CITY COUNCIL AGENDA REPORT
MEETING DATE: 6/17/2025
DEPARTMENT: Information Technology
SUBJECT:
SECOND AMENDMENT TO THE AGREEMENT WITH SOFTCHOICE, INC. FOR SUBSCRIPTION TO MICROSOFT OFFICE 365 SOFTWARE LICENSES FOR
ONE YEAR
RECOMMENDED ACTION(S):
1. Approve the Second Amendment to the Agreement with Softchoice, Inc. for Microsoft Office software licenses.
2. Authorize the Mayor to sign, and the City Clerk to attest, the second amendment with Softchoice, Inc., substantially in the form attached.
EXECUTIVE SUMMARY:
The City uses Microsoft Office 365 software for email, word processing, spreadsheets, presentations, document collaboration, and project coordination.
The software is also used for remote communication through Microsoft Teams, document storage through OneDrive and SharePoint, and identity management through Azure Active Directory. These tools are essential to maintaining daily operations across all City departments.
On July 19, 2022, the City Council approved an Agreement with Softchoice, Inc. for the purchase of Microsoft Office 365 software licenses (“Agreement”) in the amount of $117,851.40 for a term of three years (Attachment 1). The Agreement was executed under a cooperative purchasing agreement with the County of Riverside, which offered competitive pricing not available through other vendors.
In May 2023, the City Manager approved the First Amendment to the Agreement to add licenses for new employees and project planning software. This increased the not-to-exceed amount to $125,508.75 (Attachment 2).
The proposed Second Amendment would extend the Agreement by one year through Fiscal Year 2025–26 and increase the not-to-exceed amount by $49,631.67 for base license renewal. In addition, it establishes an as-needed license allowance of up to $15,000. This allowance is intended to cover licenses for new system users, such as part-time employees and contractors, approved in the FY 2025–26 budget; the implementation of the Microsoft Copilot Artificial
Intelligence Pilot Program; and other unforeseen licensing needs, which have historically averaged $7,500 annually.
The revised total not-to-exceed amount under the Agreement, including the as- needed allowance, would be $190,140.42. Sufficient funding is available in the FY 2025–26 Information Technology Division Operating Budget. Staff recommends approval of the Second Amendment to the Agreement (“Second Amendment”) to ensure continued access to Microsoft Office 365 services necessary for City operations (Attachment 3).
BACKGROUND:
Microsoft Office 365 software (“Office 365”) continues to play a critical role in supporting the City’s daily operations. The platform is used across departments for essential business functions such as email communication, word processing, spreadsheet creation, presentations, document collaboration, and project coordination. Additionally, the City relies on Microsoft Teams for video conferencing, remote collaboration, and intranet access. These tools are deeply embedded in the City’s technology infrastructure and are vital to maintaining operational efficiency.
On July 19, 2022, the City Council approved an Agreement with Softchoice, Inc. ("Softchoice") for the purchase of Office 365 licenses (Attachment 1). The original Agreement, totaling $117,851.40 over a three-year term, was procured using a cooperative purchasing agreement with the County of Riverside to secure competitive pricing.
In May 2023, the City Manager approved the First Amendment to the Agreement to accommodate additional Office 365 licenses needed for new employee onboarding and project planning. The amendment increased the not-to-exceed amount by $7,657.35, bringing the revised contract total to $125,508.75 (Attachment 2).
DISCUSSION:
The proposed Second Amendment would amend the scope of services by updating the number of Office 365 licenses, increasing the total compensation, and extending the term of the Agreement with Softchoice by one additional year.
Table 1 below provides a summary of Office 365 licenses procured through Softchoice. It reflects the original license quantities approved under the original agreement (Attachment 1), adjustments made through the First Amendment in 2023 (Attachment 2), and the proposed license quantities and associated costs included in the Second Amendment for a one-year extension (Attachment 3).
Table 1: Current and Proposed Software Licensing
License
Procured
in 2022
Revised in
2023 after
First
Amendment
Proposed
Second
Amendment
Office 365 E1 70 70 78
Office 365 E3 120 125 130
Azure Active Directory** 70 70 70
Visio Plan 2 (Desktop) 5 5 5
Project Plan 3 (Desktop) n/a 5 5
Project Plan 1 (Online) n/a 10 10
Teams Rooms Pro Sub Per Device n/a n/a 3
The proposed amendment sets the not-to-exceed amount for base licensing at $49,631.67 for the one-year extension and establishes an additional as-needed license allowance of $15,000. This allowance is intended to cover licensing needs for new system users as approved in the Fiscal Year 2025–26 budget, the implementation of the Microsoft Copilot Artificial Intelligence Pilot Program, and other unforeseen licensing needs, which have historically averaged approximately $7,500 annually, as reflected in the First Amendment. The City will continue to track expenditures to ensure the as-needed cap is not exceeded.
Pursuant to the City’s Purchasing and Contracting Guidelines, staff completes a vendor performance assessment during a proposed contract amendment. The vendor performance assessment is used as a guide to determine whether a contract should be amended, renewed, or terminated based on performance in the following categories: performance of scope of services; timeliness; budget performance; and customer service. Utilizing a detailed evaluation form, staff rates the consultant in each category.
Table 2: Vendor Performance Assessment
Softchoice Consulting Performance Assessment
July 19, 2022, to Jun 1,2025
Category Rating
Performance of Scope of
Services □ Unsatisfied □ Satisfied X Very Satisfied □ N/A Timeliness □ Unsatisfied X Satisfied □ Very Satisfied □ N/A Budget Performance □ Unsatisfied □ Satisfied X Very Satisfied □ N/A Softchoice Consulting Performance Assessment
July 19, 2022, to Jun 1,2025
Category Rating
Customer Service □ Unsatisfied □ Satisfied X Very Satisfied □ N/A
Table 2 above provides a summary of the consultant’s performance during the applicable evaluation period. Based on performance from July 19, 2022, through the present, Softchoice has consistently met expectations in all categories.
Staff recommends the City Council approve the proposed Second Amendment to extend the term of the Agreement by one year to cover Fiscal Year 2025–26, update the number of Microsoft licenses, and provide an as-needed purchasing allowance. This would ensure the continued use of Office 365 tools and services essential to departmental operations. Consistent with the City’s Purchasing and Contracting Guidelines, the IT Division prepared the Second Amendment and the City Attorney’s Office reviewed and approved it as to form.
FISCAL IMPACT:
The proposed Second Amendment would increase the total not-to-exceed compensation by $49,631.67, with an additional as-needed license allowance of up to $15,000, resulting in a combined total authorization of $190,140.42.
Sufficient funding is available in the Fiscal Year 2025–26 Information Technology Division Operating Budget.
ATTACHMENTS:
1. Agreement with Softchoice for Microsoft Licenses
2. First Amendment to Agreement with Softchoice for Microsoft Licenses
3. Second Amendment to Agreement with Softchoice for Microsoft Licenses Initiated By: Joanne Jin, Information Technology Manager Submitted By: Keith Neves, Assistant City Manager
Approved By: Debra Rose, City Manager