Title
Consider a memorandum/resolution authorizing the renewal of a Microsoft Enterprise Agreement in the amount of $511,999.46.
Summary
DATE: September 6, 2022
TO: Kent Cagle, City Manager
FROM: Willie Resto, Executive Director of Information Technology
SUBJECT: Microsoft Enterprise Agreement
BACKGROUND AND FINDINGS:
In 2019, the City of Killeen entered into an Enterprise Agreement (EA) which utilized the Master Agreement negotiated with Microsoft, allowing the City to purchase its Microsoft software licenses through a cooperative volume licensing agreement. Prior to entering into the EA, Information Technology (IT) obtained the required the software licenses from retailers which were bundled into the desktop, laptop and server purchases. This method of procurement provided no pricing guarantees from one purchase to the next and required additional purchases for new software versions.
Key portions of the City’s core software infrastructure, software delivery, desktop security platform, collaboration applications and the office productivity suite are based on Microsoft operating systems and are licensed through this EA. Renewing the EA provides significant cost avoidance and positions the City to benefit from the next generation of Microsoft’s latest software technology. This allows IT to maintain current security patches, which is imperative given ongoing security threats and compliance requirements.
Microsoft Corporation requires organizations that use their software to maintain proper licensing for computer and server operating systems, applications, and desktop software. In support of this requirement, Microsoft offers several licensing models from single purchases used primarily by individuals and small organizations up to Enterprise Agreements used by large organizations to bundle select products and services into a single program that give the flexibility and control to optimize software licensing needs in support of IT services throughout the organization.
The City’s Enterprise Agreement includes comprehensive licensing and a technical support model that provides a variety of benefits, including:
• Regular software upgrade costs (software assurance) for any and all new release of Office applications, Windows desktop operating systems, server product licensing, SharePoint and other specialized software at no additional cost during the term of the agreement
• Fixed pricing provides the ability to predict annual budgetary impacts over multiple years
• Ability to globally manage products, licensing entitlement and service in the City’s environment through the use of system management and deployment tools
• Streamlines the license purchasing process to ensure timely delivery of IT projects and
• Allows the City to add or remove various products at any time as technology needs evolve through an annual “true-up” payment using discounted pricing established at the start of the agreement
This software is a primary toolset across the entire organization and is a key component of the standard software provided on all City-owned technology hardware, now including mobile devices.
THE ALTERNATIVES CONSIDERED:
1. Do not purchase software licenses and become non-compliant with Microsoft’s licensing requirements.
2. Purchase traditional on-premise Microsoft Office, Exchange Server (Email), Windows 10 and Server Client Access Licensing productivity software: The one-time cost will be approximately $640,000 for the licensing alone and $100,000 for hardware equipment. The City would be required to invest in considerable hardware to store and retain data at the same levels as Microsoft.
3. Renew the Microsoft Enterprise Agreement for a 3-year term from SHI Government Solutions using the Texas DIR contract TSO-4092 in the amount of $511,999.46.
Which alternative is recommended? Why?
Staff recommends renewing the Microsoft Enterprise Agreement as it will assist the City to become more productive with current software versions and the City will be compliant with Microsoft’s licensing requirements. This agreement will allow controls over software licensing elements to manage software assets and to pass compliance audits while maintaining the most cost-effective program for the City.
CONFORMITY TO CITY POLICY:
The Information Technology Department is seeking approval to renew the Microsoft Enterprise Agreement from SHI Government Solutions through the Texas DIR TSO-4092 purchasing cooperative contract in the amount of $511,999.46. Purchases made through a cooperative contract are exempt from the competitive bidding process as stated in the Texas Local Government Code section 271.102. Purchases made through a cooperative satisfy the competitive bid requirement.
FINANCIAL IMPACT:
What is the amount of the expenditure in the current fiscal year? For future years?
The FY 2023 cost for the Microsoft Enterprise Agreement utilizing the Texas Department of Information Resources (DIR) TSO 4092 contract is $511,999.46. The cost will remain the same for the next two fiscal years.
Is this a one-time or recurring expenditure?
Recurring
Is this expenditure budgeted?
Yes, funds are available in the Information Technology Internal Service fund in account 627-2705-419.42-43 upon approval of the FY 2023 Proposed Budget.
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this expenditure?
Yes, upon approval of the FY 2023 Proposed Budget.
RECOMMENDATION:
Staff recommends that the City Council authorize the City Manager, or designee to execute a contract for the procurement of a Microsoft Enterprise Agreement, in the amount of $511,999.46, from SHI Government Solutions using the Texas DIR contract DIR TSO 4092 and that the City Manager, or designee be expressly authorized to execute any and all change orders or supplemental agreements within the amounts set by state and local law.
DEPARTMENTAL CLEARANCES:
Finance
Legal
ATTACHED SUPPORTING DOCUMENTS:
Quote
Agreement
Certificate of Interested Parties