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APPROVE MOTION TO AUTHORIZE THE RENEWAL OF CISCO MAINTENANCE
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RECOMMENDATION
It is recommended that the City Council approve a motion to:
1. Approve findings which support and justify an exception to the competitive bid process;
2. Authorize the purchase of Cisco maintenance services from CDW-G in the amount of $213,609.41 for the annual maintenance period beginning July 1, 2018, and a contingency amount of $30,000 for any City requested changes to the inventory of covered equipment for this same period; and
3. Authorize the City Manager to take appropriate and necessary actions to carry out the purpose and intent of this motion.
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Summary
Information Technology (IT) supports all City of Stockton departments over a local area network. There are more than 2,000 computers, printers, servers, mobile devices, and other technology supported on the network. The City uses approximately six hundred Cisco devices and software to support this equipment. Staff requests that Council authorize the renewal of Cisco maintenance services through an exception to the competitive bid process and issuance of a purchase order to an approved Cisco reseller.
DISCUSSION
Background
The IT Department supports all data communications throughout the City utilizing a Cisco networking environment as its standard. This infrastructure is what allows users access to email, software applications (Word, Excel, Computer Aided Dispatch, Records Management Systems, etc.), network drives, the Internet, Voiceover Internet Protocol (VoIP) telecommunication services, and any cloud services. There are more than 2,000 computers, printers, servers, mobile devices, and other technology supported on the network. The City uses approximately six hundred Cisco devices and software to support this equipment.
The City has used the State of California’s CALNET programs to procure technology services, including Cisco networking equipment, since 2000. The most recent version, CALNET 2, allowed the City to purchase Cisco maintenance services from AT&T at a substantially discounted rate through June 30, 2018. Subsequent extensions of the CALNET contract, however, no longer include Cisco maintenance services.
Present Situation
Cisco is the sole manufacturer of the network equipment used as a standard for the City. The hardware maintenance for this equipment is available only from Cisco approved resellers. The current Cisco maintenance agreement expires on June 30, 2018.
In the coming year, staff will bring forward to Council a contract for a network assessment to determine the health of the entire inventory of network equipment and how the City should build our network into the future, including whether the City should continue to use Cisco equipment as the standard for the City. However, in the coming year, it is necessary to continue maintenance of existing equipment. Future year agreements specific to the maintenance costs for network equipment will be determined after completing the network assessment.
If a network device should have issues or fail, without maintenance coverage, the manufacturer would not provide parts necessary to fix or replace the device. Equipment failure could lead to an extended period of downtime which would impact critical computing services provided to all city departments and its constituents. With continued maintenance coverage, critical devices are replaced within four hours and non-critical devices by the next day.
The annual budget required for Cisco maintenance has decreased as older equipment is replaced to maintain the environment or disposed of for newer service models such as the cloud-based Cisco VoIP system implemented this year. While the City did pursue a competitive procurement process with multiple vendors, because the City is required to use only Cisco-approved resellers, this procurement is an exception to the City’s standard bidding process. For the current annual maintenance renewal, the City’s Cisco representative requested quotes from approved resellers which included AMS.NET, CDW-G, Dimension Data, and Telcion. CDW-G provided the lowest quote in the amount of $213,609.41 for the annual maintenance period beginning July 1, 2018. This represents a significant cost decrease from the historical expenditures for these same services that have ranged from $300,000 to $420,000. This is largely due to the migration of the VoIP system to the cloud as mentioned above.
Future annual maintenance costs will fluctuate but are anticipated to increase from the lower level for this coming fiscal year as new network equipment ages. The purchase price of replacement equipment typically includes maintenance coverage for one year. As IT refreshes the backlog of aged equipment and the maintenance included with those purchases expires, the annual maintenance renewal cost increases. Due to the level of current-year equipment replacements, maintenance cost increases are anticipated in future years. Staff anticipates that the fluctuation in annual maintenance cost will not exceed $375,000 in the foreseeable future, which maintains a cost decrease from historical levels due to the migration of systems to cloud-based services.
FINDINGS
Stockton Municipal Code Section 3.68.070(A)(3) authorizes the City Council to award contracts without competitive bidding in cases where the City Council has approved findings which support and justify exceptions to the competitive bidding process. The proposed findings are as follows:
1. The City of Stockton adopted a data communications network equipment standard and made significant equipment investments;
2. Ensuring that the City of Stockton data communications network functions properly is critical to business operations of the City;
3. Cisco is the sole manufacturer of the network equipment used as a standard for the City of Stockton. City network equipment investments are most efficiently leveraged by continuing maintenance for equipment already on site.
4. Hardware maintenance for Cisco equipment is available only from Cisco approved resellers. Cisco provides the maintenance directly, while Cisco approved resellers are a means to acquire this maintenance.
5. By requesting quotes from Cisco approved resellers and awarding a purchase order for the annual maintenance renewal to the reseller with the lowest quote, the City completes a competitive procurement process and realizes the lowest cost option for providing these services.
FINANCIAL SUMMARY
The purchase of annual Cisco maintenance services from an approved reseller, CDW-G, is in the amount of $213,609.41 for the one-year period beginning July 1, 2018.
There is budget available in the current adopted budget for the purchase amount of $213,609.41 in the Computer Equipment Internal Service Fund, account number 502-5101-571. Sufficient funds for the contingency amount of $30,000 are included in the proposed budget for FY 2018-19. Future annual maintenance costs are anticipated to increase but remain lower than historical levels.
Attachment A - CDW-G Quote for Cisco Maintenance