Meeting Transcript Aug 1.pdf

In the Matter of:

FSSI Print Management Industry Day

August 1, 2012

Condensed Transcript with Word Index

For The Record, Inc.

(301) 870-8025 - www.ftrinc.net - (800) 921-5555

FSSI Print Management Industry Day 8/1/2012

For The Record, Inc.

1 (Pages 1 to 4)

4 FSSI PRINT MANAGEMENT INDUSTRY DAY

6 AUGUST 1, 2012

8 2200 CRYSTAL DRIVE

9 ARLINGTON, VIRGINIA 22202

10 RM #L-1301

1 A P P E A R A N C E S

3 FSSI

4 Mark Storay

Ben Williams 5 Meredith Parker

Filene Guerera 6 Pia Scott

Schedule 36

Jeff Koses 9 Stave Lazada

Walter (first/last name unknown) 11 Xerox 12 Marlon Miller

David Goins 14 Lexmark 15 Kimberley Crace

Mike Brazerol 17 Konica Minolta 18 Jack Burton

Todd Foote 20 Cannon IV 21 Steve Shank

Jim Fall

23 CTI

24 Bragi Valgeirsson

Guillermo Irahola

1 A P P E A R A N C E S (cont'd)

3 ASE Direct 4 Jud Clift

Chad Scism 6 PrinTree 7 Aaron Collins

Gentry Richardson 9 FaxPlus

10 Dave Hebner J. R. Hauser

12 Meridian 13 Chris Lucci

Tabitha Yothers 15 Metro 16 Keith Wise

Jerry Allen 18 Kyocera Mita 19 Joe Dolce

Samsung

Wendy Crowe (telecom) 23 Clovertech 24 Steve Noyes

1 A P P E A R A N C E S (cont'd)

3 ABM Federal 4 Brook Ambos

Ricoh

Jackie Parks 7 Scott Hammond

Canon USA

Dawn Roush 10 Dan Marshal

Aubrey Woolley 12 Comint Systems Corp.

13 Chan Moon

Natalie Doris 15 Toshiba Business Solutions 16 John Arvik

For The Record, Inc. (Court Reporter)

Rick Sanborn

For The Record, Inc.

2 (Pages 5 to 8)

1 I N D E X

3 DISCUSSION PAGE

4 Introduction - Purpose 6 5 Performance Restrictions on Native 6 Device Service 7 7 Small Business Performance in FA III 33 8 Copier Based and Printer Based Design 9 Definitions 40

10 Data Elements for Appendix D, Agency 11 Fleet Inventory Information 48 12 Risk Factors Necessary to Quote a 13 Product Ceiling Price 52 14 Break 92 15 Call Routing Services 92 16 Open Issues/Final Questions 93 17 Conclusion 124

1 P R O C E E D I N G S 2 - - - - - 3 MR. STORAY: I think we'll go ahead and 4 get started. I would like to thank everyone for 5 coming out. My name is Mark Storay, I'm the 6 program director for the FSSI Print Management 7 Program. Again, thank you for coming out.

8 Today's session is really about getting 9 feedback from you. We've put a lot of work into

10 this solicitation, questions have gone out, 11 we've gotten written responses back, but we want 12 to really hear from you today. We've got a lot 13 to cover, the agenda is from 9:00 to 12:00, 14 we're going to do about a 15-minute break.

15 So, just a couple of housekeeping 16 things. Bathrooms, out to the left. And then 17 if you need coffee, out to the right.

18 So, functional area III, functional 19 area IV, it's management print services, the 20 management of government-owned and 21 contractor-owned devices is what we want 22 feedback on.

23 In the room today we have Jeff Koses, 24 who is in the back, senior leadership over 25 Schedule 36, we have Walter, Schedule 36, we

1 have Pia Scott who is part of the FSSI program.

2 Let me get this. We have Ben Williams, project 3 manager for the program. We have Meredith 4 Parker, the contracting officer.

5 On the phone we also have Filene 6 Guerera, she's our legal counsel, and I think we 7 have one other contractor on the phone as well, 8 correct? And then we also have a court 9 reporter, who will be documenting all of our

10 conversations today.

11 I think it's important today that when 12 you're giving feedback, please just say your 13 name, say the company you're with, speak out so 14 he can properly document what's going on.

15 We received a lot of questions back off 16 the solicitation. We got those responses back 17 out, and we've divided those questions up in 18 basically topics today that we're going to 19 discuss. Each one of these topics you may or 20 may not be familiar with. If you're not 21 familiar with it, they're part of the RFQ 22 solicitation. We definitely can go through 23 those.

24 So, let's just jump right into it. So, 25 the first topic today we wanted to talk about is

1 performance restrictions on native device 2 services. I'm going to open it up to the floor 3 to get comment back on that. Any comment or 4 details on that topic?

5 MR. MILLER: The -- it was a little 6 unclear I thought from -- the original RFP 7 seemed to indicate, at least we had -- 8 MR. STORAY: Could you stand up.

9 MR. MILLER: You kind of had to get the

10 initial letter of serviceability from the 11 manufacturer, and then in the questions, in 12 question 61, it seemed to indicate that you were 13 loosening that up a little bit, but also there 14 were answers to other questions, like 65, where 15 it seemed to go back to the original spec that 16 was much tighter.

17 So, can you kind of just clarify where 18 you are? Do you have to have proof of 19 serviceability at the time you submit an RFP 20 response? Is it at the time you bid on the task 21 order or somewhere in the middle or you guys 22 just aren't decided at this point?

23 MR. STORAY: I'll let Meredith comment 24 on that.

25 MS. PARKER: Okay, just to clarify, he

For The Record, Inc.

3 (Pages 9 to 12)

1 is referring to page 3, service restrictions, 2 and the second bullet, and what he's referring 3 to is equipment which the contractor is 4 authorized to sell, lease, new on GSA schedule, 5 or can provide proof that authorization was in 6 effect at the time the device was sold/leased to 7 the activity at the task order level for devices 8 no longer sold on schedule.

9 At the BPA level, contractors who are

10 non-OEM contractors must provide letters of 11 authorization for brands of equipment for which 12 they plan to service. OEMs must provide letters 13 of authorization for devices they plan to 14 service other than those devices which they 15 manufacture. That's what he's referring to.

16 Question 61, what that was, page 3, 17 service restrictions, bullet 2 was referenced 18 and the comments were the plain reading of this 19 provision will unduly limit competition. The 20 declaration that contractors can only support 21 those devices that it sold at the time the 22 device was sold/leased to the ordering activity 23 is not germane to the primary point of can the 24 contractor demonstrate to the satisfaction of 25 the government that it can satisfactorily

1 perform service for the devices.

2 So, that was essentially the comment 3 that you're limiting it to people who can sell 4 or authorize to sell these devices on schedule 5 at the time that the RFQ at the order level is 6 issued. So, we have actually made a decision at 7 GSA that was not published with the questions 8 and answers and we're going to lift that and you 9 must be able to provide proof of authorization

10 to sell or service. So, that's going to be a 11 change.

12 MR. BRAZEROL: May I ask a follow-up 13 question on that, Meredith?

14 MS. PARKER: Sure.

15 MR. STORAY: Say your name.

16 MR. BRAZEROL: Mark Brazerol, Lexmark.

17 Is still the requirement going to be that 18 authorization comes from the original 19 manufacturer?

20 MS. PARKER: At this time that's our 21 decision, yes.

22 MR. STORAY: Let's make sure everyone 23 can hear the discussion.

24 (Discussion off the record.)

25 MR. MILLER: Meredith, I'm still not

1 sure how you answered that. Maybe because I 2 didn't hear you. So, you have to have at the 3 time of an RFP, you have to show proof of 4 ability to authorize the service of it at the 5 time you submit the RFP response or can you do 6 it at the time of the task order?

7 MS. PARKER: At the time you issue a 8 response to the order level RFQ, you must have 9 authorization to either sell on schedule or to

10 service the equipment from the original 11 equipment manufacturer. Yes?

12 MR. BURTON: Yes, Meredith?

13 MR. STORAY: Name? Jack, if you can 14 give us your name and company.

15 MR. BURTON: Jack Burton with Konica 16 Minolta. I wanted to find out, what is the 17 situation where, for example, we resell a 18 third-party device, and we do not provide 19 service for that third-party device, but it's a 20 service that's provided by the third party, 21 which is a non-BPA holder. What is the 22 situation around that?

23 MS. PARKER: In that situation, you 24 would be eligible to submit an offer, if the 25 requirement of the order was to service that

1 device, then you would have to arrange for the 2 service through some other means, whether a 3 subcontract or some other type of teaming 4 arrangement.

5 MR. BURTON: And we actually work at 6 the task order level for that, that's something 7 that's negotiated?

8 MS. PARKER: Yes.

9 MR. BRAZEROL: Again, just another

10 follow-up comment. Mike Brazerol, Lexmark. So, 11 the government's position, though, is it's still 12 going to rely on the original manufacturer, in 13 essence the original manufacturer now has the 14 ability to determine to the government who can 15 service their equipment?

16 MS. PARKER: Well, it's the 17 government's position that at this point, we're 18 limiting the management of devices to those 19 companies who have authorization from the 20 original equipment manufacturer, because of 21 their ability to access the supply chains 22 necessary to provide service.

23 MR. BRAZEROL: What about the inclusion 24 of past performance to demonstrate satisfactory 25 performance, or is it just solely on the

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4 (Pages 13 to 16)

1 reliance of the manufacturer? Again, it seems 2 to be somewhat of a conflict there for the 3 government to rely only on the manufacturer 4 versus through open competition.

5 MR. WILLIAMS: Mike, so many of the 6 questions back to you guys to help us clarify 7 that. So, we're discussing servicing or 8 selling, as Meredith mentioned, the existing 9 devices, and one of the things she mentioned is

10 on schedule. So, what we're after here is 11 whatever you sell or service in accordance with 12 your schedule contract.

13 So, if you guys could give us a little 14 more input in terms of how you get that on your 15 schedule contract, and whether or not we're 16 looking at letters of authorization at that 17 point, then maybe we can discuss that piece of 18 it, because essentially there's two pieces at 19 play: One, it needs to be on your schedule 20 contract; two, we're talking about this letter 21 of authorization that you are authorized to sell 22 and/or service. Okay?

23 So, that's the most important piece I 24 think we can't forget about is it needs to be on 25 schedule. So, let's maybe hear a little more

1 feedback about that as well, and what you guys 2 go through to get that taken care of.

3 MR. BRAZEROL: Yeah, and the point I 4 would emphasize is that when you look at the 5 makes and models that are available that the 6 government has, there's literally hundreds of 7 makes and models. It's quite possible that 8 someone may not have a specific model authorized 9 on their schedule, but yet they have

10 demonstrated the past performance and competency 11 to service and support equipment.

12 Again, I just go back to the single 13 qualification of reliance only on the 14 manufacturer's pre-authorization can limit 15 competition, and I want to keep the point of 16 being able to satisfactorily demonstrate 17 competency in that area should be a criteria as 18 well.

19 So, I would suggest an either/or, and 20 again, it's the government, the agency's review 21 of satisfaction that I guess I'm looking for, to 22 be able to demonstrate that.

23 MR. STORAY: We can document that.

24 MS. PARKER: And in that case, of 25 course, at the BPA level, the BPA is awarded

1 from the underlying schedule contract. So, once 2 again, we're going back to the fact that you 3 have to have a contractual agreement with the 4 government to service or sell this device. I'm 5 kind of confused how past performance then would 6 come into play at the BPA level if we're 7 awarding something that's awarded on schedule.

8 MR. BRAZEROL: Well, and that's my 9 point, to put it on the BPA, we're suggesting

10 that if a supplier or a service provider can 11 demonstrate competency in areas certain of 12 servicing certain classes of devices, versus 13 specific makes and models that only the 14 manufacturer can authorize, that reliance only 15 on the manufacturers is I guess the point of 16 emphasis.

17 MR. WILLIAMS: Follow-up question, I 18 guess, for me is when you say class, when you 19 say class of device, what is it you would like 20 to see?

21 MR. BRAZEROL: Well, what I would 22 suggest is, and there's a lot of industry 23 sources, there's you look at IDC as an example, 24 there's six segment devices. I would suggest 25 that the government look to that segment of

1 classification of devices, category of devices, 2 and can a supplier demonstrate to the 3 government's satisfaction its ability to service 4 in that class.

5 MR. WILLIAMS: Okay.

6 MR. BRAZEROL: Because the specific 7 make and model I think is secondary to 8 competency of servicing that class of device.

9 MR. FOOTE: Todd Foote, Konica Minolta.

10 But as a follow-up to that discussion, in 11 question 61 there is the element of it just 12 talks about service. So, that vendor would have 13 to have a letter of supply from -- or 14 authorization from that other vendor to be able 15 to service those products, even though he may 16 not sell them, correct?

17 MS. PARKER: Correct. Correct.

18 MR. FOOTE: So, therefore, BPA holders 19 who do not service competitive units are at the 20 mercy of being able to have those relationships 21 with those other vendors to be able to comply 22 with that element.

23 MS. PARKER: That's correct.

24 MR. STORAY: Sir?

25 MR. VALGEIRSSON: Bragi Valgeirsson

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5 (Pages 17 to 20)

1 with CTI. Two things, I noticed with the 2 document you sent out, you have two factors that 3 OEMs are going to service other equipment, it 4 actually has to get authorization from the other 5 OEM. I don't think anybody believes that's 6 going to happen.

7 Secondly, what do you tell an agency 8 that it has six or seven brands of equipment to 9 decide that they have to be under six or seven

10 service providers?

11 MR. WILLIAMS: You said Bragi, correct?

12 MR. VALGEIRSSON: Correct, B R A G I.

13 MR. WILLIAMS: One thing we want to 14 clarify, in the RFQ, this issue of letter of 15 authorization for non-native devices applies to 16 our definition of copier-based service, not the 17 printers, not the multifunction A4s, not our 18 printer issue. I want to clarify that, so that 19 we all keep that in mind, and that is based on 20 extensive market research. That is why we did 21 that.

22 So, there's a lot of logic behind that 23 decision. So, I do want to clarify that we're 24 talking about this letter of authorization to 25 service non-native devices, we're talking

1 "copiers." Okay?

2 MR. VALGEIRSSON: And the second 3 question I had about the agency that wants to 4 use this, are they looking at six or seven 5 providers, do they have six or seven different 6 models of machines?

7 MS. PARKER: And once again, that's why 8 we addressed the call routing piece.

9 MR. BRAZEROL: Again, I would just use

10 the question to emphasize the point being made 11 is, again, it's the competency of being able to 12 service that equipment that should be the most 13 important attribute, not the makes and models, 14 because as you can see, if the government relies 15 exclusively on the manufacturer's 16 representations, it creates an environment where 17 it may require seven or eight or more service 18 providers to coordinate the response.

19 MR. STORAY: Sure. Okay.

20 MR. BRAZEROL: And that's not the 21 government's interest of emphasis.

22 MR. MILLER: I would just point out to 23 the gentleman's comment, I think competency is 24 an important element and it's certainly a key 25 point, but you also, the person who wants to

1 authorize the government that they're going to 2 do service for multiple brands, you also have to 3 make sure that they can get access to all the 4 parts and skills and so it's not go be both, 5 that you have the competency and that you have 6 the access to the right pieces of equipment.

7 MR. BRAZEROL: But I would also like to 8 state for the record that a manufacturer has a 9 vested interest that only its designated service

10 providers service its equipment. So, you know, 11 again, the current position emphasizes the 12 manufacturer's vested interest, versus the 13 government's interest, and again, the higher 14 level is the government to its satisfaction to 15 evaluate those received proposals for service.

16 MS. YOTHERS: I would support that 17 argument because you might have a company that 18 has just gotten a letter of supply, and has no 19 experience in servicing the equipment, versus 20 somebody who has been doing it for five or six 21 years can demonstrate that through the forms and 22 covenants from other places that his letter 23 provides. So, I would think that weighs more 24 heavily than some letter this person has.

25 MR. STORAY: Okay, that's very good

1 feedback. Ma'am? Your name, company?

2 MS. YOTHERS: Tabitha Yothers, I'm an 3 independent consultant, I currently track small 4 business uses and report them to House of Reps 5 and DOD, and just on the surface, this sounds to 6 me very anti-small business.

7 MR. HAUSER: J. R. Hauser, OMNI 8 Business Systems. So, I work better in 9 scenarios. The scenario is an agency has let's

10 say four brands, four major brands of copier 11 devices and they put out an RFQ, or RFP, let's 12 say, to service their fleet. Are you saying 13 that -- let's say I'll just pick some names, 14 Xerox, Canon, Lexmark are in there, that Xerox 15 would somehow have to obtain a letter of supply 16 from Canon and Lexmark to service them, the 17 other brands?

18 Because I just don't see, you know, to 19 get a letter of supply, you have to send your 20 technicians typically to that factory trained 21 school. You're asking for a level of 22 cooperation that is going to be, you know, very 23 new.

24 MR. WILLIAMS: Sure, sure, no, 25 absolutely. J. R., is it?

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6 (Pages 21 to 24)

1 MR. HAUSER: Yeah.

2 MR. WILLIAMS: We will try to answer 3 that question as much as possible knowing that 4 is a very fluid dynamic question. So, when you 5 say a scenario that one agency has four 6 different manufacturers of copiers, and we all 7 know that there's a mix of leases, it's a mix of 8 copies, it's a mix of devices that are owned.

9 As you will see in that RFQ, the intention is

10 not to tap into those existing leases. We know 11 all the problems that are associated with that, 12 we have stayed away from that completely.

13 So, then we have the issue of devices 14 that are owned by the government that are mixed 15 copiers, okay? We don't touch those unless the 16 letter of authorization exists out there. And 17 we know that likely, they're not going to exist, 18 okay? So, we came up with the optional call 19 routing service.

20 So, however they're servicing those 21 copiers, if they want to put Lexmark under 22 Lexmark and Xerox under Xerox agreements, we 23 developed the optional call routing service.

24 So, on the front end, on the user side of the 25 house, the end user, it looks like one point of

1 contact, because their service request goes to 2 one phone number, one person. On the back end, 3 the request then goes to Lexmark, then goes to 4 Canon, then goes to Konica. Our intention is 5 not to set up a vehicle where Lexmark is now 6 running everyone's copiers in the world. We 7 understand that that is likely not going to 8 happen, so the RFQ was built with that just in 9 mind.

10 So, it's part of why we're here today I 11 guess to talk about that and make sure we 12 verbalize where we came from, because we've 13 heard this before. We've heard about this time 14 and time again. So, we try to build it in 15 there, and sometimes when we verbalize and 16 discuss it, we can all get on the same page.

17 That's where that's coming on that piece, that's 18 not our intention because we realize there's 19 lots of problems that deal with that.

20 MR. BRAZEROL: Then you can appreciate 21 the gentleman from OMNI brings up an important 22 point. The reliance on cooperation among 23 competitors, you know, is a very, you know, 24 sensitive element.

25 MR. WILLIAMS: Yeah, absolutely.

1 MR. BRAZEROL: Whereas if a 2 manufacturer had the benefit of a larger 3 population of equipment than the government's 4 device, that manufacturer now is in a position 5 to, again, exploit its interest at the expense 6 of competition that the government is trying to 7 seek.

8 MR. STORAY: Any other comments on this 9 topic?

10 MS. PARKER: Well, as we stated, what 11 happens if one of the manufacturers decides they 12 don't want to work with the equipment being 13 called on?

14 UNIDENTIFIED SPEAKER: Can you speak 15 up.

16 MS. PARKER: I'm sorry. Well, as we 17 stated in the question and answer documents, in 18 that situation, the contractor is not held 19 responsible for the other provider who refuses 20 to enter into an agreement.

21 UNIDENTIFIED SPEAKER: Can you speak 22 up, we can barely hear you.

23 MS. PARKER: I'm sorry, I'm still 24 having trouble with this microphone. Before we 25 leave this topic, I would like to kind of turn

1 this around back to you and ask you, pose a 2 question to you, if we were to lift this 3 restriction on the copier-based original 4 equipment manufacturers being required to 5 provide this letter of authorization, what then 6 would you envision the alternative being? How 7 would you like to see the RFQ structured and how 8 would you envision industry responding?

9 MR. BRAZEROL: I go back to the past

10 performance argument, let the agency make a 11 determination of whether or not they want to do 12 it, because unless the agency already has 13 somebody in place that's been doing it, and they 14 know the record under this scenario, that 15 company couldn't do it anymore.

16 MR. WILLIAMS: So, another question to 17 follow up on that. We've been looking for 18 examples, deployments where you've got one 19 contractor running multiple -- for instance, 20 public business cases, things where we can find 21 white papers on it to educate ourselves, where 22 you have one contractor running multiple brands 23 of copiers, in a full-scaled employment of mix 24 III and mix IV environments.

25 You don't have to get with us now, if

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7 (Pages 25 to 28)

1 you can get with us afterwards to let us know 2 where we can go to find out about existing 3 multi-brand A3 copiers being managed today, 4 mixed fleet environments, large-scale and PS 5 deployments, both the printers and the copiers, 6 that specifically would address this question 7 that we're talking about, that would be most 8 helpful.

9 MR. BRAZEROL: Both commercial and

10 government.

11 MR. FOOTE: So, I presume by that 12 question, in your research, you haven't come 13 across that already?

14 MR. WILLIAMS: That's correct.

15 MR. FOOTE: And do you wonder why?

16 MR. WILLIAMS: Well, maybe that's the 17 logic that we're talking about here.

18 MR. FOOTE: That's a challenge that 19 everybody is facing.

20 MR. WILLIAMS: Which might lead us to a 21 discussion that this draft RFQ is built on 22 extensive research. We didn't come up with this 23 in the dark. So, if we're just missing a piece 24 that says we need to develop something different 25 based on existing successes, we want to know

1 about that.

2 MS. PARKER: And just to reiterate 3 that, the performance that you're discussing and 4 the performance that you're asking us to have, 5 please submit examples of that and we will take 6 it under consideration, but as Ben has said, we 7 haven't found examples where that can occur, 8 that the markets are open to another original 9 equipment manufacturer.

10 MR. BRAZEROL: Excuse me, and again, 11 that's the key point, manufacturers have a 12 vested interest to limit access.

13 MR. STORAY: Sure.

14 MR. BRAZEROL: And that's the reason 15 why your examples or your industry analysis 16 won't show a lot of that in the industry, 17 because again, the manufacturer has a vested 18 interest to limit that competition.

19 MR. STORAY: Correct. So, are you 20 saying that scenario doesn't exist in the 21 commercial segment?

22 MR. BRAZEROL: I'm not saying it 23 doesn't exist, I'm saying the ability to open 24 service other manufacturers' products, 25 particularly in the A3 class, there's common

1 industry practices where manufacturers limit 2 that access to only their chosen authorized 3 service providers. If the government uses that 4 standard in its RFQ, it is in essence utilizing 5 those practices to limit competition in its 6 environment.

7 MR. WILLIAMS: Well, let me just 8 respond to that. The government has a 9 responsibility to open competition to everyone

10 equally, and to do all that we can to maximize 11 competition; however, the commercial world does 12 not have that same responsibility. So, if 13 decisions have been made in private industry to 14 close supply markets or to enter into agreements 15 that create the situation where competition is 16 limited, we don't have power over that.

17 MR. BRAZEROL: But the government has 18 the unique position to being the largest 19 acquirer of A3 products in the world. So, by 20 definition, its process, its initiative here, 21 has the ability to open up competition whereas 22 in the commercial industry where it may not 23 exist.

24 So, again, I think your initiative has 25 a wonderful need in the government, there's an

1 opportunity, again, to standardize, I guess I'm 2 simply emphasizing this, the government should 3 create a standard that evaluates whether it's a 4 letter of authorization, past performance or 5 some other ability for a supplier to demonstrate 6 its competency to do that. That should be a 7 litmus test that's included for evaluation.

8 That opens up competition.

9 MR. WILLIAMS: Is part of that

10 competency that we're talking about, is it an 11 actual review of all of the pricing components 12 that go into that? I mean, we'll go ahead and 13 shoot it straight, tell it like it is, can it be 14 done cost effectively is our biggest issue here.

15 So, OEM servicing an A3 device, can 16 they effectively acquire the supplies, acquire 17 the technicians to run the other A3s? Is that 18 part of our competency review? Because it 19 should be -- I mean, if we're talking about the 20 best interest of the government is to reduce our 21 TCO. Is that what we look at?

22 MR. BRAZEROL: Exactly, and by 23 definition, that's what your process, you know, 24 ultimately does, it judges price, in the context 25 of the government's evaluation criteria, a

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1 combination of those two, that ultimately makes 2 that judgment. So, you're on a key point, 3 that's the standard that if anyone wants to 4 demonstrate its competency, it has to rise to 5 that level of demonstrating price 6 competitiveness as well.

7 MS. PARKER: And in response, once 8 again, we accept your comments and are asking 9 for examples. There's a comment in the back.

10 MR. HAUSER: So, here's an example I 11 would give you, again, I go back to scenarios to 12 really play this out. You send out an RFP where 13 you have a mixed fleet of copiers, and keep in 14 mind, you're right to separate printers.

15 Printers are a different animal. It's 16 developed, you know, it's a lot less complex 17 things going on in a printer.

18 But if you have an RFP where you have a 19 mixed fleet of three or four vendors of copiers, 20 what you're asking for is Xerox to call Canon 21 and say, hey, look, I'm bidding on this thing 22 and I need your maintenance pricing because 23 we're going to sub you on this, and then Canon 24 is calling somebody at Xerox going, hey, I need 25 your pricing because I'm going to bid on this

1 and sub you on it. It's going to be the 2 biggest, longest proposal bid ever.

3 MR. WILLIAMS: Which is a perfect 4 explanation of why we set this up the way we 5 did. Our intention is not to facilitate that 6 action. Maybe, you know, if this program 7 advances, in a couple of years, with the data 8 that we have, and we start to leverage the 9 ability and we leverage the business

10 intelligence, then perhaps we can move markets 11 to avoid those, but that's really, that's the 12 most anecdotal explanation of why this is set up 13 the way it is.

14 MR. STORAY: What's your name, sir?

15 MR. HAUSER: I'm sorry, J. R. Hauser, 16 OMNI Business Systems.

17 MS. PARKER: Just to reinforce again, 18 your point, your cautions are worth while, 19 because you've taken a large agency, distributed 20 around the country, with four or five different 21 vendors, each vendor with, you know, six or 22 seven different models from the low end of 23 production, you know, just I would be real 24 cautious when someone says that they can step up 25 and do a nation-wide coverage of four different

1 vendors and 30 different models from a call 2 order to supplies to skill sets, I think you're 3 not treading cautiously here.

4 MR. STORAY: So, are we saying this is 5 not cost effective? Is that what I'm hearing?

6 MR. HEBNER: Yeah, there's nobody in 7 favor of that, on the pricing, that's not going 8 to work on the existing.

9 MR. BRAZEROL: They're not going to do

10 the prime any favors on the pricing, which is 11 eventually going to get passed on to the 12 government, which is then not going to do the 13 government any favors, because there's three or 14 four levels of mark-up of which started a point 15 that wasn't going to reduce costs.

16 MS. PARKER: So, do we have any other 17 questions on this topic before we move on?

18 MR. GOINS: Yeah, David Goins from 19 Xerox. Let me just make a point to be 20 argumentative here. There's a couple of 21 concepts. You could authorize the vendor who 22 wins to use GSA sources of supply and they could 23 go to that vendor as a GSA vendor and say I need 24 your GSA price to service this government-owned 25 device. And the other way is through a CTA, FAR

1 Part 9.

2 So, I'm not trying to argue your point, 3 I understand, and I don't disagree, but if I'm 4 sitting where Meredith is, I'm thinking there's 5 alternatives here, what are you whining about?

6 MR. HEBNER: Yeah, but when have you 7 ever sold GSA -- 8 MR. GOINS: I'm not arguing that point, 9 I'm just saying if you're sitting where Meredith

10 is sitting, there's alternatives. So, just 11 think about it, guys, just think about it.

12 MR. STORAY: Sir?

13 MR. ARVIK: My name is John Arvik, I'm 14 with Toshiba. We have a couple of large 15 accounts we have done this for already and we 16 would be happy to share some intimate details 17 with regard to this operation and the 18 infrastructure that we have put in place to 19 support that. My point is there is some 20 competitive IP in terms of how you do that 21 infrastructure, if I share that information with 22 you, is that going to become public domain 23 information in this group?

24 MS. PARKER: We will discuss the 25 information that must -- that we must protect

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9 (Pages 33 to 36)

1 and what should be released publicly. We can 2 have that conversation offline.

3 MR. ARVIK: All right.

4 MR. BRAZEROL: Just to make the final 5 point on the discussion really emphasizes and 6 relies on manufacturers who have a vested 7 interest to designate letters of supply, they 8 have now an interest to be price competitive and 9 cooperative if a standard is opened up to past

10 performance and competency.

11 Once that equation is put into the 12 competition, a manufacturer no longer can be 13 restricted in its tactics, its pricing position, 14 it has an interest now to be cooperative.

15 Without that standard, there is no reason why a 16 manufacturer would be cooperative. Certainly 17 not price competitive.

18 MR. STORAY: Thank you for the feedback 19 on that topic. The next topic is small business 20 performance FA III. Are there any questions or 21 comments on this topic? None?

22 MR. HAUSER: Well, actually, J. R.

23 Hauser with OMNI Business Systems and we are 24 classified as small business. And we are a 25 multiline dealer. You know, so going back and

1 kind of touching on the first topic, you know, 2 we have some advantages, but still limited in 3 what we can do. But we're a little bit confused 4 about small business participation. The purpose 5 of FA IV versus FA III, and, you know, the 6 differences there. Why copier-based equipment 7 wasn't included in FA IV, for instance, 8 versus -- in other words, if it's a small 9 business setaside for FA IV, why isn't it

10 exactly the same as FA III, I guess?

11 MS. PARKER: And if I could just ask 12 you why should it be in your estimation a small 13 business setaside?

14 MR. HAUSER: Well, I'm saying you have 15 FA IV, functioning of FA IV is a small business 16 setaside already; however, it's only printers.

17 We're an MFD dealer for multiple lines. So, 18 that kind of excludes us from offering, you 19 know -- 20 MS. PARKER: FA III has no 21 restrictions, if you're a small business, you 22 may submit an offer.

23 MR. HAUSER: Right. Right. So, 24 functional area IV, then, what was the purpose 25 of it, I guess would be my question?

1 MS. PARKER: It was the area of the 2 market that lent itself best to a small business 3 setaside, because of the ability of small 4 businesses to perform in this area, 5 printer-based management, and the ability of 6 them to access the markets that they need to 7 provide toner and so forth.

8 MR. HAUSER: So, if you're trying to 9 have multiple lines serviced, then functional

10 area IV would actually open that up a little bit 11 more, because as a small business and a 12 multiline dealer, we would actually have the 13 capability in some cases, depending on the fleet 14 that they have, to service multiple lines of 15 MFD-based equipment versus just printers.

16 MR. WILLIAMS: Correct. So, in 17 functional, and just to recap what's already 18 written and posted, functional area IV is the 19 native and non-native management of existing 20 printer devices. And as Meredith mentioned, 21 that is based on our research that it's 22 basically printing 101.

23 We all understand that the vast 24 majority of those printers out there follow the 25 open distribution channels. It is fairly easy

1 for companies to obtain supplies and service for 2 those printer devices.

3 One step further, those also make up 4 70, 80, 90 percent of the printer population out 5 there. So, that's one of our biggest beasts to 6 tackle. It's also a perfect fit for our 7 research to play into, because research says 8 small business does have the ability to tap into 9 those devices. And when we start talking about

10 the big iron or A3 devices, that's slightly 11 different.

12 So, as Meredith mentioned, functional 13 area IV was a perfect candidate for the small 14 business setaside. It was logical, it made 15 sense. While at the same time we wanted to 16 allow that same ability to the OEM. The OEM 17 also has the ability to get the supplies. They 18 also have the ability to get the technician.

19 So, we wanted to give them an area to 20 play as well. So, all of that was based on 21 extensive research, coming from most of the 22 folks in this room.

23 MR. RICHARDSON: Yeah, Gentry 24 Richardson. On a positive note, I agree with 25 the whole functional area III and IV piece, For The Record, Inc.

10 (Pages 37 to 40)

1 because as a small business, you can go out to 2 functional area level IV, but you can also apply 3 for functional area level III. So, it opens you 4 up to both. So, I don't see where that causes a 5 problem.

6 I also see it as an opportunity to open 7 things up for small business because it takes an 8 OEM analysis to say let me take a look and maybe 9 subcontract with a small business or work with a

10 small business versus the lockout, and this 11 lockout has been going on a long time and it 12 does need to be re-addressed. So -- 13 MR. STORAY: Any other comments on that 14 topic?

15 MR. LUCCI: Yes, Chris Lucci, Meridian, 16 touching on what J. R. Said, we are actually a 17 small business that has multiple lines and areas 18 of supply. We have examples where we've 19 actually had teaming agreements put in place for 20 we have three large supply manufacturers where 21 let's say for Canon, for instance, where we 22 partner with the vendor here or wherever it is 23 in the country and we are able to do that with 24 all manufacturers. So, it does give us the 25 unique ability to do that.

1 I understand that OEMs, that's not 2 really -- I don't think it would ever be 3 possible to allow them to do selling and service 4 the other lines, but from a small business 5 standpoint as an independent dealer, we actually 6 are able to do this and do it on a relative 7 basis.

8 MS. PARKER: So, once again, what we're 9 talking about is the strategic sourcing

10 initiative, we've got multiple goals that we 11 need to achieve, and one of those goals is to 12 reduce costs, and if you're talking about going 13 back to the primary source of the equipment, 14 then in most cases you're talking about lower 15 cost, maybe not in all cases.

16 So, to respond to that, why should we 17 make it a setaside, because we've also got 18 pricing objectives. We want to get the best 19 price, as well as promote small business. So, 20 we're trying to balance those two initiatives 21 and we feel like this does that, this gives 22 small business a niche and this also opens up 23 the market to the most competitive price 24 offerings.

25 MR. WILLIAMS: One other piece to tag

1 on to Chris, correct? To tag on to that 2 comment. That really is it's a great point in 3 that there are niche environments out there, 4 niche entities that have this ability, and one 5 of the things that FSSI is doing today, 6 especially with the print management program, is 7 the business intelligence data that we're 8 getting in.

9 You guys have done a fantastic job, and

10 the contractors, in submitting reports to tell 11 us what's out there and how it's being used, 12 we're going to use that data. That's going to 13 make us smart.

14 So, one of the things possibly also 15 tied to FA III and FA IV is that business 16 intelligence data. If the data comes in that 17 says, okay, we see this clear piece of the 18 market that we didn't see before, then we have 19 the ability to make decisions based on that 20 data.

21 So, if the data says that 80 percent of 22 the small businesses serve it as a price point 23 that is lower than the OEMs, then why wouldn't 24 the government make the decision to, okay, let's 25 re-address that.

1 So, it's something that's always an our 2 table based off the intelligence date that's 3 coming in, to use it in the sales and say, okay, 4 let's make it better, we need to cut back and we 5 need to improve. We definitely have the 6 ability. That's how we go through that 7 reporting exercise, however painful it might be 8 at times, trust me, I know from experience, it's 9 definitely something that helps us.

10 MR. STORAY: Thank you for that 11 feedback. Our next topic is copier-based and 12 printer-based design definitions. Are there any 13 comments or feedback on this topic?

14 MR. BRAZEROL: Mike Brazerol, Lexmark.

15 The definition of copier-based, based on the 16 plain reading of the draft RFQ, is limited to 17 A3-based devices, and the use of the agency's 18 copiers include both A3 and A4.

19 MR. WILLIAMS: The one thing that we 20 tried to do in our definition, and I think we -- 21 either we did it in the Q&A or it's in the 22 actual RFQ, it doesn't actually limit it to 23 11x17 paper, it limits it based on the 24 definition that we tried to get in there. It 25 doesn't say anything about 11x17. In fact, we

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11 (Pages 41 to 44)

1 clearly say that we are not -- that we 2 understand multifunction devices can be 11x17 3 A4s, we tried to account for that, so we didn't 4 actually limit it to 11x17.

5 MR. BRAZEROL: Okay, well, thank you 6 for clarification, the printer-based reference 7 was both A3 and A4 and that reference was absent 8 under the printer-based design.

9 MR. WILLIAMS: Correct, that's noted

10 and that was addressed in question 5 of the Q&A 11 document and that was an oversight, we will put 12 that in.

13 MR. MILLER: So, after parsing the 14 definition and the answers to your questions, 15 the best distinction that I could come up with 16 was the only thing that really would be 17 considered a copier was if it was over 50 pages 18 a minute and then used a separate toner vessel.

19 Is that the intention? Because 20 you answered some of the questions this printer 21 could be a copier and this copier could be a 22 printer and I'm not clear exactly whether it's 23 exclusively a copier and a printer.

24 MR. WILLIAMS: Sure, I'll try to answer 25 the question as best we can right now. First

1 off, there's no reference to speed in there.

2 What we were trying to get at was a few 3 different pieces. First off, the fact that we 4 are dealing with cartridges on the A4 devices.

5 Cartridge versus bottle, and I understand that, 6 you know, the market is changing and there's 7 different types of devices out there, so we're 8 trying to work with you guys.

9 Cartridges versus bottles, consumable

10 components all in one cartridge versus the A3 11 devices that typically just have the toner in 12 the bottle, and then we made a reference to the 13 actual print driver itself, which we can try to 14 flesh out a little better, but the fact that 15 we're relying on the industry to really tell us, 16 okay, what constitutes printer platform and what 17 constitutes copier platform. The cartridge was 18 our step one.

19 The drivers, the PCL, et cetera, that 20 could be our step two, and we certainly welcome 21 any input on this point, where you can help us 22 define copiers and printers.

23 MS. PARKER: And just to reference, the 24 reference to speed. On page 2 of the RFQ, 25 printer-based design, there is a statement, 1 printer-based devices are traditionally designed 2 to operate with speeds up to 50 pages per 3 minute, I think there's some ambiguity in that 4 definition and we're going to clean that up and 5 say, it is or it is not something over a certain 6 speed.

7 MR. STORAY: And we welcome feedback on 8 the clarification of those definitions. If you 9 can provide us feedback on that.

10 MR. VALGEIRSSON: Bragi Valgeirsson, 11 CTI. Who makes that definition? When an agency 12 is coming out with a bid, do they have to 13 provide a list of equipment and tell in the RFI, 14 this is a copier, this is a printer?

15 MS. PARKER: That happens at the BPA 16 level. You're going to submit something that's 17 either a printer-based or a copier-based type of 18 classes of devices.

19 MR. STORAY: Name?

20 MR. SHANK: Steve Shank with Cannon IV.

21 I think that you keep using the A3/A4 term 22 interchangeably between both FA III and IV and I 23 think you might want to be careful with using 24 that in either one or the other.

25 MR. WILLIAMS: Right, in this

1 discussion, we seem to be bouncing back and 2 forth. In the draft RFQ, that's why we exactly 3 set printer-based and then copier-based. It 4 took us a while to get that in our heads to 5 stop, you know, making the A3/A4 reference, 6 because it muddies the waters here.

7 So, great point, we did it here, we 8 will try to start doing it here as well.

9 MR. STORAY: Any other comments? Sir?

10 Name?

11 MR. CLIFT: Jud Clift, ASE Direct. On 12 the actual consumable base, what type of 13 clarification or definitions were the TAA 14 compliance of consumables? If I can get that 15 input.

16 MS. PARKER: Okay. Could you repeat 17 the question? What exactly is the question on 18 TAA compliance?

19 MR. CLIFT: What is the TAA compliance 20 of the consumable? Because it ultimately would 21 see if everyone -- keep the playing field even, 22 what type of consumables are being on that FSSI 23 office supply that compliance is heavily 24 regarded?

25 MS. PARKER: Once again, anything that

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1 you purchase from a BPA would go back to the 2 terms and conditions of the schedule, so if 3 you're buying a service on the schedule, then 4 you would look at what is awarded on schedule.

5 If you're buying toner on schedule, then once 6 again you would go back to the schedule and see 7 what requirements were on schedule for toner.

8 So, if you were buying toner on the 9 schedule, you would be required to purchase a

10 TAA-compliant type of toner cartridge.

11 MR. CLIFT: Right, but in the industry, 12 especially on this, the consumable is being just 13 dropped in, filled, it's not hitting loading 14 docks, a lot of people aren't seeing that actual 15 toner where it's manufactured, where it's coming 16 from, what type of toner is going into that 17 device.

18 MR. WILLIAMS: So -- 19 MR. CLIFT: So, it might be at the top 20 end OEM, but at the end of the day it might be 21 hitting the dock and it might be at a non-TAA 22 compliant.

23 MR. WILLIAMS: The question is not how 24 it's being dressed at the TAA level, how is it 25 being policed?

1 MR. CLIFT: How is it being policed, 2 because at the end of the day, the TAA may look 3 like a rock star on paper, but it can be we're 4 not playing on an even playing field as far as 5 they're not policing themselves on the 6 consumable supply. There's two -- there's a 7 bipolar mentality there, if that TAA compliance 8 if you're legalistic about it or a little bit 9 loose about it, that's a margin maker and a

10 contractor burner, because you can really drop 11 significant money from that.

12 MR. WILLIAMS: Basically a two-part 13 question, or answer to that question. As 14 Meredith says, everything built into the BPA 15 level defaults into the schedule level.

16 So, the good thing about this position 17 is we get to kick it to Steve Lazada's group and 18 Jim Concannon over at Schedule 36 and Steve is 19 in the back of the room now, to address at this 20 schedule level.

21 In terms of policing, we won't be 22 inspecting the toner cartridges. Again, that 23 goes to the schedule contract and Steve might be 24 able to give you a little offline information 25 with how that gets addressed, but yeah, so I

1 mean, we're defaulting to the schedule.

2 MR. CLIFT: Right, and I guess 3 specifically in the FA IV with the term-based 4 design for the TAA compliance, and let's talk 5 about an HP SKU with what happened in Japan, 6 there are specific make and models out there 7 that are NA that could be on schedule but don't 8 have a good SKU or an actual TAA-compliant SKU.

9 So, scrubbing it down, there's some

10 printers by default that might be omitted, that 11 there's not an available TAA compliance.

12 MR. WILLIAMS: Absolutely, and you're 13 kind of dovetailing into another piece, in terms 14 of our pricing. And the one comment that we've 15 kind of hinted around, but we might as well go 16 ahead and say it, it's likely that we're not 17 going to be able to tap into every single print 18 output device in the Federal Government for 19 every single end user. That is going to happen.

20 So, it sounds like we're just talking 21 about instances where that's going to happen.

22 We fully recognize that and we're just going to 23 do the best that we can. And the schedule level 24 does the best that they can to incorporate 25 everything working within the parameters of

1 regulations such as TAA. So, we're doing the 2 best we can, that's our intention. If you have 3 thoughts or input into how that can be better 4 both at the schedule level and the BPA level, 5 then let's have those conversations.

6 MR. CLIFT: No, it's what's in their 7 just experience on the office supply that just 8 the clarification or ramifications were really 9 put forth and drafted so the consequences on our

10 side of the table were well known and not a ask 11 for forgiveness then permission, and I'm not 12 seeing it in what those are on this side of just 13 clearly defining that line in the sand.

14 So, on this side, because not asking 15 for forgiveness and asking for permission falls 16 on the competitive standpoint opportunity. A 17 fair point, though.

18 MR. WILLIAMS: Okay.

19 MR. STORAY: Thank you for your 20 comments. Next topic, data elements for 21 appendix A, agency fleet inventory information.

22 Are there any comments, feedback?

23 MR. MILLER: I think for, at least for 24 us, this is probably the most difficult and 25 contentious area, the way this is laid out.

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13 (Pages 49 to 52)

1 Just trying to -- I'm not completely sure I 2 understand between risk and prospects what the 3 intention is, but this whole notion of being 4 able to characterize all the risk factors that 5 are in the printer model just seems very 6 undoable.

7 Changes from installation to 8 installation, from model to model, they change 9 over time and there are thousands of models out

10 there in the market and you have new ones coming 11 on all the time and old ones being taken out of 12 active service. It seems like the way this is 13 being implemented, you could be in constant 14 manpower spinning just keeping up with the risk 15 factors, trying to renegotiate contractors as 16 risk factors change.

17 I'll speak for us, in our business, we 18 just don't do business this way. We figure out, 19 you know, a combination of empirical data and 20 our best guess on some of this stuff, and to 21 expect the industry to be able to track all this 22 detail and provide it to the government I think 23 is something you guys should reconsider.

24 MS. PARKER: So, let's go back to that 25 concept and go back to where it comes from, page

1 17 of the draft RFQ and it addresses order 2 opportunity instruction, and option 3, and 3 option 3 is a two-phased approach, a phase one 4 firm fixed, our labor and rate quote will be 5 submitted for the creation of the device 6 inventory.

7 So, what we are looking at right here 8 is device inventory, and when you go back to 9 option 1, option 1 says for requirements for the

10 ordering activity has conducted their inventory 11 creation in such a fashion that has resulted in 12 the collection of the required data for each 13 device being incorporated into the task order.

14 So, that is what we're asking for when 15 we're -- when we're talking about…