SR 09-13-2016 3H
Ci ty Council
Report
City Council Meeting : September 1 3, 2016
Agenda Item: 3.H
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To: Mayor and City Council
From: Sarkis Metspakyan, Acting Chief Information Officer , Information Systems
Department
Subject: First Modification to Contract No. 9710 with Hewlett Packard for the
Purchase, Installation and Maintenance of Desktop Computers
Recommended Action
S taff recommends that the City Council authorize the City Manager to negotiate and
execute a first modification to A greement # 9710 CCS in the amount of $700,000 with
Hewlett Packard, a California -based company, for the purchase, insta llation, and
maintenance of desktop computer equipme nt. This will result in a four -year amended
agreement with a new total amount not to exceed $2,300,000 , with future year funding
contingent on Council budget approval .
Executive Summary
T he Information Systems Department (ISD) administers the City’s Computer Equipment
Replacement Program (CERP), which covers the purchase, installation and
maintenance of the City’s desktop computer systems, laptops, printers, servers and
other computer equipment. Approxi mately 800 computer systems will reach end -of -life
and will need to be replaced this year to ensure that they remain functional and
compatible with new software systems, and remain covered for product support. The
majority of these replacement systems are purchased through the City’s existing
agreement with Hewlett Packard (HP). Under the agreement, HP provides equipment,
installation and maintenance services for the City’s desktop computers. The agreement
with HP will soon reach its not to exceed contrac t threshold of $1,600,000. The
remaining contract balance on the agreement is approximately $428,000, which is
insufficient to complete the purchase of all systems required for this year’s computer
replacement cycle. Therefore, staff recommends modifying the agreement with HP to
increase the contract amount by $700,000, for a new total amount not to exceed
$2,300,000 in order to complete the FY 2016 -17 system refresh and to accommodate
for future growth for the remainder of the contract term , which ends o n June 30, 2017 .
Background
Unlike most city governments which purchase computer equipment on a "pay as you
go" system, Santa Monica installs, supports and maintains the City's computer
technology under a centralized purchasing program that ensures adequa te reserves for
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timely replacement. Currently, our I nformation S ervices D epartment (ISD) manages
approximately 2,100 desktop computer systems, laptops and tablets, 300 auxiliary
computers monitors, 300 printers, 350 servers, various network equipment and a ll
enterprise software. CERP was established to standardize the City’s technology and to
ensure that computer equipment is properly maintained, refreshed regularly, and
remains compliant with modern technology requirements in order to better guarantee
per formance and service resolutions. Funding for the future replacement of equipment
included in CERP is established at the time of purchase. As new equipment is
purchased, staff sets aside an annual 20%-25% (depending on the equipment life cycle)
of the eq uipment purchase price in the Computer Technology Replacement and
Services Fund in order fund future equipment replacement.
The City’s desktop computers are replaced on a four -year replacement cycle. The
replacement cycle was originally setup so that appr oximately 25% of the systems are
replaced each year during year 1 and year 2 of the cycle and approximately 50% are
replaced during year 4. No equipment is scheduled for replacement on year 3. Year 3
is the off -year, which staff utilizes to evaluate and identify new technologies to roll -out
for the upcoming four -year replacement cycle and to bid out, negotiate and finalize the
new contracts for the purchase of equipment. Any new systems purchased during the
cycle, which reach end of life on an off -year, are moved up and aligned with year 4 of
the corresponding cycle.
O n February 12, 2013 (Attachment A), Council authorized a four -year contract with HP
in an amount not to exceed $1,600,000 for the purchase of desktop computer
equipment, installation servi ces to refresh all end -of -life systems and four -year warranty
for product replacement, including on -site maintenance support.
This fiscal year is year 4 of the replacement cycle , approximately 800 computer systems
are due for replacement. The contract w ith HP does not have sufficient contract
authority remaining to purchase the systems needed to complete the current
replacement cycle .
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Discussion
I SD administers the City’s CERP, which covers the purchase, installation and
maintenance of the City’s deskto p computer systems, laptops, printers, servers and
other computer equipment. The equipment for CERP is purchased from various
manufacturers; however, the majority of the replacement desktop systems are
purchased through the City’s master agreement with HP . Under the agreement, HP
provides equipment, installation and maintenance services for the City’s desktop
computers. The agreement with HP will soon reach its not to exceed contract amount
of $1,600,000. The original HP contract amount was established to account for the
replacement of approximately 1,500 desktop computers during a four -year replacement
cycle, which was an estimate of the count of computer systems in the City’s inventory at
the time and did not account for future growth . Since contract inception, ISD has
experienced an unanticipated upsurge in requests for new desktop computer systems.
ISD has purchased approximately 300 more HP systems th an original projected due to
a rise in demand for equipment related to new City programs, such as t he opening of
Pico Library; new laptop kiosks at the Main Library; new systems for the Big Blue Bus
Dispatch Office; as well as systems for new hires throughout the organization and
various other City projects. During this same period, there has also been an
unexpected increase of approximately 180 requests to purchase auxiliary computer
monitors for existing desktop systems. Staff are expanding their use of dual monitors
because second monitors expand their desktop workspace, enabling them to multi -task
by working on multiple programs and documents at once.
The two trends mentioned above have resulted in an unanticipated increase in the
purchase of equipment from the HP contract. These purchases have exhausted the
contract available balance earlier than projected. Currently, the contract has a balance
of approximately $428,000, which is insufficient to complete the purchase of all systems
required for the current computer replacement cycle. During this cycle, approximately
800 systems are due for repla cement. It is imperative that the City’s computer
hardware be replaced on a four -year refresh cycle to ensure that computer hardware
remains reliable and up -to -date. Computers that are over four years old are no longer
covered by the manufacturer warranty and demonstrate an increased rate of failure.
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At this time, staff recommends modifying the contract with HP to increase the not to
exceed contract amount by $700,000 to complete the current system refresh and to
accommodate for future growth for the rem ainder of the contract term. Funding for
equipment replacement has been set aside as part of CERP and is available in the
Information Technology Replacement and Services Fund.
Before the contract with HP expires, staff will conduct a competitive bidding process to
select a computer hardware vendor for a new multi -year contract. The bidding process
will help to establish competitive pricing for the purchase of best in class, reliable
hardware, including desktops, laptops, tablets, and monitors. The City is also in the
process of shifting to a more mobile workforce with the addition of mobile computer
hardware like laptops and tablets. The new contract amount will reflect the cost to
replace the current inventory of systems as well as account for future gr owth based on
purchasing trends. Looking further into the future, the new City Services Building has
strict power requirements that dictate the type of computer hardware that will be
purchased. As mobile hardware manufacturers are continuing to improve po wer and
battery efficiencies, it is very likely that the computer hardware selected for the majority
of staff in the City Services Building will be mobile hardware .
Vendor/Consultant Selection
On August 31, 2012, the City issued a Request for Proposals (R FP) for the purchase,
installation, and maintenance of City desktop computer equipment. The RFP was
posted on the City’s online bidding site and notices were advertised in the Santa Monica
Daily Press in accordance with City Charter and Municipal Code pro visions. A total of
490 vendors were notified and 55 vendors downloaded the RFP. Four firms
responded. Staff interviewed the four firms. Proposals were submitted by the following
firms: Dell, HP, Lenovo and Quatro Tech. Responses to the RFP were revi ewed by a
selection panel of staff from the Information Systems Department. Evaluation was
based on the following selection criteria: product approach, ability to meet the City’s
technical specifications and requirements for product support, and cost.
B ased on this criteria and criteria in SMMC 2.24.073, staff recommended HP as the
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best bidder to provide desktop computer equipment and services in accordance with the
City specification. HP was the lowest bidder and best met the City’s technical
specificat ions and requirements for product support .
Financial Impacts and Budget Actions
T he contract modification to be awarded to HP is $700,000, for an amended contract
total not to exceed $2,300,000. Funds are available in the FY 2016 -17 Capital
Improvem ent Pr ogram in account C55000313 .589000. Future year funding is
contingent on Council budget approval .
Prepared By: Oscar Santiago, Principal Administrative Analyst, ISD
Approved
Forwarded to Council
Attachments:
A. February 12, 2013 Staff Report (web link)