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. 2 of 5
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 3 of 5
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 5 of 5
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