City Council Agenda Report
Meeting Date: October 17, 2023
From: Todd Dusenberry, General Manager of Public Utilities Department: Public Utilities
Submitted by: Adriana Ramos, Administrative Analyst
Subject
Service Level Performance Agreements with USIP Communications, LLC Recommendation
A. Approve and authorize the City Administrator to execute a Service Level Performance Agreement and issue Change Orders with USIP Communications, LLC (USIPCOM), in substantially the same form as submitted, in an amount not-to-exceed $333,252 and up to a 15% contingency of $49,988, to provide the primary feed for Upstream Internet Access Services for three years; and
B. Approve and authorize the City Administrator to execute a Service Level Performance Agreement and issue Change Orders with USIPCOM, in substantially the same form as submitted, in an amount not-to-exceed $289,704 and up to a 15% contingency of $43,456, to provide the backup feed for Upstream Internet Access Services for three years.
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 networking equipment at City Hall and other utility facilities to provide reliable internet services to Vernon's businesses and residents.
Currently, VPU has contracts with two broadband providers, Lumen and USIPCOM, that are the source lines used by VPU to provide internet services to residential and business customers. On June 21, 2023, a Purchase Contract with Lumen was approved for an annual cost of $52,720.14 to provide the primary feed for Upstream Internet Access Services to VPU. The Lumen contract is set to expire on June 18, 2024, but would be terminated upon completion of the Fujitsu networking equipment project detailed below. Concurrently, on June 21, 2023, a Purchase Contract with USIPCOM was approved for an annual cost of $66,373.16 to provide the backup feed for Upstream Internet Access Services to VPU. The USIPCOM contract is set to expire on June 14, 2024 and would be replaced should the transition to the proposed agreements be approved. VPU’s existing fiber optic service is limited by the total bandwidth of these two contracts. Bandwidth thresholds limit the number of new customers VPU can reliably add to the fiber optics system and restrict the internet speeds offered to existing customers.
VPU’s fiber optic service was limited by the existing Fujitsu Network Communication networking equipment (Fujitsu). To resolve this issue, on March 21, 2023, the City Council approved a Labor and Materials Contract with Fujitsu for $717,765.97 to upgrade the existing fiber optic network system and perform network migration services to facilitate the reliability and future growth of VPU’s fiber optic system. The new networking equipment is expected to be completed by the end of the calendar year 2023.
To meet the installation timeframe of the new Fujitsu networking equipment, VPU has identified the need for new broadband service contracts to accommodate customers looking for higher internet speeds and cost-effective options from the City. The proposed upgrade will provide a more reliable, higher quality service, and various internet speed options for VPU's customers.
More importantly, the contracts will provide the ability to market and sustain the future growth of the fiber system. With the increased bandwidth and upgrade of the existing networking equipment, VPU plans to update its existing offerings and service packages for customers and re-design the network distribution system to grow and serve more customers.
VPU contacted vendors who could meet its broadband requirements, including future growth plans. VPU staff determined that USIPCOM can meet the service level requirements and expectations. VPU recommends City Council approve a three-year Service Level Agreement with USIPCOM. USIPCOM will provide the primary and backup feeds to the VPU fiber optic system.
The monthly cost for the primary feed is $9,257 ($333,252 for three years), plus a 15% contingency or $49,988 for unforeseen changes in fees, taxes, etc., and the monthly cost for the backup feed is $8,039 ($289,704 for three years which includes a $300 one-time installation fee) plus a 15% contingency or $43,456 for unforeseen changes in fees, taxes, etc. USIPCOM will secure each service line from different sources to provide the reliability and redundancy necessary to meet VPU’s current and future requirements. The new services will each be offered at 100G, which provides VPU and its customers with 100 times the bandwidth compared to existing services.
Staff recommends upgrading the new service provider contract to facilitate the existing and future growth of the VPU fiber optic system and offer high internet speeds to the City's residential and business customers. Upon City Council approval and completion of the Fujitsu networking equipment project, the existing contract with Lumen will be terminated at an approximate cost of $28,000 in accordance with the agreed upon Terms and Conditions. Since the bid from Lumen for a comparable new 100G service was priced at $19,851 per month ($238,212 for one year), it is more cost-effective to terminate the service with Lumen and move forward with a secondary service from USIPCOM.
The proposed agreements are exempt from the competitive bidding and competitive selection requirements pursuant to Vernon Municipal Code Sections 3.32.110(A)(6) and 3.32.110(B)(1), as these contracts are for the acquisition, sale or transmission of electrical power, natural gas, water, or telecommunications for the Public Utilities Department, and would be commercially unreasonable to procure these services through the standard procurement procedures.
USIPCOM’s Sale Order Forms have been reviewed and approved as to form by the City Attorney’s Office.
Fiscal Impact
The fiscal impact is not-to-exceed $744,400, including contingencies, for the term of the agreements. Sufficient funds are available in the Fiber Fund and approval of this action requires a transfer of $68,000 from Fiber Fund, Professional Services – Other Account No. 059-080-800- 529215 to Fiber Fund, Transport Services – Telecom Account No. 059-080-800-520173 for the current fiscal year and funds will be budgeted in subsequent years.
Attachments
1. USIP Communications, LLC – Sales Order (Primary Feed)
2. USIP Communications, LLC – Sales Order (Backup Feed)
3. Lumen Technologies – Order Form Terms and Conditions