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Home My WebLink AboutStaff Report 7584 City of Palo Alto (ID # 7584) City Council Staff Report Report Type: Consent Calendar Meeting Date: 3/6/2017 City of Palo Alto Page 1 Summary Title: New 3-year contract for Microsoft Licensing Title: Approval of a 3-Year Contract With SoftwareOne, Inc. for Microsoft Licensing in the Amount of $455,707 Annually From: City Manager Lead Department: IT Department Recommendation Staff recommends that Council approve and authorize the City Manager or designee to execute the following: 1) A new three-year agreement with SoftwareOne, Inc. in the amount of $455,707 annually to pay for the City’s annual Microsoft licensing. 2) Authorize a 20% contingency in the amount of $91,141 each year for the purchase of Microsoft licensing for any unforeseen licensing needs. Executive Summary This is a support services contract for Microsoft Product Licensing and Maintenance as described in the Riverside County Microsoft Enterprise Agreement. The City of Palo Alto has used the Riverside Enterprise Agreement since 2005 to secure discounted pricing of Microsoft licensing. Riverside’s sheer volume of licenses of Microsoft products used has allowed them to obtain deep discounts on these products. This discount is allowed to be passed on to other agencies within the state. The products and services in this annual licensing run the City’s email system; a large proportion of our City data center core systems; productivity software such as Word, Excel, and PowerPoint both installed and online; video conferencing; SharePoint; and many more essential City solutions. Background On April 23, 2012, Council approved contract C12144913 with CompuCom Systems Inc. for a Microsoft Enterprise Agreement (MEA) (Staff Report: 2649) for 4,260 licenses for various Microsoft software programs. This agreement was initially executed by the County of Riverside, California (RIVCO-20800-(002-007)-12/12 and is extended to local agencies to take advantage of the competitive pricing that has been negotiated through City of Palo Alto Page 2 this contract. The MEA covers all Microsoft licensing and maintenance at an annual cost of $210,617 and is valid through January 2017. Office 365 licenses were also added to this agreement back in December 2015 and additional Office 365 licenses in 2016 which increased the annual cost to $310,000. The City will again be piggybacking with the County of Riverside for Microsoft licensing. Every year on the City’s anniversary date an annual true-up is performed which compares the actual number of licenses used by City staff against how many licenses the City has already purchased. The cost associated with this true-up includes the license cost of these items as well as the Software Assurance for the remaining years on the agreement. Software Assurance provides the City with Planning Services to enable efficient deployment of licenses and solutions, in-person and online training for IT and end users, and rights to new software releases during the term of the agreement at no additional cost. Discussion The execution of this contract will ensure the current services provided by Microsoft, namely the annual licenses necessary for Office 365 which provides the City’s city-wide email services as well as critical applications such as Microsoft Office Word and Excel. The annual cost for this new three-year contract is $455,707 for a three-year term ($1.37 million), not to exceed $1.65 million when including the 20% contingency. Although the previous contract annual amount was $310,000 annually, annual true-ups over the term of the contract totaled approximately $380,000. The Information Technology Department diligently reviewed this new contract ensuring the City is accurately licensed for all necessary components such as server licensing, user licensing and security licensing. This contract not only renews the existing volume in the prior contract but it accounts for additional user licensing for position vacancies and for new hires. Variances such as these were accounted for in the annual true-up in the prior contract. The licensing level was marginally increased to provide more robust security capabilities such as enterprise mobility plus security and mobile device management. This increased security will allow the City to consolidate some security vendors. In addition to required licenses, staff has also included additional licensing that could be leveraged for future functionality such as Power BI (Business Intelligence) which allows for visual report writing and dashboard capabilities. Adding this minimal charge to the annual agreement allows the City to leverage the current discounted pricing should staff decide to implement the new functionality citywide. These licenses will allow the City to have even greater functionality with Office 365. Additional details of the services provided through this contract can be found in Attachment C. A contingency of twenty percent is recommended annually to be allocated for Microsoft City of Palo Alto Page 3 licensing in order to fund any unforeseen licensing purchase needs that occur. Resource Impact The funding for the current Microsoft contract is budgeted in the Information Technology Fund and allocated out to departments as part of the Information Technology Department’s allocated charges. The marginal increase of the annual base contract level will be incorporated into the development of the Fiscal Year 2018 Budget, and funding for subsequent years of the contract will be subject to approval through the annual budget process. Environmental Review Approval of these contracts do not constitute a project under the California Environmental Quality Act (CEQA); therefore, no Environmental Assessment is required. Attachments:  Attachment A: Master Enterprise Agreement  Attachment B: Microsoft Signature Form  Attachment C: City of Palo Alto Licensing Quote Quoted to:City of Palo Alto Microsoft 3 Year EA Renewal SPE Revision #2 Year 2 and 3 Date 2/15/2017 EA# 6849237 Quantity Part #Description Unit Price Ext. Price 24 9GS-00135 CISSteDCCore ALNG SA MVL 2Lic CoreLic $154.89 3,717.36$ 248 9GA-00313 CISSteStdCore ALNG SA MVL 2Lic CoreLic $31.93 7,918.64$ 1,000 359-00961 SQLCAL ALNG SA MVL UsrCAL $31.81 31,810.00$ 15 810-04760 SQLSvrEnt ALNG SA MVL $1,309.05 19,635.75$ 12 228-04437 SQLSvrStd ALNG LicSAPk MVL $318.94 3,827.28$ 56 9EP-00208 SysCtrDatactrCore ALNG SA MVL 2Lic CoreLic $45.74 2,561.44$ 304 9EN-00198 SysCtrStdCore ALNG SA MVL 2Lic CoreLic $16.76 5,095.04$ 2 MX3-00117 VSEntwMSDN ALNG SA MVL $999.05 1,998.10$ 1 77D-00111 VSProwMSDN ALNG SA MVL $286.11 286.11$ 20 6VC-01252 WinRmtDsktpSrvcsCAL ALNG LicSAPk MVL UsrCAL $46.80 936.00$ 140 9EA-00278 WinSvrDCCore ALNG SA MVL 2Lic CoreLic $117.30 16,422.00$ 560 9EM-00270 WinSvrSTDCore ALNG SA MVL 2Lic CoreLic $16.76 9,385.60$ 100 3NS-00003 ExchgOnlnPlan2Gov ShrdSvr ALNG SubsVL MVL PerUsr $65.36 6,536.00$ 1,100 AAA-11984 SPE E3 FromSA GOV ShrdSvr ALING SubsVL MVL PerUsr $254.96 280,456.00$ 100 AAA-11982 SPE E3 GOV ShrdSvr ALING SubsVL MVL PerUsr $310.28 31,028.00$ 30 3GU-00001 O365ATPGOV ShrdSvr ALNG SubsVL MVL PerUsr $16.40 492.00$ 120 9K4-00003 VisioProO365GFromSA ShrdSvr ALNG SubsVL MVL PerUsr $98.65 11,838.00$ 2 DDJ-00001 PowerBIProGOV ShrdSvr ALNG SubsVL MVL PerUsr $81.15 162.30$ 2 7VX-00001 ProjOnlnPremGOV ShrdSvr ALNG SubsVL MVL PerUsr $439.78 879.56$ 100 7E7-00001 ProjOnlnProfGOVFromSA ShrdSvr ALNG SubsVL MVL PerUsr $204.04 20,404.00$ 2 LM9-00001 SfBPSTNCallingDmstcGOV ShrdSvr ALNG SubsVL MVL PerUsr $118.85 237.70$ 2 LK3-00001 SfBPSTNConfGOV ShrdSvr ALNG SubsVL MVL PerUsr $39.66 79.32$ -$ -$ -$ Product-total 455,706.20$ Sub-Total 455,706.20$ 0 Tax ESD - nontaxable. Please type "Electronic Software Delivery" on your PO.-$ Shipping No Charge Total 12 Month Annual Payment Year #2 and Again Year #3 455,706.20$ Prices good for 30 days Quoted by Miles Allarea, SoftwareONE, Inc. Phone 916-934-6023 miles.allarea@softwareone.com Pass-Through Warranty and Other Rights. As a reseller, end-user warranties and liabilities (with respect to any third party software products provided by SoftwareONE) shall be provided as a pass-through from the manufacturer of such products. All software products are subject to the license agreement of the applicable software supplier, as provided with the software packaging or in the software at time of shipment. Important: Please provide the email address of the recipient designated to receive a SoftwareONE order confirmation and/or receive electronic software deliveries. Please fax your POs to our Client Assistance Center at 800-366-9994 or email to: statestore@softwareone.com - Call 800-400-9852, option 2, to check order status.