City Council Agenda Report
Meeting Date: March 21, 2023
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Administrative Analyst
Subject
Labor and Materials Contract with Fujitsu Network Communication, Inc.
Recommendation
A. Find that the proposed action is categorically exempt from California Environmental Quality Act (CEQA) review, in accordance with CEQA Guidelines § 15301, because the project consists of the maintenance, repair or minor alteration of existing equipment and involves negligible or no expansion of an existing use;
B. Approve and authorize the City Administrator to execute a Labor and Materials Contract with Fujitsu Network Communication, Inc. (Fujitsu), in substantially the same form as submitted, in an amount not-to-exceed $652,765.97, to upgrade the existing fiber optic network system and perform network migration services; and
C. Authorize a contingency amount of $65,000 for estimated taxes and freight costs and grant authority to the City Administrator to issue Change Orders for an amount up to the contingency amount, if necessary.
Background
Vernon Public Utilities (VPU) Fiber Optic based Internet Access Service receives dedicated wholesale internet circuits from upstream service providers. These internet circuits are then provisioned through the City’s networking equipment to provide reliable internet services to Vernon businesses and residents. On February 7, 2012, the City Council adopted Resolution No. 2012-24 approving and authorizing the execution of an agreement with Fujitsu for the purchase of equipment and services related to the fiber optic system internet access operations.
The City’s existing networking equipment has now reached the ten (10) year life expectancy for this type of equipment and requires an upgrade for reliability purposes.
VPU is engaged in growing the internet customer base and providing businesses and residential customers with high-quality, reliable internet services. With broadband requirements increasing across the board, customers are requiring higher internet speeds. As such, VPU is exploring options to increase the bandwidth with its service providers. The increased bandwidth would not only allow for future customer growth but would also come at a discounted rate, providing significant savings to the City. The existing networking equipment currently limits the number of new customers that VPU can add to the Fiber Optics System which, in turn, limits the internet speed that can be offered to the customers. To resolve this issue, a network modernization and upgrade of existing equipment is needed.
The proposed Labor and Materials Contract will allow Fujitsu to provide network planning, a site audit, circuit auditing, migration planning, and execution to increase network reliability and service offerings. The scope of work includes network design, equipment selection, equipment procurement, testing and turn-up traffic migration and other aspects of a broadband project.
Fujitsu will install provisioning equipment, routers and switches, replacing the current 2 Gigabyte system with a 100 Gigabyte capable future-proof platform with extended life expectancy and offer 1 Gigabyte circuit service to the City of Vernon’s internet customers versus the maximum 100 Megabyte service currently offered.
The proposed Labor and Materials Contract with Fujitsu is exempt from competitive bidding pursuant to Vernon Municipal Code Sections 3.32.110 (A)(2) and (B)(1), as any required upgrade services and/or any necessary equipment can only be provided by Fujitsu. The City’s existing internet system topology is built around a Fujitsu’s transport and distribution equipment infrastructure. The fiber optic network software used by VPU networking equipment is only compatible with Fujitsu software, and the software is currently proprietary to Fujitsu. The direct award to Fujitsu will provide a cost benefit to the City and deliver a substantially faster systems transition period without a potential lapse in service.
Staff recommends City Council approve the proposed Labor and Materials Contract in the amount of $652,765.97 for the necessary equipment upgrades; and recommends a contingency amount of $65,000 for estimated taxes and freight costs, for a potential cost not to exceed $717,765.97.
The Labor and Materials Contract has been reviewed and approved as to form by the City Attorney’s Office.
Fiscal Impact
Funds for the contract were not included in the Fiscal Year 2022-23 budget, however the Department will request a mid-year budget adjustment to allocate $717,766 to the Fiber Fund, Capital Outlay Account No. 059-080-800-660000. Funding for this Fiber capital project will be provided by the Electric Fund. The capital advance between funds will not accrue interest due to the operational relationship that benefits both funds. It is estimated that the Fiber Fund will repay the Electric Fund over a period not exceeding ten years.
Attachments
1. Labor and Materials Contract with Fujitsu Network Communication, Inc.