SR-10-14-2014-3DCity of City Council Report
Santa Houlea°
City Council Meeting: October 14, 2014
To: Mayor and City Council
From: Jory Wolf, Chief Information Officer
Subject: Purchase of Microsoft Software Licenses
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a Professional Services Agreement with Insight Public Sector, an Illinois -based
company for the purchase of Microsoft software licenses, software license upgrades, and
license tracking services in an amount not to exceed $402,450 for one year, with four
additional one year renewal option(s) in the amount of $1,609,800, on the same terms
and conditions for a total amount not to exceed $2,012,250 over a five year period with
future year funding contingent on Council budget approval.
Executive Summary
The Microsoft Enterprise Agreement (EA) is a comprehensive volume licensing program
designed for organizations like the City that have standardized on Microsoft technology.
Through the EA program, Microsoft offers substantial cost savings over standard license
pricing over a five -year period. The EA consolidates software purchases across the City
while streamlining the software license management and tracking process. The EA
provides Software Assurance (SA), which provides Microsoft technologies and services
including new product version rights, training, deployment planning, and support. Staff
seeks the authority to enter into a new Microsoft Enterprise Agreement with Insight Public
Sector in an amount not to exceed $2,012,250 over a five -year period.
Background
On July 2 22004, Council authorized a contract with DELL Software and Peripherals in an
amount not to exceed $903,588 for the purchase of Microsoft software licenses, software
license upgrades, and license tracking services over a period of five years, through
October 25, 2009.
On November 10, 2009 Council authorized a new contract with DELL MARKETING L.P.
in an amount not to exceed $1,279,422 for the purchase of Microsoft software licenses,
software license upgrades, and license tracking services over a period of five years,
through October 31, 2014.
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On October 31, 2009 the City entered into a five -year agreement with DELL MARKETING
L.P. for a Microsoft Enterprise Agreement. The Microsoft Enterprise Agreement
consolidated software purchases across the City while streamlining the software license
management and tracking process. The EA allowed the City to license Microsoft software
and cloud services over a five -year period at the best available pricing. Through the term
of this volume licensing program, the City received substantial cost savings on all
Microsoft software and products. The City was also able to utilize the Software Assurance
(SA) benefit from the agreement to stay current on new product versions at no additional
cost to the City.
Over the past ten years, the City standardized and maintained its electronic infrastructure
with Microsoft's software, including the Windows operating systems, MSSQL, the Office
Suite, Exchange, and SharePoint. The City licensed every compatible hardware device
with Microsoft's product licensing and has only purchased applications and systems that
utilize the Microsoft Operating System (OS).
The City's existing five -year contract with DELL MARKETING L.P. expires on October 31,
2014. Renewing the Microsoft Enterprise Agreement is essential to maintaining the City's
current and future technology goals. Failure to renew the EA will be disruptive and
expensive because of the City's current reliance on Microsoft's products. The City will
also lose the ability to consolidate purchases and the ability to use Software Assurance,
which will eventually cause the City's software environment to be obsolete and unstable.
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Vendor Selection
The County of Riverside issued a Request for Proposals (RFP) in November of 2011
and conducted a similar process again in May 2014 for Microsoft licenses. In both
cases, the County of Riverside selected Insight Public Sector as the company with the
most competitive pricing and best - suited to provide Microsoft software licenses,
software license upgrades, and license tracking services. Under the terms of the RFP
and the resulting contract, similar pricing is also offered to other government agencies in
the State of California under cooperative purchase agreements. The County of
Riverside indicated that the pricing offered by Insight Public Sector under their contract
was the most competitive available, except for pricing offered to Federal Government
agencies, which is not available to local government agencies. Staff recommends
piggy- backing as opposed to issuing an RFP.
Piggybacking is the post -award use of a contractual process that allows an agency that
was not involved in the original competitive procurement to purchase the same
supplies /equipment through that original process. Many local government agencies
have taken advantage of the pricing offered under the County of Riverside contract,
including the State of California. Pursuant to section 2.24.080(b) of the Santa Monica
Municipal Code, Exception to Competitive Bidding, staff recommends contracting with
Insight Public Sector to provide Microsoft software licenses, software license upgrades,
and license tracking services for a period of five years in an amount not to exceed
$2,015,000.
Executing the contract with Insight Public Sector ensures that the City can continue to
use Microsoft's desktop and server licenses and products, while taking advantage of
new added products and services (e.g. SharePoint and Office 365). The Microsoft
Enterprise Agreement gives the City the best overall pricing based on the size of the
organization. However, the price of the product has increased since October of 2009
due to changes in Microsoft's licensing model and new product offerings. The
agreement allows licensing and services that can be increased or decreased throughout
the life of the contract and provides simplified licensing management through one
certified Microsoft Reseller, Insight Public Sector.
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Financial Impacts & Budget Actions
The Professional Services Agreement to be awarded to Insight Public Sector is
$2,012,250. Funds in the amount of $402,450 are included in the FY 2014 -15 budget at
account C55000313.589000. Future year funding is contingent upon Council approval for
budget adoption.
Prepared by: Al Dave, Software Systems Division Manager
Approved:
1 olf
hie Information Officer
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Forwarded to Council:
Rod Gould
City Manager
Reference:
Agreement No. 9975
(CCS)