Title
Consider a memorandum/resolution authorizing the renewal of a 3-year Microsoft Enterprise Agreement, in the amount of $1,884,699.00.
Body
DATE: September 16, 2025
TO: Kent Cagle, City Manager
FROM: Willie Resto, Executive Director of Information Technology
SUBJECT: Microsoft Enterprise Agreement Renewal
BACKGROUND AND FINDINGS:
In 2023, the City of Killeen entered into an Enterprise Agreement (EA) with Microsoft through a cooperative volume licensing program. This agreement standardized the City’s software licensing, ensured compliance, and delivered cost savings by eliminating the need for piecemeal license purchases with every hardware refresh.
The EA serves as the foundation for the City’s core software infrastructure, desktop security, collaboration applications, and productivity tools. Renewing the EA for another three years will ensure continued compliance, predictable budgeting, and access to Microsoft’s latest technology and security updates.
The new agreement reflects higher costs due to several factors:
- More Users & Devices: Growth in City staff, laptops, servers, and mobile devices.
- Expanded Services: Includes enhanced collaboration tools, cloud features, and advanced security services.
- Cybersecurity & Compliance Needs: Ensures IT can maintain current Microsoft versions and security patches.
- Microsoft Pricing Adjustments: Reflects global price increases; EA locks in fixed pricing for 3 years.
- Cost Avoidance: Avoids significantly higher retail costs for licenses and upgrades.
Without the EA, licenses and upgrades would need to be purchased individually at retail rates:
- 1,000 desktops/laptops – Retail Office & Windows upgrades: $600 each = $600,000
- Server licensing – Estimated retail cost avoidance: $50,000–$100,000
- Total 3-year savings estimate: $700,000+
These savings come in addition to improved flexibility and efficiency through Microsoft’s Software Assurance program, which includes all upgrades during the term of the agreement.
Benefits of Renewal-
- Software Assurance – All Microsoft product upgrades included
- Predictable Costs – Fixed pricing across 3 years
- Centralized Management – Streamlined deployment and compliance tracking
- Flexible Scalability – Annual “true-up” process for license adjustments
- Supports Operations – Provides employees secure, up-to-date tools across desktops, servers, and mobile devices
THE ALTERNATIVES CONSIDERED:
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Which alternative is recommended? Why?
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CONFORMITY TO CITY POLICY:
Yes, this conforms to city policy.
FINANCIAL IMPACT:
What is the amount of the revenue/expenditure in the current fiscal year? For future years?
Year 1 of 3: FY 2026 $628,233
Year 2 of 3: FY 2027 $628,233
Year 3 of 3: FY 2028 $628,233
Is this a one-time or recurring revenue/expenditure?
Recurring.
Is this revenue/expenditure budgeted?
Yes, funds are included in the FY 2026 adopted budget.
If not, where will the money come from?
N/A
Is there a sufficient amount in the budgeted line-item for this revenue/expenditure?
Yes, funds are budgeted in the Information Technology Fund in account 627-57140-180-800-000000.
RECOMMENDATION:
Staff recommends that the City Council authorize the City Manager, or designee to execute a contract for the procurement of a 3-year Microsoft Enterprise Agreement, in the amount of $1,884,699, from SHI Government Solutions using the Texas DIR contract DIR-CPO-5237 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
Contract Verification Form
Certificate of Interested Parties
DIR-CPO-5237
Presentation