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APPROVE MOTION TO AUTHORIZE PURCHASE OF REPLACEMENT PHONE SYSTEM FOR CITY FACILITIES THROUGH A COOPERATIVE PURCHASING AGREEMENT AND ACCEPT FINDINGS FOR AN EXCEPTION TO THE COMPETITIVE BIDDING PROCESS
recommended action
RECOMMENDATION
Staff recommends the City Council approve a motion to:
1. Authorize the purchase of a cloud-based Cisco Voice Over Internet Protocol phone system to replace the current phone system used at City facilities, utilizing a San Joaquin County cooperative purchasing agreement with Telcion, at the cost not to exceed $200,000 for the initial purchase (Attachments A and B), with future annual cost estimated at $168,720 for the ongoing subscription to be included in the annual budget appropriation process;
2. Approve findings for an exception to the competitive bidding process; and
3. Authorize the City Manager to take necessary and appropriate actions to carry out the purpose and intent of this motion.
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Summary
Staff recommends purchasing a cloud-based Cisco Voice Over Internet Protocol (VOIP) System from Telcion Inc. through a cooperative purchasing agreement with San Joaquin County for a term of five years at a cost of $168,720 per year. This purchase will ensure that the City’s phone system remains up-to-date and supported by the manufacturer. Moving to a cloud-based system will save an estimated $869,110 over a five-year period. Currently, the Cisco VOIP phone system hardware is at the end of life and end of support. The City can no longer purchase a maintenance agreement to cover any problems or issues that arise with the current hardware. Because the hardware is at the end of support, no upgrades are available for the system. This hardware supports the desktop phone communications throughout the City. Estimated completion of this project is fourth quarter of 2017.
DISCUSSION
Background
The City has been working to replace and update its technology infrastructure. Over the next several years, the City will be replacing a majority of the infrastructure that supports all the City Departments. One of the projects identified is the replacement of the Cisco VOIP phone system, which was purchased in 2008. The initial cost for the phone system was approximately $2.1 million dollars, with maintenance and support averaging $275,000 per year. The replacement of the phone system will also meet the Information Technology department’s goal of reducing the footprint of the data center by moving to a cloud solution and maintaining an environmentally green data center. Moving to a cloud-based system will reduce the amount of hardware and software the City must purchase and maintain, providing the City with a substantial estimated cost savings over a five-year period. Reducing the hardware in the data center reduces the energy consumption used to power and cool the data center. It will also allow staff to refocus on other projects because staff will not have to spend as much time maintaining the system.
Present Situation
Staff recommends migrating from the current on-premise phone system to a cloud-based phone system. Moving to a cloud-based system supports the Information Technology department’s goal of reducing the footprint of our data center. It will ensure that all hardware and software will be up-to-date. It will reduce the amount of hardware and software the City must purchase and maintain and will allow staff to focus on other projects.
Over the next five years, the annual investment for the current on-premise system is estimated at $1,712,710. This estimate includes cost for hardware replacements (servers), hardware maintenance, and a third-party contract to help support and administer the current phone system.
With the decision to move to a cloud-based hosted solution, the cost of ongoing maintenance and hardware replacements (server) is eliminated. The cost of the cloud-based phone system for the first five years is estimated at $168,720 per year. This will include support, administration, and software licenses. The first year estimated savings of $229,822 is based on estimated cost for replacement of a comparable on-premise phone system, which is costlier than the proposed cloud-based solution. The City will realize an estimated cost savings of $869,110 over the next five years, which is summarized in the chart below.
|
Business Solution |
FY 2017-18 |
FY 2018-19 |
FY 2019-20 |
FY 2020-21 |
FY 2021-22 |
5-Year Totals |
|
VoIP On Premise |
398,542 |
328,542 |
328,542 |
328,542 |
328,542 |
1,712,710 |
|
VoIP Cloud |
168,720 |
168,720 |
168,720 |
168,720 |
168,720 |
843,600 |
|
Calculated Savings |
$229,822 |
$159,822 |
$159,822 |
$159,822 |
$159,822 |
$869,110 |
Moving to a cloud-based and current version of the phone system will ensure the City has the latest and most up-to-date features of the phone system. It will allow the City to integrate the phone system with Office 365 and our Microsoft ecosystem. For example, users will be able to receive voicemail in their email. The new system will include the latest version of Cisco WebEx for voice and video conferencing, replacing the current Meeting Place application for conference calls. The system will give the City a choice of using a traditional handset or software phone which is an application that can run on your PC or smart phone. Users who prefer to use the traditional handset can continue to use their existing phones. Current office phones are compatible with the new cloud based system, and we will continue to use all functioning phones on the new system.
If approved, the overall transition from the current phone system to the cloud-based system is tentatively scheduled to begin the first quarter of FY 2017-18, with full implementation completed by the fourth quarter of 2017.
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. San Joaquin County has established a cooperative purchase agreement with Telcion Communications Group and offers all entities within the State of California the same Terms and Conditions, the same price and for the same effective period.
2. San Joaquin County established these cooperative purchase agreements pursuant to a competitive bidding process.
3. The bid specifications used by San Joaquin County have been assessed by Purchasing as compatible to the City of Stockton standards with regards to the formal process, lowest pricing, awarded contract, and cooperative purchasing language allowing public agencies to avail of such process and pricing.
4. By using the San Joaquin County cooperative purchasing agreement with Telcion Communications Group for the cloud based VOIP system, the City will realize substantial savings.
FINANCIAL SUMMARY
Expenditures for the initial purchase of the cloud-based phone system are not to exceed a total of $200,000, itemized as follows:
• Cloud-based VOIP System: $155,400
• Cisco WebEx for Conferencing: $13,320
There is sufficient budget in the proposed FY 2017-18 budget request in the Computer Internal Service Fund, account number 502-5122-571, to cover the FY 2017-18 estimated cost of $168,720.
Future annual cost estimated of $168,720 for the ongoing subscription of the cloud-based system will be included in the annual budget appropriation process.
Attachment A - San Joaquin County Cooperative Purchasing Agreement with Telcion
Attachment B - City of Stockton Cooperative Purchasing Agreement with Telcion