City of Culver City, California
Agenda Item Report
RECOMMENDATION:
Staff recommends the City Council approve a Renewed Enterprise License
Agreement with Microsoft Corporation (Redmond, WA) using Dell, Inc. (Round Rock,
TX) as the Large Account Reseller (LAR) for PC Operating Systems, Office
Professional software, Client Access Licenses, and Server Licenses in an amount not-
to-exceed $396,213.81 (three annual payments of $132,071.27).
BACKGROUND:
The City relies on Microsoft’s Operating System, office productivity software, client
access licenses (CALs), and server products to run its desktop computers and
servers. Microsoft Office includes word processing and spreadsheet applications
along with presentation and database software. Microsoft Office e-mail and internet
software are used for communication, research, software application access on a daily
basis.
The City also has purchased a wide range of department specific software for handling
financial transactions, timekeeping, police and fire record keeping, public works
requests for service, and many other functions. These applications are installed on
the City’s desktops or servers using the Microsoft products as foundation to do their
work.
Meeting Date: 10/13/14 Item Number: C-3
CITY COUNCIL AGENDA ITEM: Approval of a Renewed Enterprise License
Agreement with the Microsoft Corporation (through Dell, Inc. LAR) for PC
Operating System, Office Professional Software, Client Access Licenses, and
Server Licenses in an Amount Not-to-Exceed $396,213.81 for a Three (3) Year
Term.
Contact Person/Dept.: David Leuck Phone Number: (310) 253-5950
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [] Attachments: []
Commission Action Required: Yes [] No [X] Date: _______________
Public Notification: Meetings and Agendas – City Council (10/08/14), Jonathan Gold,
Dell Inc. (10/02/14)
Department Approval:
Michele Williams (10/02/14)
City Attorney Approval:
Carol Schwab (by H. Baker) (10/07/14)
Chief Financial Officer Approval:
Jeff Muir (by M. Noller) (10/08/14)
City Manager Approval:
John M. Nachbar (10/08/14) City of Culver City, California
Agenda Item Report
In 2003, the City entered into an Enterprise Agreement with pricing and terms
mirroring the County of Riverside’s Microsoft Enterprise Agreement. The agreement
was renewed in October of 2008 for an additional five-year period, which expired in
2013. On October 28, 2013, the City Council authorized renewing the agreement for
a one year term.
The Enterprise Agreement bundles desktop and server licensing into a single
program. The terms and pricing contained in the Enterprise Agreement are available
to every municipality in California through a “piggy-back” clause in the County of
Riverside’s Agreement. Riverside County’s negotiations include the buying power of
counties and municipalities within California. As a result, Microsoft extends to Culver
City a level of discount for which it would not normally qualify and also exempts this
purchase from competitive bidding requirements, pursuant to Culver City Municipal
Code Section 3.07.045.G.
The Enterprise Agreement also designates Dell as an approved LAR for Microsoft
products. The City has used Dell, Inc. for the previous agreements, and staff
recommends continuing to use this vendor for the renewed agreement.
DISCUSSION:
The Enterprise Agreement has been very beneficial to the City over the years. During
the agreement term, the City is automatically entitled to major update releases of all
the covered products. The City also benefits from preferential pricing on new
purchases for City use, an employee purchase program, training credits for IT staff,
and access to support services.
One stop licensing through Dell’s reporting to Microsoft has simplified licensing
compliance checks and ensures that Culver City will be able to pass compliance
audits. Each year, the IT Department conducts an internal audit to identify the number
of desktops and server licenses required for the organization. Additional purchases
by the City during the life of the Enterprise Agreement have been at preferential pricing
and added to the Enterprise Agreement’s annual coverage.
Annual budgeting for the license payment has enabled the IT Department to estimate
costs over multiple years and eliminated unplanned large lump sum capital budget
requests when a major update is released during a particular year.
Staff recommends entering into a three-year Renewed Agreement with Microsoft. The
proposed renewal for three years would require an annual payment of $132,071.27
each year. The following table summarizes the cost increases comparing the
proposed Renewed Agreement to the current Enterprise Agreement. City of Culver City, California
Agenda Item Report
Agreement Changes
The IT Department has been investigating internet/cloud based services including e-
mail and productivity software which could be licensed under the Microsoft Enterprise
Agreement. Transitioning to a cloud e-mail solution means that daily administration
tasks, backup/recovery, and physical data storage would be outsourced. This would
result in efficiencies gained as these tasks would no longer be performed by City staff.
Additionally, the e-mail system would be enhanced as current storage limitations that
are in place due to limited data storage would be eliminated.
Transitioning e-mail services to a cloud solution would also include an option to
implement E-Discovery tools. E-Discovery is a legally required process during
litigation to identify, secure and review electronic data. Currently this identification,
collection and preservation process is done manually and requires extensive staff
resources from the IT Department in consultation with the City Attorney’s Office. While
there will be a significant cost increase for the cloud solution, staff recommends this
strategic direction because having an E-Discovery tool will greatly enhance the City’s
efficiency in complying with modern E-Discovery requirements.
The Renewed Agreement provides for discounted pricing for transitioning to the
Microsoft “Government Cloud.” It should be noted that the Government Cloud has
additional privacy and security restrictions and is exclusively used by governmental
agencies. Microsoft has also received compliance with the FBI’s Criminal Justice
Information Services (CJIS) standards. In addition, IT will consult with the City
Attorney’s Office throughout the implementation of the new Government Cloud
software to ensure that confidentiality and security issues are addressed. Local
Product Licenses
Current
Agreement
Proposed
Agreement
Pricing
Difference Description of Changes
Desktop Software -
Includes Windows OS
and Office
Productivity Suite
$53,607.68 $104,818.52 $51,210.84
Increased pricing for migration to Office 365
(cloud email and productivity suite).
Licensing model changes from price per
desktop (386) to per end-user/employee
(700)
Server Software -
Includes Windows
Server OS, SQL Server
Database, Remote
Desktop, System
Center, Enterprise
Sharepoint
$17,548.04 $27,252.75 $9,704.71
Increased pricing reflects compliance with
Windows server OS. Moving to a "data
center" model which supports licensing for a
virtual environment and adding a SQL
license for the external facing SQL database
that is located on the website server
$71,155.72 $132,071.27 City of Culver City, California
Agenda Item Report
municipalities which have transitioned to Microsoft’s Government Cloud (or are
currently in the transition process) include San Jose, San Diego, Long Beach,
Oakland, and San Mateo County.
Another contributing factor to the cost increase is that the pricing model for Microsoft’s
cloud solution (Office 365) is different from the current model. Currently, the licensing
is priced per desktop installation of the software. The City has 386 desktops licensed
under the existing Enterprise Agreement. Transitioning to the Government Cloud
requires pricing per end-user or employee, and the City would extend licensing for
approximately 700 employees.
There is also an increase for the server licensing component of the Renewed
Agreement. This change includes moving to a “data center” license to support the
virtual server environment. Additionally, staff was recently notified of a compliance
issue where a specific license is required for external-facing website servers. To
satisfy this requirement, a new license is also being added to cover the database
software utilized on the City’s web server.
FISCAL ANALYSIS:
Approval of the Renewed Agreement would result in three annual payments of
$132,071.27 for a total expenditure not-to-exceed $396,213.81.Initial year funding is
appropriated in the City Council Adopted Budget for Fiscal Year 2014/2015 in the
Information Technology Repairs and Maintenance account - 10124100.600200.
Should the City Council approve this agreement, staff will request appropriate funding
for future years as part of the annual budget process.
ATTACHMENTS:
None.
MOTION:
That the City Council:
1) Approve the Renewed Agreement with Dell, Inc. for a three year term (with one
two-year extension subject to the approval of the City Manager provided the
renewal pricing does not increase by more than 10%) resulting in three annual
payments of $132,071.27 for a total expenditure not-to-exceed $396,213.81 with
Dell, Inc. as the Large Account Reseller; and, City of Culver City, California
Agenda Item Report
2) Authorize the City Attorney to review/prepare the necessary documents; and,
3) Authorize the City Manager to execute such documents on behalf of the City.