SR 09-27-2022 5D
City Council
Report
City Council Meeting: September 27, 2022
Agenda Item: 5.D
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To: Mayor and City Council
From: Joseph Cevetello, Chief Information Officer, Information Services
Department, Infrastructure and Cloud Services
Subject: Approval of Second Modification with Insight Public Sector, Inc. for Microsoft
Enterprise Agreement
Recommended Action
Staff recommends that the City Council authorize the City Manager to negotiate and
execute a second modification to agreement #10933 in the amount of $2,400,000
(including 10% contingency) with Insight Public Sector, Inc. for the purchase of
Microsoft software licenses, including software license upgrades and license planning
services for the Information Services Department. This will result in a 6-year amended
agreement with a new total amount not to exceed $4,900,000, with future year funding
contingent on Council budget approval.
Summary
The City of Santa Monica uses Microsoft software for office productivity tools and on all
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, Inc. (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 licensing agreement with Insight
ends in October 2022. For this reason, staff seeks approval to modify its existing
agreement with Insight Public Sector, Inc., at a fixed discounted rate for licenses, with
the flexibility to add new products and services as needed.
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Discussion
The Microsoft EA is a comprehensive volume licensing program designed for
organizations like the City that have standardized on Microsoft technology. The
Microsoft EA program is offered exclusively through authorized third-party resellers,
such as Insight, and is not available directly through Microsoft.
Through the EA program, Microsoft offers substantial cost savings to government
agencies over standard government license pricing over a multiyear 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
computers and servers, which require an operating system, as well as user licensing to
enable cloud-based office productivity software for City staff, allowing for secure,
anywhere, anytime access to City applications in support of service delivery. Currently,
the City has over 2,500 Microsoft subscription licenses assigned to staff, City Council,
Boards and Commission members, as well as library public computers. These licenses
are essential for city business continuity and will be renewed as part of this agreement.
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 accounts to most
members of City Boards and Commissions; 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 employee role-based
deployment. The City offers 4 types of licenses based on user needs. ISD has been
leveraging this type of licensing to achieve cost savings by deploying licenses and
functionality based on employees’ needs. 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
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capabilities of 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 (CERP) and is
available in the Information Technology Replacement and Services Fund.
Vendor Selection
Exception to Competitive Bidding
Staff recommends Insight Public Sector, Inc. to furnish and provide Microsoft software licenses and
services as an exception to competitive bidding per Muni Code 2.24.250(c).
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;
Vendor Justification
Based on the results of a competitive process in October 2019, the County of Riverside
executed an agreement for Microsoft Enterprise Licenses with Insight Public Sector Inc.,
identified as Licensing Solution Provider (LSP) under Agreement # PSA-0001526,
which was subsequently amended pursuant to Amendment #1. The City is now seeking
approval to enter into a cooperative procurement contract with Insight Public Sector Inc.
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. Insight is one of six LARs who have entered into a Software Cooperative
Agreement, which extends guaranteed pricing from the Riverside master EA to
government agencies. Staff evaluated a contract under the California Department of
Technology; however, Insight’s pricing was the most competitive for the City’s current
licenses with Microsoft.
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As part of this agreement, Insight 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.
Past Council Actions
Meeting Date Description
09/10/2019
(Attachment A)
Authorize agreement with PCMG (vendor was later acquired by
Insight Public Sector Company, Inc.)
On September 10, 2019, City Council approved #10933 contract with PCMG in the
amount of $2,500,000 for the purchase of Microsoft software
licenses, including software license upgrades and license planning services for
the Information Services Department. On March 30, 2020, the City processed a first
modification of the agreement to reflect corporate restructuring from PCMG to Insight
Public Sector Company. The current agreement expires on October 31, 2022;
therefore, the City recommends modifying the agreement with a second modification to
extend the contract.
Financial Impacts and Budget Actions
Staff seeks authority to approve funding from the Information Technology Replacement
and Services Fund to amend the agreement with Insight Public Sector, Inc. for the
purchase of Microsoft software licenses, including software license upgrades and
license planning and tracking services. Funds for this purchase are available in the FY
2022-23 Capital Budget. Enterprise funds will reimburse the Information Technology
Replacement and Services Fund to pay for their portion of licenses. Future year
funding will be contingent on Council budget approval.
Contract Modification Request
Agreement
#
Contract
Authorized
Amount
FY2022-23
Modified
Request Amount
Future Years Dept/CIP
Account
Total Revised
Contract
Amount
10933 $2,500,000 $800,000 $1,600,000 C7100030.689000 $4,900,000
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Prepared By: Sarkis Metspakyan, Systems & Network Manager
Approved
Forwarded to Council
Attachments:
A. PCMG_Contract_No._10933
B. 1st Modfication
C. Oaks_Initiative
D. dd
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Contract No. 10933 (CCS)
AGREEMENT FOR PURCHASE OF SOFTWARE LICENSES, SOFTWARE
LICENSE UPGRADE, AND LICENSE TRACKING SERVICES
This Agreement for Purchase of Software Licenses, Software License Upgrade, and License
Tracking Services (“Contract”), entered into as of _________________(“Execution
Date”), by and between the CITY OF SANTA MONICA, a municipal corporation
(“City”), and PCMG, Inc. (“PCMG”), is made with reference to the following:
RECITALS:
A. The City is a municipal corporation duly organized and validly existing under the laws
of the State of California with the power to carry on its business as it is now being
conducted under the statutes of the State of California and the Charter of the City.
B. PCMG is qualified to do business, and is doing business, in the State of California.
PCMG represents it has the background, knowledge, experience and expertise
necessary to provide the licenses, license upgrades, and services set forth in this
Contract.
C. On October 22, 2019, PCMG was awarded Agreement#PSA-0001527 with the County
of Riverside incorporating all of the terms, conditions and specifications of Request
for Quotations #RIVCO-2020-RFQ-0000048 (the "RFQ") to act as a Licensing
Solution Provider ("LSP") for the provision of Microsoft Enterprise license
subscription and support services for multiple governmental agencies ("Riverside
Contract"). The Riverside Contract is attached hereto as Exhibit A. Pursuant to the
Riverside Contract, PCMG provides LSP services.
D. The City seeks to purchase, and PCMG agrees to provide, Microsoft software licenses,
software license upgrades and license tracking services pursuant to the Riverside
Contract in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, it is mutually agreed by and between the undersigned parties as
follows:
TERMS AND CONDITIONS
1. Term. This Agreement begins on November 1, 2019 and terminates on October 31,
2022, unless sooner terminated in accordance with Section 14.
1.1. Guaranteed Term Pricing. Notwithstanding that the Riverside Contract
currently expires on October 31, 2021, PCMG represents and warrants that the
pricing structure in Exhibit B will remain the same during the entire Term.
2. PCMG Services. PCMG shall provide all of the Microsoft software licenses, software
licenses upgrades as selected by the City, license tracking services, and support services
(including, Microsoft Enterprise license subscription services and License Support
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Provider service) in accordance with the rates in the Riverside Contract as set forth in
Exhibit B. In addition, PCMG will provide the services set forth in Scope of Services
attached as Exhibit C. The services identified in Exhibits B and C shall collectively be
referred to as the “Services.”
3. City Services. The City agrees to:
3.1 Make available to PCMG any currently existing documents, data or information
required for the performance of the Services.
3.2 Designate a representative authorized to act on behalf of City.
3.3 Promptly examine and render findings on all documents submitted for staff
review by PCMG.
4. Compensation. The total compensation to PCMG for all licenses and Services shall
not exceed $2,330,053.74, as set forth in Exhibit B.
5. Invoices. PCMG will invoice the City for the Services in accordance with Exhibit B
and the City will pay any undisputed amount within 30 days of receipt.
6. Notices. All notices, demands, requests or approvals to be given under this
Agreement, must be in writing and will be deemed served when delivered personally,
by email, or on the third business day after deposit in the United States mail, postage
prepaid, registered or certified, addressed as follows:
6.1 All notices, demands, requests or approvals to the City:
Information Services Department
City of Santa Monica
1685 Main Street, Room 105
Santa Monica, California 90401
Attention: Joseph Cevetello, Chief Information Officer
Re: Contract No. 10933 (CCS)
with a copy to:
Santa Monica City Attorney’s Office
1685 Main Street, Third Floor
Santa Monica, California 90401
Attention: City Attorney
Re: Contract No. 10933 (CCS)
6.2 All notices, demands, requests or approvals to PCMG:
PCMG
13755 Sunrise Valley Dr., Ste. 750
Herndon, VA 20171-4608
Attention: Sharon O. Ennis, Sr. Vice President
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sharon.ennis@pcmg.com
Re: Contract No. 10933 (CCS)
7. Independent Parties. Both parties to this Agreement will be acting in an independent
capacity and not as agents, employees, partners, or joint venturers of one another.
Neither the City nor its officers or employees will have any control over the conduct
of PCMG or any of PCMG’s agents, employees, or subconsultants, except as otherwise
provided in this Agreement.
8. Integrated Contract. This Agreement represents the full and complete understanding
of every kind or nature whatsoever between the parties. Any preliminary negotiations
and agreements of any kind or nature are merged into this Agreement. No oral
agreement or implied covenant may be held to vary the provisions of this Agreement.
This Agreement may be modified only by written agreement signed by City and
PCMG, and approved as to form by the City Attorney.
9. Insurance. Insurance Requirements and Verifications have been waived by a mutual
agreement between the PCMG and City.
10. Defense and Indemnification.
10.1 PCMG agrees to defend, indemnify, protect, and hold harmless the City, its
agents, officers, boards and commissions, and employees (collectively, “City”)
from and against any and all liability, claims, demands, damages, or costs,
including but not limited to attorney’s fees, or payments for injury to any
person or property (collectively, “Losses”) caused or claimed to be caused by the
act, errors, and/or omissions of PCMG, or PCMG’s employees, agents,
officers, and subconsultants. PCMG’s responsibilities under this Section 10.1
include liability arising from, connected with, caused by, or claimed to be
caused by the active or passive negligent acts or omissions of the City, which
may be in combination with the acts or omissions of PCMG, its employees,
agents or officers, or subconsultants; provided, however, that PCMG’s duty to
defend, indemnify, protect and hold harmless shall not include any Losses
arising from the sole negligence or willful misconduct of the City.
Notwithstanding PCMG’s obligation to defend City hereunder, City has the
right to conduct its own defense and seek reimbursement for reasonable costs
of defense from PCMG, if City chooses to do so.
10.2 Enforcement Costs. PCMG agrees to pay any and all costs the City incurs
enforcing the indemnity, defense and hold harmless provisions set forth in
Section 10.1.
11. Prohibition Against Transfers.
11.1 PCMG may not assign, hypothecate, or transfer this Agreement or any interest
therein directly or indirectly, by operation of law or otherwise without the prior
written consent of City. Any attempt to do so without the City’s consent will be
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null and void, and any assignee, hypothecatee or transferee acquires no right or
interest by reason of such attempted assignment, hypothecation or transfer.
11.1 The sale, assignment, transfer or other disposition of any of the issued and
outstanding capital stock of PCMG or of any general partner or joint venturer
or syndicate member of PCMG, if a partnership or joint venture or syndicate
exists, which results in changing the control of PCMG, will be construed as an
assignment of this Agreement. Control means 50% or more of the voting power
of the corporation.
12. Permits and Licenses. PCMG, at its sole expense, must obtain and maintain during
the term of this Agreement all required business and professional permits, licenses
and certificates.
13. Waiver. A waiver of any breach of this Agreement may not be deemed a waiver of any
subsequent breach of the same or any other term, covenant, or condition of this
Agreement.
14. Default and Termination.
14.1 If PCMG fails or refuses to perform any of the provisions of this Agreement,
and if the default is not cured within a period of five days after the City’s written
notice of default specifying the nature of the default, City may immediately
terminate this Agreement by written notice to PCMG.
14.2 The City has the option, at its sole discretion and without cause, of terminating
this Agreement by giving ten days’ written notice to PCMG. Upon termination
of this Agreement, City will pay PCMG any compensation earned and unpaid
up to the effective date of termination.
15. Compliance with Law. PCMG must comply with all laws of the State of California
and the United States, and all ordinances, rules and regulations enacted or issued by
City.
16. Discrimination. PCMG may not discriminate in the provision of services hereunder
because of race, color, religion, national origin, ancestry, sex, age, sexual orientation,
marital status, AIDS or disability.
17. Nuisance. PCMG may not maintain, commit, or permit the maintenance or
commission of any nuisance in connection with the performance of services under
this Agreement.
18. Records.
18.1 PCMG must maintain complete and accurate records with respect to costs,
expenses, receipts and other such information required by the City for any
services provided where compensation is on the basis of hourly rates,
subconsultant costs, or other direct costs. PCMG must keep the records,
together with supporting documents, separate from other documents and
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records and maintain them for a period of three years after receipt of final
payment.
18.2 PCMG must maintain records in sufficient detail to permit an evaluation of the
Services and in accordance with generally accepted accounting principles.
PCMG must clearly identify all records and make them readily accessible to the
City. At the City’s request, PCMG must provide records in an electronic format
and, if necessary, access to any proprietary software to view such electronic
records.
19. PCMG must allow the City to have free access to PCMG’s books and records and to
inspect all work, data, documents, proceedings and activities related to this
Agreement. The City has the right to examine or audit PCMG’s records, and PCMG
agrees to cooperate with any examination or audit of its records. Work Product;
Reports.
19.1 Any work product prepared or caused to be prepared by PCMG or any
subconsultant for this Agreement will be the exclusive property of City. No work
product given to or prepared by PCMG or any subconsultant pursuant to this
Agreement may be made available to any individual or organization by PCMG
without prior written approval by City.
19.2 At the City’s request, PCMG must furnish reports concerning the status of the
Services.
20. Standard of Care. PCMG agrees to provide all Services, including services performed
by any subconsultant, in a manner consistent with the level of care and skill ordinarily
exercised by members of PCMG’s profession currently practicing in the same locality
under similar conditions.
21. Subconsultants.
21.1 If PCMG proposes to have any subconsultant perform any part of the Services,
PCMG must submit a request for approval in writing, describing the scope of
work to be subcontracted, the name of the proposed subconsultant, and the
total price or hourly rates used in preparing an estimated cost for the
subconsultant’s services. The City, in its sole discretion, may grant or deny the
request.
21.2 PCMG will be responsible for the quality of any subconsultant’s work. Every
subcontract or agreement of any kind entered into between PCMG and any
subconsultant (or between any subconsultant and others) must contain the
following provision:
This agreement is consistent with all terms and conditions of
the Agreement No. 10933 (CCS) entered into between the City
of Santa Monica and PCMG on^^____________________.
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22. Governing Law. The laws of the State of California, without regard to any choice of
law provisions, will govern this Agreement.
23. Venue and Jurisdiction. The City and PCMG agree that the Services will take place in
Los Angeles County. Any litigation arising out of this Agreement may only be brought
in either the United States District Court, Central District of California, or the
Superior Court of California, County of Los Angeles, West District, as appropriate.
The parties agree that venue exists in either court, and each party expressly waives any
right to transfer to another venue. The parties further agree that either court will have
personal jurisdiction over the parties to this Agreement.
24. Survival of Provisions and Obligations. Any provision of this Agreement, which by its
nature must be exercised after termination of this Agreement, will survive termination
and remain effective for a reasonable time. Any obligation that accrued prior to
termination of this Agreement will survive termination of this Agreement.
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25. Exhibits. The following exhibits are incorporated by reference into this Contract as
though fully set forth herein.
Exhibit A Riverside Contract
Exhibit B Budget
Exhibit C Scope of Services
In witness whereof, the parties have caused this Agreement to be executed the day and
year first above written.
ATTEST:
______________________________
DENISE ANDERSON-WARREN
City Clerk
APPROVED AS TO FORM:
______________________________
LANE DILG
City Attorney
CITY OF SANTA MONICA,
a municipal corporation
By: ______________________________
RICK COLE
City Manager
PCMG Corporation
#VENDOR
By: ________________________________
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City Attorney
Lane Dilg
11/13/2019
SVP
Sharon O. Ennis
11/13/2019
PCMG, Inc.
Rick Cole
City Manager
11/18/2019
City Clerk
Denise Anderson-Warren
11/19/2019
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Exhibit A
Riverside Contract
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DocuSign Envelope ID: 3F1653F4-DD2C-4B0D-92B7-68A09032928F 5.D.a
Packet Pg. 125 Attachment: PCMG_Contract_No._10933 (5346 : Second Modification- Insight Public Sector, Inc. for EA Agreement)
DocuSign Envelope ID: 3F1653F4-DD2C-4B0D-92B7-68A09032928F 5.D.a
Packet Pg. 126 Attachment: PCMG_Contract_No._10933 (5346 : Second Modification- Insight Public Sector, Inc. for EA Agreement)
DocuSign Envelope ID: 3F1653F4-DD2C-4B0D-92B7-68A09032928F 5.D.a
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DocuSign Envelope ID: 3F1653F4-DD2C-4B0D-92B7-68A09032928F 5.D.a
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Exhibit B
Budget
The total compensation under this Agreement shall not exceed $2,330,053.74 for all
licenses and Services, as included in the three quotes below.
Quote#1
Quote#2
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Quote#3
In addition, Microsoft sets, and periodically revises, uniform volume license subscription
prices (ranging from level A (highest cost) to level D (lowest cost)) based on the number of
computers and other criteria. PCMG agrees to provide additional licenses as required by
the City during the term of the agreement at the following rates:
Microsoft Enterprise license subscription and services rates
Line Description Price Level Markup%
1
Enterprise Online Services** (including Full USLs, From SA USLs,
Add-ons and Step Ups) M365 E3 and ES, Enterprise Mobility+
Security E3 and ES, Office 365 Enterprise El or E3, Windows 10
Enterprise E3 or ES.
Level D
Minus
2%
0
2 Enterprise Products Office 365 Pro Plus, Windows 10 Enterprise,
Core CAL Suite, Enterprise CAL Suite. Level D 0
3
Additional Products M365 Fl, M365 ES Compliance, M365 ES
Security, Office 365 Enterprise F1, Project Online, Visio Online Plan
1 or Plan 2, Dynamics 365, Azure, SOL Server, Windows Server, etc.
Level D
0
4
Server and Tools Product (applies to Server and Cloud Enrollments
only) SharePoint Server, SQL Server, BizTalk Server, Visual Studio,
Core Infrastructure Suites, etc.
Level D
0
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Packet Pg. 130 Attachment: PCMG_Contract_No._10933 (5346 : Second Modification- Insight Public Sector, Inc. for EA Agreement)
Exhibit C
Scope of Services
Contractor will work with staff in the Information Services Department.
The scope of work for this agreement includes but is not limited to:
1. Obtain contract pricing for Microsoft software products as per this Agreement.
2. Manage volume license agreements with Microsoft.
3. PCMG shall provide pre-sale support, purchase fulfillment support, and post-
sales support.
4. Per this agreement, Microsoft is responsible for providing download services for
software version upgrades to customers.
5. Microsoft provides technical support directly to its users.
6. At the request of the City of Santa Monica, PCMG shall provide purchase
history reports to the City.
7. Reports may be requested semiannually unless otherwise agreed to by PCMG.
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1
FIRST MODIFICATION OF AGREEMENT NO. 10933 (CCS)
This First Modification of Agreement Number 10933 (CCS) (“First Modification”), entered
into as of _________________(“Execution Date”), by and between the City of Santa Monica,
a municipal corporation (“City”), and PCMG, Inc. (“PCMG”) is made with reference to the
following:
RECITALS
A. On or about November 18, 2019, the City and PCMG entered into Agreement Number
10933 (CCS) for the provision of Microsoft Enterprise license subscription and support
services (“Original Agreement”).
B. On March 30,2020, PCMG, through its parent company Insight Enterprise, Inc. re-
quested an assignment of the Original Agreement (the “Proposed Assignment”) from
PCMG to Insight Public Sector, Inc. to reflect a corporate restructuring.
C. Pursuant to Section 11 of the Original Agreement, the City and PCMG desire to modify
the Original Agreement to reflect the City’s consent to the Proposed Assignment.
TERMS AND CONDITIONS
Now, therefore, the undersigned parties do hereby mutually agree to modify the Original
Agreement as follows:
1. Pursuant to Section 11 of the Original Agreement, the City consents to PCMG’s Pro-
posed Assignment of all of PCMG’s obligations under the Original Agreement to Insight
Public Sector, Inc. as of the Execution Date above.
2. Any and all references in the Original Agreement to “PCMG, Inc.” shall be updated to
“Insight Public Sector, Inc.”
DocuSign Envelope ID: 3237AC6E-EC4A-447F-8505-9AD85436CEE3
5/14/2020
5.D.b
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2
3. Except as expressly modified by this First Modification, all other terms and conditions of
the Original Agreement shall be and remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First Modification as of the date
and year first written above.
ATTEST:
______________________________
DENISE ANDERSON-WARREN
APPROVED AS TO FORM:
______________________________
CITY OF SANTA MONICA,
a municipal corporation
By: ______________________________
Lane Dilg
Interim City Manager
By: _______________________________
DocuSign Envelope ID: 3237AC6E-EC4A-447F-8505-9AD85436CEE3
George S. Cardona
Acting City Attorney
4/27/2020
Assistant Secretary
4/28/2020
Insight Public Sector, Inc.
Lisanne Steinheiser
City Attorney
Lane Dilg
5/14/2020
City Clerk
Denise Anderson-Warren
5/15/2020
5.D.b
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5.D.c
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5.D.c
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5.D.c
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5.D.d
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5.D.d
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5.D.d
Packet Pg. 139 Attachment: dd [Revision 1] (5346 : Second Modification- Insight Public Sector, Inc. for EA Agreement)