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Originally posted in the LI Business News by David Winzelberg
Published: January 4, 2013

Just-unveiled state rules governing how public agencies buy millions of dollars worth of copiers and other office equipment could result in a windfall for a few firms and a store-shuttering drop in business for many independent dealers.

The previous state contract for purchasing copiers – in effect from June 2002 until it expired last month – allowed public agencies to choose from a dozen of the leading copier companies and do business with nearly 300 independent dealers statewide, including 27 on Long Island, at prices discounted from 30 to 50 percent.

But under the new rules, dozens of independent office equipment suppliers and servicers that might not carry the brands awarded stand to be shut out of millions of dollars in sales to public agencies. Those dealers could still get public agency business, but each agency would have to conduct its own competitive bidding process for each purchase of copiers, a costly and time-consuming effort that most industry observers say is too cumbersome.

For the new contract, the New York State Office of General Services has fielded bids from 12 manufacturers for three categories of machines characterized by copy output.

So far, the state has tentatively awarded the biggest category, comprised of computer printers and multifunction machines that scan, copy and print, to Oki Data as the primary source and Lexmark as a backup that can only be used when Oki Data is unable to fill an order.

The OGS has yet to award the contract in the other two categories because “bidders either failed to supply mandatory items or their proposals were otherwise deficient,” according to the state.

Local dealers who carry Oki Data products were understandably thrilled with news of the state’s award.

[highlight type=”one”]“It will mean a significant increase in revenue for our company,” said Bob Venero, the owner of Future Tech Enterprise in Holbrook.[/highlight]

[highlight type=”one”]But, Venero added, the state award “will absolutely impact companies that don’t carry Oki Data.”[/highlight]

One likely victim is TGI Office Automation in Plainview. The firm, which carries the Toshiba, Lanier and Lexmark brands, could lose as much as 20 percent of its sales if it can’t compete for business from public agencies, according to company vice president Angelo Perrone.

“That’s bad for guys like us,” Perrone said.

“You’re taking choices away from the end users of machines that may best suit their needs,” he added. “Having more manufacturers to choose from gives us the flexibility to do the right thing by the customer.”

The state says the new contract will ultimately save money for school and fire districts, local governments and the hundreds of other agencies that can purchase copy machines under its central agreement.

“OGS is moving through a procurement transformation effort that is saving taxpayer dollars by aggregating purchasing power,” spokeswoman Heather Groll said in an email to LIBN. “Renewing an outdated contract is unlikely to produce any savings.”

Brent Kushman, a Fairfield, N.J.-based sales representative for Kyocera Document Solutions who covers seven states including New York, said the state’s new copier contract funnels a lot of business to a select few and will have a damaging effect on small business.

“The new state contract … will have a huge impact on over 300 small businesses around New York,” Kushman said. “Some may close their doors because of the amount of business they do with the state.”

Rob Richardson, eastern district president for the Business Technology Association, an industry trade group based in Kansas City, said limiting competition isn’t likely to help lower prices or improve services here.

“Fewer choices is probably not a good thing,” he said.