SR 09-10-2019 3C
City Council
Report
City Council Meeting: September 10, 2019
Agenda Item: 3.C
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To: Mayor and City Council
From: Joseph Cevetello, Chief Information Officer, Information Services Department
Subject: Agreement with PCMG, Inc. for Annual Purchase of Microsoft Software
Licenses
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute an agreement and issue a Purchase Order with PCMG, Inc, a Virginia-based
company, for the purchase of Microsoft software licenses, including software license
upgrades and license planning services for the Information Services Department. This
recommended award is made as an exception to the competitive bidding process
pursuant to Section 2.24.250(c) and is for a total amount not to exceed $2,500,000
(including a 10% contingency of $225,000), over a three-year period, with future year
funding contingent on Council budget approval.
Summary
The City of Santa Monica uses Microsoft software on all of its computers and servers.
The Information Services Department (ISD) manages the licensing for this software
through an Enterprise Agreement (EA), purchased through Insight Public Sector
(Insight), one of many Microsoft Licensing Solutions Partners (resellers). Under the EA,
Microsoft provides Software Assurance for all software purchases, which guarantees
the City can access new product version rights, training, deployment planning, and
support. The City’s current five-year licensing agreement with Insight terminates in
October 2019. For this reason, staff seeks approval to enter into a new multi-year
purchase agreement with one of the other authorize resellers, PCMG, at a fixed
discounted rate for licenses, with the flexibility to add new products and services as
needed.
Discussion
The Microsoft EA is a comprehensive volume licensing program designed for
organizations like the City that have standardized on Microsoft technology. Through the
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EA program, Microsoft offers substantial cost savings to government agencies over
standard government license pricing over a multi-year period. The EA consolidates
software purchases across the City while streamlining the software license
management process. The EA provides Software Assurance, which provides Microsoft
technologies and services including new product version rights, training, deployment
planning, and support. The City currently purchases Microsoft licensing for all Windows
devices and servers, which require an operating system, as well as user licensing to
enable cloud-based services for City staff, allowing for secure access to City
applications in support of service delivery.
Over the past five years, the City has increased its use of Microsoft products as a result
of implementing various City initiatives, including providing email account licenses to all
City staff and Boards and Commissions members; deploying database software
licenses for City applications requiring advanced database management; and enabling
cloud-based services to all City staff to allow for anytime, anywhere, secure access to
City applications.
Microsoft offers various tiers of licensing to accommodate for employee role-based
deployment. ISD has been leveraging this type of licensing to achieve cost savings by
deploying licenses and functionality based on employees’ needs. However, the City’s
increasing reliance on secure cloud-based software services has resulted in deployment
of more expensive tiered licensing. Staff anticipates that licensing costs will continue to
increase as Microsoft moves towards capability-based bundled pricing, which requires
customers to purchase bundled packages in order to leverage unique capabilities of the
Microsoft tools. To address this, ISD will continue to closely manage the City's licensing
model, adjusting license levels to optimize savings and adopt industry best practices in
license management and cost optimization practices.
Funding for this agreement and for all enterprise software license purchases has been
set aside as part of the Computer Equipment Replacement Program and is available in
the Information Technology Replacement and Services Fund.
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Vendor Selection
Exception to Competitive Bidding
Staff recommends PCMG to furnish and provide Microsoft software licenses and
services as an exception to competitive bidding per Muni Code 2.24.250(c).
In November 2011, the County of Riverside issued a Request for Proposals (RFP) and
conducted a similar process again in May 2014 for the purchase of Microsoft licenses.
Under the terms of the RFP and the resulting master Enterprise Agreement (EA) with
Microsoft (Agreement#01E73970), similar pricing is also offered to other government
agencies in the State of California under cooperative purchase agreements. Many cities
in California leverage this EA, as does the City of Santa Monica, to take advantage of
the best pricing available for government agencies. Under the EA, Microsoft requires all
licenses governed by the agreement to be purchased through authorized Large Account
Reseller (LAR) designated as part of the EA. PCMG is one of six LARs who have
entered into a Software Cooperative Agreement, wh ich extends guaranteed pricing from
the Riverside master EA to government agencies. As part of this agreement, PCMG will
assist the City with quarterly planning and road map development for software licenses
and services to maximize Return on Investment and ensure that the City is fully utilizing
its investment in Microsoft tools.
c. competitive procedures were followed by a governmental agency, federal, state,
county, city, joint powers agency, special district, or cooperative purchasing agency
and the goods or services are supplied to the City at the same or better price;
Financial Impacts and Budget Actions
Staff seeks authority to approve funding from the Information Technology Replacement
and Services Fund to award an agreement with PCMG for the purc hase of Microsoft
software licenses, including software license upgrades and license planning and
tracking services.
Contract/Agreement/Purchase Order Request
FY 2019-20
Request Amount CIP Account # Total Contract
Amount
$750,000 C7100030.689000 $2,500,000
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Future year funding is contingent on Council budget approval.
Prepared By: Oscar Santiago, Administrative Services Officer
Approved
Forwarded to Council
Attachments:
A. City of Santa Monica OAKS - PCMG
REFERENCE:
Agreement No. 10933
(CCS)