Pennsylvania House fires Xerox, hires Canon, but at what cost?

HARRISBURG, Pa. (WHTM) – Xerox copiers have been pushed out of offices and line several hallways at the Capitol.

The company has been kicked out of the House, the Pennsylvania House, that is.

“They’re not happy campers because we’re asking them to exit the building after 20 years,” said House Chief Clerk Dave Reddecliff, who signed off on the deal.

The House broke its contract for printers and copiers with Xerox. The company, clearly upset at losing the business, took the rare step of sending a letter to all 203 members alerting them to the $5 million it will cost taxpayers to prematurely sever the deal and asking them to reconsider.

“We’re eating 5 million dollars,” Reddecliff said matter-of-factly.

Reddecliff says he began looking into the Xerox contract about a year ago, shortly after becoming the chief clerk. He called the contract confusing and a morass. The House was paying Xerox more than $262,000 per month to lease 430 machines. The five-year deal was worth more than $15.7 million.

Reddecliff enlisted an outside consultant named Matthew Smith, a former Xerox employee, who now works for a New York company called Copy Watch, Inc. Smith found the House a deal with Canon at $189,000 a month or $11.3 million over five years, a savings of just over $4 million.

Xerox countered with an even lower offer, but Reddecliff says at that point, the trust was gone. He’s convinced Xerox had been overcharging the House and giving it more than it needed equipment-wise.

“They should’ve come back to us a long time ago and said, ‘folks, based on the data, you don’t need certain machines, you don’t need these larger machines, heck, you don’t need this machine at all over here.’ They never did that,” Reddecliff said.

Canon will give the House $5 million to pay off the penalty for severing the Xerox contract. The House will pay that back to Canon over time.

Xerox, in its letter, protested that there was no Request for Proposal put out for the Canon deal; it wasn’t openly bid. Xerox is right. The House, unlike the state itself, does not have to publicly bid its contracts.

I ask Reddecliff about that.

What if somebody else is even 20 grand a month cheaper than Canon?

“Yeah, we don’t know,” Reddecliff conceded.

You’re not required to do RFP’s?

“That’s right.”

But you think it wouldn’t be a bad idea, down the line, to require them?

“That’s exactly right.”

The deal with the consultant, Matthew Smith, allows him to collect 30 percent of any savings he found. That’s a cool $1.1 million.

So it’s $5 million to bust the contract and another $1.1 million for a consultant. That might raise eyebrows in Harrisburg.

“If somebody wants to beat me up over saving $3.2 million versus saving $4.3 million over the next five years, OK, but I’m still saving money,” Reddecliff said.

Xerox sees it differently and thinks taxpayers will be forced to pay even more for a bad Canon deal. It questions the lack of transparency or open bidding in the Canon deal and also wonders why the House doesn’t have a single staffer that could’ve unraveled the Xerox contract and saved taxpayer money without spending a million bucks on an outside consultant.

Xerox spokesman Carl Langsenkamp sent a lengthy email Monday that read in part: “If this was about saving money, an open procurement would have shown that our final proposal was $21K a month less than the Canon proposal and would have saved an additional $1.2 million over the contract period. It is our belief that the House has accepted a contract with fewer machines for more money than Xerox proposed, less labor and a lower level of service. So this is taking taxpayer money to pay off a $5 million buyout over time?  Do the math on how long that means they will be using taxpayer dollars to pay something off that they can never recoup.”

Reddecliff says over the next few years, he intends to “right-size” the House’s copying needs both in terms of number of machines and level of machine. That should save money, he said.

His office is now taking a closer look at all of the House’s contracts to ensure the problems that arose from the copiers are never duplicated.

Get breaking news, weather and traffic on the go. Download our News App and our Weather App for your phone and tablet.

1 thought on “Pennsylvania House fires Xerox, hires Canon, but at what cost?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s