City Council
Report
City Council Meeting: September 9, 2025
Agenda Item: 4.M
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To: Mayor and City Council
From: Feroz Merchhiya, Chief Information Officer, Information Services Department Subject: Approval of Agreement with Insight Public Sector, Inc. for the Purchase of Microsoft Enterprise Licenses
Recommended Action
Staff recommends that the City Council:
1. Adopt a finding of no possibility of significant effect pursuant to Section 15061(b)(3) (Common Sense Exemption) of the California Environmental Quality Act (CEQA) Guidelines;
2. Authorize the City Manager to negotiate and execute an agreement with Insight Public Sector, Inc. for the purchase of Microsoft enterprise 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 an amount not to exceed $1,234,824 (including a $161,064 contingency) for one year, with two additional one-year renewal options on the same terms and conditions for a total amount not to exceed $4,462,624 over a three-year period (including a $582,082 contingency), with future year funding contingent on Council budget approval.
Summary
The City of Santa Monica uses Microsoft software on all City computers and servers and manages its licensing through an Enterprise Agreement (EA) with Insight Public Sector, Inc. (Insight), a Microsoft Licensing Solution Provider (LSP). The City’s current six-year agreement with Insight will expire in October 2025. To maintain continuity and compliance with licensing requirements, staff recommends entering into a new multiyear agreement with Insight. This agreement will be established under a County of Riverside cooperative contract and will support a phased license upgrade strategy designed to manage costs while aligning with Microsoft’s evolving product offerings and 2 of 4
licensing requirements. This approach ensures uninterrupted access to essential tools while providing flexibility to adapt to future licensing needs.
Discussion
The City of Santa Monica relies on Microsoft software for day-to-day operations, including office productivity, cloud-based collaboration, cybersecurity, identity management, and data analytics. The Information Services Department (ISD) manages these licenses through an Enterprise Agreement (EA), which consolidates purchases, streamlines administration, and ensures compliance with Microsoft’s licensing requirements. The EA also includes Software Assurance, providing the City with access to new version rights, planning resources, and technical support.
Over the past several years, the City’s reliance on Microsoft products has expanded, with over 3,000 licenses deployed for staff, City Council, Boards and Commissions, and public access terminals. Licensing has evolved to include advanced database services and secure, cloud-based productivity tools that support remote and mobile access to City systems.
The City’s current EA with Insight will expire in October 2025, prompting the need to establish a new agreement to ensure service continuity. The new EA includes the “trueup” cost associated with additional M365 subscription licenses that were added in the past year, as well as additional SharePoint storage and Azure cloud services usage costs. In addition, ISD is upgrading Microsoft M365 licenses to include Microsoft’s Archive and eDiscovery features to meet the City’s two-year email retention policy requirement. Upgrading to include these features is an efficiency that eliminate the need for the City to have an additional email archiving system, which will offset some of the increased cost. Finally, Microsoft has increased their pricing for M365 licenses and cloud services to reflect the ongoing innovation and feature enhancements delivered across Microsoft services.
To manage costs, the City shall adopt a phased approach to renewing and upgrading its licenses. In the first year, the City will maintain its current license structure, allowing for 3 of 4
uninterrupted access to existing tools while deferring major cost increases. In years two and three, ISD plans to upgrade select license tiers in response to Microsoft’s product roadmap, which includes retiring legacy licenses and bundling new features into highertier offerings. These upgrades will provide access to expanded functionality, including advanced compliance tools, governance capabilities, and AI-driven applications such as Microsoft Copilot.
As Microsoft continues to evolve its licensing model, ISD will continue to monitor usage, adjust license assignments based on user roles, and adopt best practices to ensure that the City remains both compliant and cost-effective in its use of Microsoft technologies.
Vendor Selection
Exception to Competitive Bidding
Staff recommends Insight Public Sector, Inc. to furnish and provide Microsoft software licenses and related services as an exception to competitive bidding per Muni Code
2.24.250 (c). On April 16, 2024, the County of Riverside issued Request for Quote ITARC-00532 for Microsoft Enterprise Agreement Licensed Support Providers, posted publicly on PublicPurchase.com. As a result of this competitive process, the County awarded agreement ITARC-00930 to Insight Public Sector. Agreement No. ITARC00930 is effective from November 1, 2024 – October 31, 2027, with the option to renew for an additional three-year period expiring on October 31, 2030. The City is leveraging the resulting agreement to secure Microsoft software licenses and related services under the same terms and pricing.
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; Environmental Review
The proposed agreement is exempt from the provision of the California Environmental Quality Act (CEQA) pursuant to Section 15061(b)(3) of the CEQA Guidelines (common sense exemption) which states that CEQA does not apply, “where it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment.” The agreement would not result in any adverse physical environmental effects as it encompasses software licenses and related services. The software services are administrative in nature and would not have a physical effect on 4 of 4
the environment, so therefore, are exempt from CEQA. Therefore, the agreement is exempt from CEQA and no further environmental review under CEQA is required.
Past Council Actions
Meeting Date Description
09/10/2019
(Attachment A)
Agreement with PCMG, Inc. for Annual Purchase of Microsoft Software Licenses (vendor was later acquired by Insight Public Sector Company, Inc.) 09/27/2022
(Attachment B)
Approval of Second Modification with Insight Public Sector, Inc. for Microsoft Enterprise Agreement
Financial Impacts and Budget Actions
Staff seeks authority to approve available funding from the Information Technology Replacement & Services Fund to award an agreement with Insight Public Sector, Inc. for the purchase of Microsoft enterprise software licenses, including software license upgrades and license planning services. Enterprise funds contribute and reimburse the Information Technology Replacement & Services Fund to cover the cost of their portion of licenses. Future year funding is contingent on Council budget approval.
Agreement Request
FY 2025-26 Request
Amount
Future Years
Amount CIP Account # Total Contract Amount
$1,234,824 $3,227,800 C7100030.689000 $4,462,624
Prepared By: Sarkis Metspakyan, Infrastructure and Cloud Services Manager Approved Forwarded to Council
Attachments:
A. Staff Report for Microsoft Licenses - 09.10.2019
B. Staff Report Insight_Mod 2_9.27.2022
C. Insight Levine Act Disclosure Form 08.12.2025 - signed D. Insight OAKS INITIATIVE FORM - signed 08.12.2025