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DATE: October 15, 2012
TO: Honorable Mayor and Members of the City Council through City Manager
FROM: Tim Williamsen, IT Manager <fr t/
SUBJECT: Resolution, Authorizing the City Manager to Enter Into a Lease Purchase with
Key Government Finance, Inc.-on Behalf of Cisco Systems Capital Corporation in
the amount of$117,025.09 Including Maintenance Agreement and Execute All
Other Documents Necessary to Purchase the Equipment,:Software, Installation
and Maintenance Services from AMS.Net and Complete the Voice System Server
Replacement.
RECOMMENDATION
It is recommended that the City Council approve the attached Resolution, Authorizing the City
Manager to Enter Into a Lease Purchase with Key Goverment Finance, Inc. on Behalf of Cisco
Systems Capital Corporation in the amount ail 17,025.09 Including Maintenance Agreement
and Execute All Other Documents Necessary to Purchase the Equipment, Software, Installation
and Maintenance Services from AMS.Net and Complete the Voice System Server Replacement
Project.
BACKGROUND
The telephone system in use by City,staff was installed in 2006. Prior to 2006 the City had used
an ATT-specific system called "Centrex." The old system lacked features found in more modem
systems such as voicemail indicators and forwarding, conferencing, multi-line capability,
number directory, email integration with voicemail and call history.
Call trees in the old system were only,possible;with expensive additional, specially programmed
appliances. As well, some desksets were special digital models ("EBS" sets) which required
being,sent out for repairs and were not compatible with common building telephone wiring.
Additionally, features&such as calleriD, hold, transfer, call forwarding and conferencing were not
available without additional cost per line.
Maintenance was problematic, causing users to wait for sometimes over 5 days for ATT repair
personnel to be dispatched and repair problems and the system was largely reliant on aging in-
ground copper lines, causing additional maintenance, especially during rainy seasons.
Agenda Review: I - - --
City Attorney 1 . Finance Director I City Manager
The phone system was upgraded in 2006 to a system utilizing Cisco's Voice Over IP (VolP)
technology. The system utilizes the already-in place data network which is used for computers.
The necessary equipment, software, and installation services were acquired under a 5 year lease.
A substantial savings in operational ongoing expense was realized, even with the lease payments
in place. The telephone monthly billing expense was reduced by approximately $2000/month
and the new system reduced maintenance and labor costs.Additionally, substantial increases in
functionality were implemented, enabling City staff inmany areas to improve productivity and
services to the public. For example, the new system has more usable voicemail (voicemail
indicators and voicemail forwarding), conferencing, callerID, multi-line capability, number
directory, email integration with voicemail, and call history. Call trees are implemented easily
and training is much simpler since desksets are identical in every office. Features such as
callerID, hold, transfer, call forwarding and conferencing are now available to all users. User
frustration and downtime has been all but eliminated, now estimated at less than 10 hours per
year total over the whole system.
DISCUSSION
The central portion of the City's telephone system, the.main voice servers, has reached end of
manufacturer support, thus repair response and normal updates are no longer available for the
models currently in service at the City. As well, vendor maintenance contracts are no longer
available.
The original VOIP system was purchased as a Master Lease Agreement purchase from Cisco
Capital/Key Government Finance and the lease was fulfilled in 2011. The original system
leased included voice servers, desk sets and necessary network equipment, with installation,
training and maintenance, for a total of $350,402. The main voice servers have reached end of
support and are over six years old. The models originally acquired had been available for two
years at the time of acquisition and industry standard for servers typically range from 4-7 years.
Among the 2012-2013 Information Technology goals included in the 2012-2013 budget include
replacement of the voice system servers. A critical role of the IT Division is to ensure continued
operations of the telephone and voicemail systems. The installed system relies on computer
network servers. It is vital to the operation of the phone system that this server hardware and
software be up to date and supportable by the manufacturer. IT relies on manufacturer support
forrapid diagnosis and recovery from problems. Additionally, the replacement models proposed
include redundant configuration of the phone system, reducing the chances of lost,phone system
functions. The new servers take advantage of virtual server technology, saving computer room
space, electrical power and generating less heat energy.
Staff has obtained a.quote from AMS.Net for the full replacement of voice server hardware,
software, and installation and maintenance services. This quote has been provided under the Fast
Open Contracts Utilization Services (FOCUS) contract, formally bid and awarded by the County
of Merced. AMS.Net was awarded contract 2009121. In accordance with City Municipal Code
4.04.100, the,City.may purchase goods and services that have been already bid and awarded by
other public agencies.
Utilizing the existing Cisco Capital /Key Government Finance Master Lease Agreement, the
City can add the proposed acquisition as a schedule by submitting an application. The
application and leasing option are included as Attachment 2.
The purchase price of hardware, software and services is covered by the FOCUS contract. To
distribute the costs over the life of the,equipment, five years, staff recommends a lease purchase.
The full costs of the project will be supported in the IT fund budget.
Staff recommends that the Council approve the attached Resolution, authorizing the City
Manager to execute all project related documents, including the equipment lease and
maintenance agreement for the replacement of the voice system servers from AMS.Net and
Cisco Capital. Implementation of this proposed project will result in reduced risk of loss of
phone system functionality, as the new servers will be supported by the manufacturer for the
duration of the lease. Implementation will also include added redundancy, reducing the risk of
lost phone system functions due to hardware or software failure.
FINANCIAL IMPACTS
Total project costs, including hardware, software, installation, five years maintenance and sales
tax is $117,025.09. The annual cost is $23,405.02 over the 5-year period. The cost has been
factored into the I.T. cost allocation formula to all departments, and the expense has been
anticipated in the budget.
ATTACHMENTS
L Resolution Authorizing the City Manager to Sign Equipment Lease and Maintenance
Agreement Documents for Voice Server Replacement
2. Cisco Capital /Key Government Finance lease,application and leasing option
ATTACHMENT 1
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA
AUTHORIZING THE CITY MANAGER TO ENTER INTO A LEASE PURCHASE
WITH KEY GOVERNMENT FINANCE, INC. ON BEHALF OF CISCO SYSTEMS
CAPITAL CORPORATION IN THE AMOUNT OF $117,025.09 INCLUDING
MAINTENANCE AGREEMENT AND EXECUTE ALL OTHER DOCUMENTS
NECESSARY TO PURCHASE THE EQUIPMENT, SOFTWARE, INSTALLATION
AND MAINTENANCE SERVICES FROM AMS:NET AND COMPLETE THE VOICE
SERVER REPLACEMENT PROJECT
WHEREAS, the City of Petaluma utilizes a functioning, well integrated telephone and
voicemail system for the performance of all business and administrative functions; and
WHEREAS, the existing system is not any longer supported by the manufacturer for
these purposes ; and
WHEREAS, the continued use of the existing phone system is viewed by staff to
accomplish the necessary administrative and business functions; and
WHEREAS, the acquisition of replacement voice servers is funded by Information
Technology expenditures; and
• WHEREAS, the existing Master Agreement between the City and Cisco Capital /Key
Government Finance allows for additional lease purchase equipment acquisition; and
WHEREAS, Petaluma Municipal Code section 4.04.100 provides an exception to City
competitive bidding for purchases of supplies and equipment made under a cooperative
purchasing program with the state, county or other public agencies; and
WHEREAS, the acquisition of replacement voice servers from AMS.Net is being made
through cooperative purchasing,as an addition to County of Merced FOCUS contract #2009121,
which was competitively bid; and
WHEREAS, the City has retained documentation as to the advantage of the competitive
purchasing, in accordance with Petaluma Municipal Code Section 4.04.100.
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma
as follows:
The City Council authorizes the City Manager to execute lease purchase documents to replace
the voice system servers in the amount of$117;025.09 including maintenance agreement and to
execute all other documents necessary to purchase the equipment, software, installation and
maintenances services`from AMS.Net and complete the Voice Server Replacement Project.
Key Government Finance, Inc., on'behalf of Cisco Systems Capital Corp.
Financing Application for State&•Local Government Customers C I S C O
Capital
Lessee - Attachment 2
(Full Legal Name) City of Petaluma
Federal Tax ID k 94-6000392
Street Address I I English St.
City,State,and Zip ,Petaluma,CA 94952
Customer Contact Tim Williamsen Invoices to be sent to:
Title IT Manager Contact Accounts Payable(Leslie Mannign)
Phone and Fax No. 707 778 4573 Department Finance
e-mail address timw{Oci.petaluma.ca.us Street Address I I English St.
City,State,and Zip Petaluma,CA 94952
Contract Signer John C.Brown Phone.and Fax No. 707 778 4413 and 707 778 4428
Title City,Manager e-mail address accountspayable(oci.pelaluma.ca.us
Phone and Fax No. 707 778 4345and 707 778 4 Special Instructions
e-mail address citymgrs ci.petaluma.ca.us
email PDF file is preferred.
1.Equipment Description:
Cisco servers;software;Call Manager,Unity,Unified Contact Center,Cisco Emergency Responder.
2.What is the purpose of the proposed equipment acquisition?
Replace existing voice servers
3.Why is the equipment essential?
Current configuration is no longer supported,end of life.
4.What department is using the equipment?
All City users-Police,Fire,Finance,Community Development,.Park and Rec,Public Works,other admin.
5.Is the new equipment replacement,an upgrade or additional to the department? replacement
6.If replacement orupgrade,what is the age of the existing equipment? 6 years
,7.If you're upgrading existing equipment,is the existing equipment paid off? yes,in 2011
Source of funds for Fund Balance: $170,000 Date of most recent Audite •Financial Statement:
proposed payments: eityofpetaluma.net/finance/finstatement.html
General Fund As of 6/30/12 Fiscal Year End: June 30
Other(provide detail) ITintragovernmental
8.Have funds been appropriated for the payments due on the proposed financing during the current budgetary period? YES
9.Will any loan or grant monies be directly used.to make the'payments? NO
If so provide detail.
10.(lave you ever defaulted or non-appropriated on a lease or bond obligation? NO
General Liability Insurance Coverage limits in the amount of S1 Million is required.If applicable,automobile liability coverage of S3 million required.
Is the lessee a member or a managed risk pool? YES_ If yes please provide the name
Self Insured? General Liability Coverage Limits:S and coverage amounts below.
If the lessee has additional commercialinsurance coverage please provide coverage limits.
$40,000,000 excess coverage via CJPR:MA(Calif.Joint
$500,000 self retained retention Powers Risk Mgt)
Submitted by
(Name): John C.Brown 'fide: City Manager
Signature: Date:•
SO that we may begin our credit review process,please scan and email this application,along with your equipment quote(bill of materials)and the signed fnancinp,
proposal,to katie.l.hamilton a key.com&julpierc@cisco.com
Please mail or email the 2 most recent conies of your Audited Annual Financial Statements,plus a copy of this year's budget,to:
Katie Hamilton 720-980-3811 ph/216-370-9393 fax
Key Government Finance,Inc. Katie.l.hamilton(akev.coo
1000 S.McCaslin Blvd,
Superior CO 80027
Please note that we do require the copies of your audited annual financial statements in order to process your request.
KEYCORP CONFIDENTIAL /1_
• Iliellla
CISCO_
ICISCO CAelTAL LEASING4QFTION'-PublicjEntities`° "?;'" I I Capital
October 2, 2012
**Quote Expires: 11/2/12
City of Petaluma
11 English Street
Petaluma, CA 94952
EQUIPMENT The lease financing will be completed by Key Government Finance, Cisco Systems
LEASE OPTION: customers: Payments due under the Lease financing will be made directly to Key Gc
1187.
LESSOR: Key Government Finance, Inc.
LESSEE: City of Petaluma
EQUIPMENT: Cisco.Systems Products
Cisco Systems Equipment ^$i". , '43;298 OOq
Non-Cisco Equipment $F, a , ' ; 71!
Smartnet maintenance, 5 years isel,".Vt 401536I8O
Professional Services/Labor x$T`„' ;v25l200':00”
Est. Sales Tax at 8.0% t$g`"';,1;k ,; x1;743150)
TOTAL AMOUNT TO BE LEASED 410`7178_30;
FINANCING This is a tax-exempt state and municipal government lease with the title to the equip
STRUCTURE: pays all costs, including insurance, maintenance and taxes,for the term of the lease
for$1
:Amount to be Leased' 4 .^_•InterestiRate ''"Factor; ,.Pa - • Ezp`enditurel,
$110;778130 2:87% 0:0179121 51,984:27 $1.19,056.32
$11Q778.30 2.82% 0.2112780 $23,405.02 $117,025.09
O The payment(actor expresses the payment as a percentage of the Equipment Cost To calculate the periodic le
by the Equipment Cost
RATE INDEX: The interest rate provided above is,based on current market rates as of the date of t
conditions as of the time of closing. After closing the interest rate will be fixed for the
APPROVAL: The financing contemplated by this proposal is subject to the execution and delivery
including withoutlimitation, to the extentapplicable,the Master Lease Agreement, a
documents or agreements reasonably required by Lessor.This,proposal, until credit
Government Finance to provide credit. Final acceptance of this proposal is subject
Lessor.
In Association with Key Government Finance, Inc.
1000 South McCaslin Blvd
Superior,CO 80027