City Council
Staff Report
From: City Manager
Report Type: CONSENT CALENDAR
Lead Department: IT Department
Meeting Date: August 11, 2025
Report #:2506-4836
TITLE
Approval of Amendment No. 1 to Contract No. C22182051 with EPI-USE Labs LLC to Increase the Compensation by $939,675 for the City’s AWS Cloud and SAP Basis Support Services and Extending the Term by 12 months to December 31, 2026; CEQA status - exempt under 15061(b)(3).;
RECOMMENDATION
Staff recommends that the City Council approve and authorize the City Manager or designee to execute Amendment No. 1 to Contract No. C22182051 with EPI-USE Labs LLC (Attachment A) to extend the term of the contract by 12 months to December 31, 2026 and adds $854,250 for base services and $85,425 for additional services, for a new total not-to-exceed amount of $3,153,815, for the City’s AWS Cloud and SAP Basis Services over a total term of 4.5 years.
EXECUTIVE SUMMARY
Staff recommend amending the City’s contract with EPI-USE Labs LLC to extend the term by 12 months to December 31, 2026. This amendment supports the City’s ongoing operations in the Amazon Web Services (AWS) cloud environment and SAP system management. The City is simultaneously preparing for the sunset of the current SAP version in 2027. The contract allows for continued hosting, networking, technical SAP Basis services, and as-needed support via task orders. The services will be delivered by EPI-USE Labs LLC, a vendor originally selected through a Request for Proposals (RFP) process completed in June 2022.
BACKGROUND
In May 2021, the City issued an RFP to procure cloud hosting and AWS support services. The selection criteria emphasized vendor ability to support SAP in the AWS environment, staff expertise across domains (infrastructure, networking, security, SAP Basis), pricing breakdowns, and long-term cost considerations including AWS discounts.
EPI-USE Labs LLC was selected based on their technical expertise, customer references, and competitive pricing. The original three-and-a-half-year contract, approved by City Council on June 20, 2022 (CMR ID #139941), was for an amount not to exceed $2,214,140—covering basic services and contingency funding for additional services through task orders.
ANALYSIS
This contract term will be extended by 12 months to December 31, 2026. This extension is strategically aligned with the City’s timeframe to address the end of support of the current SAP version by January 2027. Extending this contract ensures continuity of services and mitigates the risk of service disruption. EPI-USE Labs LLC will continue to provide:
AWS account and infrastructure management,
Cloud hosting and network operations support,
Ongoing SAP Basis administration (monitoring, performance tuning, patching, etc.), On-demand, ad-hoc technical/functional support via City-issued task orders.
AWS usage fees are passed through directly to the City, billed based on actual consumption at AWS’s published list prices. If actual usage costs are below projections, the City benefits from those savings. This amendment is necessary to avoid service gaps in 2026 and to ensure continuity as the City begins planning for SAP modernization as the current version approaches the scheduled end of life as reported by SAP of January 2027.
FISCAL/RESOURCE IMPACT
Funding for this contact was appropriated in the Information Technology Fund as part of the FY 2026 Adopted Budget as part of the annual operating expenses to support enterprise resource program (ERP) system operations; no additional funding is requested.
Funding for subsequent years of the contract will be subject to approval through the annual budget development process. The Information Technology Department (ITD) is funded by an internal service fund. Approximately 49% of ITD is General Fund funded with the remaining 51% funded by other fund types across the City including enterprise and special revenue funds.
STAKEHOLDER ENGAGEMENT
ITD worked with the vendor and city staff throughout the development of this contract amendment. Coordination efforts focused on reviewing the proposed scope of services, pricing, and timing.
1 Archived June 20, 2022 City Council Staff Report: https://www.paloalto.gov/City-Hall/City-Council/Council- Agendas-Minutes
ENVIRONMENTAL REVIEW
The approval of this contract amendment is exempt from review under the California Environmental Quality Act (CEQA) under CEQA Guidelines section 15061(c)(3).
ATTACHMENTS
Attachment A: EPI-USE Labs Contract, C22182051 Amendment No. 1 APPROVED BY:
Darren Numoto, Chief Information Officer