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APPROVE MOTION TO AUTHORIZE A MICROSOFT ENTERPRISE AGREEMENT FOR THE USE OF MICROSOFT SOFTWARE AND SERVICES
recommended action
RECOMMENDATION
It is recommended that the City Council approve a motion:
1. Authorizing the City Manager to execute an amendment with Dell Marketing, LP (Attachment A) and Microsoft Enterprise Enrollment Agreement (Attachment B), extending the term of the Microsoft Enterprise Agreement for 36 months, for an annual estimated cost of $1,500,000 in FY 2024-25, $1,650,000 in FY 2025-26 and $1,815,000 in FY 2026-27, for Microsoft subscriptions and other Microsoft services utilizing the County of Riverside’s cooperative purchasing agreement;
2. Approving findings which support and justify an exception to the competitive bid process;
3. Authorizing the City Manager to take necessary and appropriate actions to carry out the purpose and intent of this motion.
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Summary
The City of Stockton entered a three-year Microsoft Enterprise Agreement (EA) with Dell Marketing on July 1, 2021, utilizing a cooperative agreement established by Riverside County. The agreement is set to expire June 30, 2024. The EA is a citywide agreement that allows the usage of Microsoft products and licenses, including Office 365 cloud-based email system, Microsoft Word, Excel, PowerPoint, Publisher, OneDrive, SharePoint, and Teams. The EA also provides for centralized document storage in the cloud, which helps the City meet the requirements of the California Public Records Act (CPRA) by providing the tools necessary to perform public records requests in the email system and in documents stored on the Microsoft platform. In addition, the City continues to transition data storage and services to the Microsoft Azure cloud. Moving services from the City’s data center to Microsoft’s secure government cloud reduces the burden on the City’s data centers and results in a more streamlined and flexible data storage environment. The EA is an essential contract to support the City’s day-to-day work activities.
Riverside County amended its contract to run through October 31, 2024, which allows agencies to renew their Microsoft Enterprise Agreement for another 36-month term. Staff recommend renewing the Microsoft enrollment agreement via continued utilization of the Riverside cooperative agreement for an additional 36 months, with an annual estimated cost of $1,500,000 in FY 2024-25, $1,650,000 in FY 2025-26 and $1,815,000 in FY 2026-27, for Microsoft subscriptions and services.
DISCUSSION
Background
Nine years ago, the City migrated from a legacy email system that was hosted on local servers in the data center and legacy Microsoft productivity suites to the latest Microsoft Exchange/Outlook hosted email solution utilizing Microsoft’s Enterprise Agreement. This migration greatly expanded productivity and provided the latest technology tools available to City employees and created a more stable technology environment. In addition, Microsoft Office 365 offered new document storage and online collaboration systems for employees, resulting in greater efficiency and teamwork and a more secure and resilient environment with a higher degree of cyber security.
The IT Department’s highest priority is to continue to provide a range of systems and services that City departments can rely on to efficiently carry out their work, including email, calendar, as well as ease of access from all devices. In addition, IT leadership recognizes that an integrated suite of office productivity software, online document storage and collaborative online workspaces are industry standards and will continue to allow City departments to work more effectively and collaboratively. The IT Department strives for an easy-to-use, reliable, secure, 'always on' IT infrastructure on the client’s behalf.
The migration to Microsoft Office 365 and complementary Microsoft products has greatly expanded the productivity and technology tools available to City employees. More importantly, this migration established email and document storage on a stable, reliable, and robust platform. In addition, over the few years, the City has widely adopted Microsoft Teams to conduct remote meetings. This was available through our existing enterprise agreement and required minimal cost for those conducting meetings to provide a dial-in number for the meetings. Microsoft Office 365 continues to provide employees with much-needed tools to work more effectively and collaboratively.
Riverside County negotiated a Master Microsoft Enterprise Agreement through a competitive solicitation process and established a cooperative purchasing agreement to include all government entities within the State of California. This Master Agreement has been used by more than 900 organizations in California. Riverside County completed a solicitation for Microsoft services on October 22, 2019. This competitive process included ten licensing solution providers, and the IT Department determined Dell Marketing, LP to be the lowest responsive and responsible bidder for Riverside County. Dell Marketing, LP offers the highest discount compared to the other vendors included in the cooperative. With City Council approval of Motion 2021-05-25-1205, the City of Stockton entered a three-year Microsoft Enterprise Agreement (EA) with Dell Marketing on July 1, 2021, utilizing the cooperative agreement established by Riverside County.
On April 1, 2020, Riverside County executed Amendment 1 to the licensing solution provider agreement with Dell Marketing L.P., extending the agreement through October 31, 2024. This extension allows agencies to continue to renew their Microsoft Enterprise agreement for another 36-month term. This program allows cities like the City of Stockton to respond to rapidly changing technology needs without completing repetitive, resource-intensive processes to procure the latest software. Utilizing the extension and renewing the Microsoft Enterprise agreement will allow the City to continue utilizing Microsoft products and services at discounted rates.
Present Situation
The current Microsoft EA licensing term for Office 365 and other products expires on June 30, 2024. Staff recommend continuing and leveraging the investments in Microsoft Office 365 by renewing the Microsoft EA and licensing for an additional 3-year term.
Staff recommend procuring Microsoft services through a renewed Microsoft EA for Microsoft Office, utilizing the cooperative agreement established by Riverside County, because the agreement allows the City to pay an annual fee and subscribe to the needed software at a discounted price and saves time on resource-intensive, repetitive processes. The price is set forth per the terms of the enterprise agreement. The City continues to receive the latest releases without paying additional fees and is able to respond rapidly to changing technological needs. Leveraging the Riverside County cooperative agreement saves the City time and resources and achieves cost savings that the City would not attain independently.
The annual investment for Microsoft products is estimated at $1,500,000 in FY 2024-25, $1,650,000 in FY 2025-26, and $1,815,000 in FY 2026-27, totaling $4,965,000. These conservative estimates represent the number of services that we anticipate using for three product areas (see table below). Although the package of services procured will fluctuate based on the needs of City departments, and the City will only be charged for actual services provided, a preliminary plan is summarized in the chart below. Office 365 represents the ongoing and anticipated growth costs for hosted email, Word, Excel, PowerPoint, One Drive, Project, Visio, and SharePoint. Additionally, the City will also subscribe to Microsoft Security (G3/G5), achieving enhanced security, including the Windows Enterprise operating system and advanced threat protection. Azure represents Microsoft’s cloud services, including server, application, backup hosting, and recovery.
|
Business Solution |
Prior 3-year EA |
FY 2024-25 |
FY 2025-26 |
FY 2026-27 |
|
Office 365 - Microsoft Security & Business Products |
$2,399,000 |
$1,162,601 |
$1,278,348 |
$1,406,183 |
|
Additional Azure Cloud |
$595,000 |
$144,155 |
$158,570 |
$174,427 |
|
Microsoft Copilot (AI) |
|
$193,244 |
$213,082 |
$234,390 |
|
Total |
$2,994,000 |
$1,500,000 |
$1,650,000 |
$1,815,000 |
Costs for the core Office 365 products in future years are comparable to current costs, with incremental increases for procurement of new licenses for new employees, additional SharePoint storage as that service is fully implemented, and new servers, should the need arise. Microsoft Azure services purchases provide space for storage, network, and virtual machines in the Microsoft Cloud.
The G5 Security features offer advanced threat protection capabilities that go beyond the features available in G3. It includes enhanced threat intelligence and real-time analysis to detect and respond to sophisticated cyber threats more effectively. G5 Security provides comprehensive identity and access management tools, enabling the City to enforce stronger authentication protocols and access controls. Multi-factor authentication and conditional access policies become more robust with G5 Security, reducing the risk of unauthorized access to our systems and data. The G5 security feature supports secure collaboration and communication tools that enhance our ability to protect confidential information shared within and outside the organization.
Features like information rights management and secure messaging contribute to a more secure and compliant collaboration environment. With the increasing frequency of data breaches, a more sophisticated Data Loss Prevention solution is necessary to safeguard our sensitive information. G3 and G5 Security Suite integrate seamlessly with advanced threat intelligence platforms, enriching our security posture by leveraging up-to-date information on emerging threats and vulnerabilities.
Microsoft's AI solutions offer features like intelligent automation, data analysis, and improved user experience. Adding Microsoft AI to our licensing will help as we move towards future implementations. With AI tools, users will be able to streamline daily processes, analyze data for current situations, and predict future events and opportunities. The AI tools will also allow for the City to address the public in a way that provides a better experience for our citizens and their access to City resources. We will also be able to stay ahead of the curve as more and more AI tools are used in the day-to-day operations of producing and presenting information that supports the growth of the City.
The Microsoft EA allows the City to purchase a broad range of services that provide additional tools for City employees to work more productively. This package provides tools within an integrated system and includes automatic updates and upgrades to all products. This package provides modernized tools and follows best practices in the technology industry, including greater operational flexibility. This approach frees up IT staff time to work on other projects. It also provides important flexibility in providing data and application services to the cloud.
Findings
Stockton Municipal Code section 3.68.070 provides an exception to the competitive bidding process in cases where the City Council has approved findings that support and justify the exception. The proposed findings are as follows:
1. The City of Stockton has a continued need for core, cloud-based enterprise software products.
2. Riverside County has established a cooperative purchase agreement with Dell Marketing, LP, and offers all entities within the State of California the same terms and conditions, the same price, and the same effective period for these products.
3. Riverside County established these cooperative purchase agreements pursuant to a competitive bidding process.
4. The bid specifications used by Riverside County have been assessed by Procurement as compatible with City of Stockton standards with regards to the formal process, lowest pricing, awarded contract, and cooperative purchasing language allowing public agencies to avail such process and pricing.
5. Continuing to utilize current Microsoft technology will leverage investments in employee training, resulting in greater efficiency and collaboration realized through this technology.
6. Continuing to utilize current Microsoft technology will generate an increase in user productivity by enabling integration with other automated systems the City is currently using.
FINANCIAL SUMMARY
Expenditures for the Microsoft EA for Office 365 and Azure are estimated as follows:
|
Fiscal Year |
Amount |
|
FY 2024-25 |
$ 1,500,000 |
|
FY 2025-26 |
$ 1,650,000 |
|
FY 2026-27 |
$ 1,815,000 |
|
TOTAL |
$ 4,965,000 |
Purchases made from this cooperative agreement will be funded through the Technology Internal Service Fund 510, project accounts, or department accounts and will not exceed budget authority. Following Council approval of the annual budget for FY 2024-25, an appropriation of funds will be included in an amount sufficient to fund the FY 2024-25 estimated cost of $1,500,000. Funding for subsequent contract years will be subject to approval through the annual budget development process.
Attachment A - Agreement Amendment with Dell Marketing
Attachment B - Microsoft Enterprise Agreement Enrollment Form