During the demonstration of the ED-209 in the boardroom, the ED-209 was loaded with live ammo. As we see in the movie, this turns out to be a bad decision and it goes horribly wrong.
But why was the ED-209 loaded with live ammo in the first place?
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I'm unable to locate a canon reference within the film but it's worth pointing out that there are some very major real-world differences between live ammunition and blank ammunition, not least that dummy rounds can weight up 3 to 4 times as much as blank rounds, sound very different when fired (highly important for the ED-209 which apparently relies heavily on sonic detection) and have substantially less recoil. For a device as consistently flaky as the ED-209, any one of these difference could easily cause some kind of malfunction.
The original script makes it clear that they didn't expect the ED-209 to fire a single shot in this particular demonstration. It was supposed to detect the noise of the gun hitting the ground and then power itself down. Since it was never intended to fire, the choice of rounds would have been moderated by the need to make the demonstration work correctly, rather than by safety considerations. Ultimately the thick carpet prevents it from detecting that the weapon has been dropped, but that was wholly unforeseen.
There's also the possibility that this demonstration was merely the culmination of a series of tests elsewhere in the facility and the technicians simply forgot to change the loading over to something safer. This is obviously pure conjecture, but given the general level of competence shown (not to mention the evidence of substantially diminished Health and Safety consideration), not an unreasonable guess.
In an interview with the Village Voice, the film's producer (Jon Davidson) stated that Verhoeven had reshot the ED-209 scene no less than three times, each time increasing the number of explosive squibs and bloodpacks used. His goal was to make the scene as bloody and as shocking as possible. If Ed was firing blanks it wouldn't have had the same impact, literally or figuratively.
Producer Jon Davison, who also provided ED’s menacing speaking voice, redid the shots of the poor guy's corpse being pulped by bullet hits three times because Verhoeven didn’t think they were bloody enough. These were among the shots he later had to excise before the MPAA would grant the ultraviolent original an R rating
Backing up what Richard wrote, this was a very important meeting where absolutely nothing should go wrong or be left to chance1. Having done software writing, testing and given demos myself, I know the last thing you want is your product coping with an unrealistic variable (in this case, blank rounds), for a board level presentation. To show you the high stakes of this meeting, here's a quote from the book2
Morton, a thin, hyper junior executive was even tenser than usual. Today's meeting would be an important one at OmniCon. He was sure of that. Why, the Old Man himself would be in attendance.
(Robocop, page 28, with my emphasis)
This was clearly a company used to live ammo, even in the boardroom. Not only would security be on hand with it, but also consider the final scene:
Dick Jones takes a loaded gun kept in a box in the boardroom and takes the Old Man hostage.
Not to mention that the gun Dick Jones handed the unfortunate Mr Kinney was also loaded.
No one considered ED-209 would actually fire in what was meant to be a routine operation:
Jones put a fatherly arm around the started boy. "Mr Kinney will help us simulate a typical arrest and disarming procedure."
(Page 33, my emphasis.)
The whole movie, directed by the Dutch Paul Verhoeven, was meant to be a satire on American culture. From his European perspective, so much of the movie was thus America writ large, from the crazy commercials ("You pick the heart... and remember, we care!"), to the absurd ED-209 design. In the same vain, Verhoeven wanted the boardroom scene to be over-the-top violence perhaps (my speculation) imagining the American boardroom of the future.
Mega-lolz: so much of this film is black humour but this scene especially ends with multiple one-liners. From the movie:
Morton: "Is someone gonna call a paramedic?"
Jones: "I'm sure it's only a glitch, a temporary setback."
Old Man: "You call this a glitch?! We're scheduled to begin construction in six months. You're 'temporary setback' could cost us 50 million dollars in interest payments alone."
And from the book (page 36):
Paramedic: "They should have ordered mop and pails."
Finally, from the perspective of 1987, the far future did not have the same Health & Safety standards we might expect today!
1 Shame then that no one thought to test ED-209 in the boardroom, on carpet!
2 I know, I should get extra marks for cool at this point.
Dick Jones wanted to demonstrate the amazing power and compliance of ED-209, and was arrogant enough to believe that OCP's engineers were perfect and their product was infallible. This scene demonstrates Jones' (and OCP's) arrogance and disdain for human life, which to them isn't as important as profits and showmanship.