sought the advise of the CSEC* re its demands for AES 256 and had… *Communications Security Establishment Canada • Only chosen vendors who “could be” compliant • The Ombudsman accepted the Deputy Minister – Ron McKerlie’s attestations, the case was closed • …..to be continued

  26. Not to be deterred– 4 Office wrote the CSEC (our client) and received assurances that: • “AES 112” was the CSEC standard, not “AES 256” as claimed • “AES 128” as most vendors offered exceeded CSEC standards • ie that AES 256 was unnecessary Tab ___ • RESULT • Ontario taxpayers have also been bushwhacked to the tune of a $50,000,000 per year savings opportunity. • Printer and copier and computer manufacturers and vendors have lost faith in Ontario tendering practices.

  27. BASICALLY MGS I.T. STAFF • Ignored Gartner’s recommendations • Ignored LCBO staff recommendations • Ignored own (outside) consultant (I.P.M. inc) • Ignored MGS purchasing staff (who request reassignment) • Ignored 4 Office pre-closing proofs that A3 cheaper than A4 • Ignored 4 Office pre-awarding proofs that Xerox was not compliant • Ignored the protests of 10 vendors who were unjustly disqualified. • AND WHAT’S WORSE • Despite having been advised that Ontario is paying a 50% premium, and that one of the two vendors selected was non-compliant, MGS has extended this S.A. not once, but twice.

  28. HUMAN NATURE • “The more wide-spread the illicit behaviours, the more people will feel that they are chumps if they do not abandon their principles and grab what they can while the going is good.” • The Fall and Rise of Canada’s Founding Values • Brian Lee Crowley • Cheating in any industry will spread when procurement policing is non-existent.

  29. IF YOU CAN’T BEAT THEM – JOIN THEMWHAT DID HP DO? • According to the furious HP printer sales representative, he was told to stand down and not protest the disqualifying specifications. • That HP has since chosen to market its Notebooks and PCs through Compugen instead of direct, (as had been the case) should send shivers up any official (truly interested in cutting costs) given the size of the “IT” spend.

  30. 10% of the IT spend is on print and copy. • Why “Hard Copy” is like an iceberg. • If we can’t trust the ministry to source the “10%” ie the copiers and printers – what could be happening with the other 90% of its purchases*? • *It was this argument that caught the attention of Councillor Bas Balkissoon, (now MPP) when at the City – • that led to the MFP Leasing inquiry. 90% of the IT spend is on computers & software.

  31. WHY SO MANY “I.T.” PROBLEMS • Computer Suppliers • As many VARs (computer resellers) have access to the same products, tender prices are almost always close. • IT Departments (to protect themselves) • Issue subjectively evaluated RFPs to differentiate between the suppliers, and they also add • “Weighting factors” that nullify “cost” as a relevant factor. • See “What’s wrong with the I.T. industry” Tab 8 • Suppliers,(ie computer/printer suppliers) as a result • Curry favour with sports events, product launches in the south in winder, “charity” golf events with big ticket “prize” tables and even cash kick-backs. • To influence how subjective parts of an RFPs are evaluated, even the biggest suppliers have been implicated in major frauds. • Tab __

  32. MFP COMPUTER SCANDAL - 1999 • Xerox sells non-compliant copiers into the City through MFP Leasing (the City’s #1 PC supplier) • City of Torontopays 50% premium • 4 Office protests (for several years) and finally • Gets attention of Councilor Bas Balkissoon • MFP Leasing, “Ontario’s” #1 computer supplier gets removed and Compugen becomes #1 supplier. • PLEASE NOTE: The Minister, the Hon. Gerry Philips, cancelled plans to have “Purchasing” report to I.T. in 2002. • DÉJÀ VU – in 2009 (after I.T. takes control) • Xerox sells non-compliant copiers throughCompugen – Ontario’s #1 computer reseller and Ontario pays a 50% premiumvs the feds.

  33. TO SAVE $50 MILLION/YEAR( ie TO EFFECTIVELY MOVE FROM 1:2 – 1:8 DEVICE/STAFF) • Each ministry must find their own “Managed Print” solution with the help of independent unbiased consultants. • Ministries need broad product offerings that will allow them to choose “best solutions” for their own ministry’s unique needs. • Ministries need authority to source from the Federal Government’s latest (updated every 2 months) pricing alternatives, ie alternatives that are tested at length and graded. Most, if not all, manufacturers will gladly allow the province to piggy-back on the NMSO. • Ministries should also be forced to follow Federal Procurement Guidelines which demand that Deals >$400,000 (life cycle cost) must go to tender. • By doing this, each ministry can individually standardize and save.

  34. RECOMMENDATIONS • Stop MGS & OECM from sourcing or recommending copier products that release ozone immediately (review Part I). • Do not extend existing contracts a third time. • Have the Finance Department call in independent “Managed Print” consultants and see to it that their advice is followed. • Award no less than five (5) suppliers standing on future S.A.s. • Move “Purchasing” and Ontario’s Green Office* away from those negatively affected by a downsizing of the printer fleet. • Review subjectivity and cost weighting issues. Tab ___ • Set guidelines such as 1:8 print* device:staff and let ministries find their own cost saving solutions. • Lastly, call in the Auditors. A failure to act is to condone – and as noted by Mr. Crowley in his book “The Fall and Rise of Canada’s Founding Values”, an invitation for others to “abandon their principles”.

  35. VENDORS WHO CHEAT MUST ALSO BE PUNISHED • In 1995 – 4 Office exposed Savin Canada who were removed from Ontario Government S.A.s after a protracted campaign. • In 2002 – (with 4 Office persistence) MFP Leasing was exposed and removed and not allowed to re-quote. Ask the Honourable Bas Balkissoon. • If ministries are ever to control costs, they must demand that those that cheat be removed and not be allowed to re-quote on future RFPs.

  36. FINAL POINTS • For over 25 years two competing methodologies, printer vs copier, capitalization vs lease, hidden costs; and limited warranty vs “all in” service have fought it out with Information Technology groups generally supporting the printer procurement methodology they were most familiar with. • As noted Gartner Consulting, although 100% correct re savings issues, were premature in their projections that 70% of corporations would adopt the “all in” methodologies by 2004. Nevertheless, it is happening and the saving projections are real. • Lastly, as we are all hurt when people cheat, and as its not about money but about what kind of a country we want to live in, rest assured that 4 Office will continue this fight until it is resolved fairly. • Bill Norgate, President • 4 Office Automation Ltd.

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