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SR 09-10-2019 3C City Council Report City Council Meeting: September 10, 2019 Agenda Item: 3.C 1 of 4 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 2 of 4 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. 3 of 4 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 4 of 4 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)