SR - AGR-5700.3 - THIRD AMENDMENT INFORMATION TECHNOLOGY SERVICES� pP Og •
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AGENDA ITEM
March 8,2015
TO: Honorable Mayor and
Members of the City Council
THRU: Rick Otto
City Manager
FROM: William M. Kolbow��n„
Finance Director
ReviewedNerified B
City Manager
Finance Director
To Be Presented By: Will Kolbow
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1. SUBJECT
Third Amendment, First Extension to Agreement with Xerox State and Local Solutions,
Inc. for Information Technology Services
2. SUMMARY
The City contracts for Information Technology (IT) Services with Xerox (formerly ACS) State
and Local Solutions, Inc. The latest contract was approved by the City Council on June 28,
2011. The initial term for the contract is five years, with options to extend up to an additional
three years. The initial term expires on June 30, 2016. The proposed extension is for one year.
In addition, staff is in ongoing negotiations to make certain changes to the contract due to
increased demand for, and complexity of, IT services.
3. RECOMMENDED ACTIONS
Approve the Third Amendment to the Information Technology Services Agreement with Xerox
State and Local Solutions, Inc., extending the Agreement for one year commencing July 1, 2016
and terminating on June 30, 2017, and authorize the Mayor to execute the Amendment.
4. FISCAL IMPACT
The total not to exceed compensation under the First Extension Term is $1,337,542.37. This
expenditure will be included as part of the proposed FY 2016 -17 Operating Budget in account
780.1601.51670.00000 (Information Systems Fund — Contractual Services).
5. STRATEGIC PLAN GOAL(S)
4a. Provide outstanding public services — Enhance technology to improve public accessibility to
information and services.
ITEM _3, 10 1 3/8/2016
6. GENERAL PLAN IMPLEMENTATION
Not applicable.
7. DISCUSSION and BACKGROUND
Background
The City has contracted for Information Technology (IT) support since 1984. Contracting for
this service continues to be a more cost effective and efficient method of providing this service as
opposed to having an in -house IT department.
The City approved its latest contract with the current vendor, Xerox State and Local Solutions,
Inc. (Xerox), in June 2011, after a competitive bid process. That agreement included an initial
term of five years, with a City option to extend the agreement up to an additional three years.
The initial term will expire on June 30, 2016.
Through the first four and a half years of the Agreement, the City has been very satisfied with the
services provided by Xerox. The on -site IT staff have been responsive and effective in ensuring
the City's complex and extensive IT network remains sound and secure.
Discussion
Since the execution of the agreement, there has been a significant growth in technology
sophistication and acquired IT infrastructure. As such, staff is beginning to review the current IT
staffing structure and is working with Xerox to identify necessary changes in order to keep up
with our increased IT needs, and balancing those needs within the fiscal challenges we face in the
next year.
Staff is proposing to extend the contract by one year, beginning July 1, 2016, while continuing to
negotiate with Xerox on any changes that may be necessary to handle the City's increasing IT
infrastructure. It is staff s intention to come back to the City Council in the next few months
with recommendations changes to the existing agreement. By extending the term now, it allows
staff ample time to generate sound recommendations while ensuring no interruption in our
service level from Xerox.
The initial base rate for services was $1,295,000 for FY 2011 -12. This was unchanged for year
two of the agreement (FY 2012 -13). Beginning in year three (FY 2013 -14), the fee increased
annually in an amount equivalent to the percentage increase granted to the Orange Municipal
Employees Association (OMEA), with a minimum of 1% and a maximum of 2.2 %. For FY
2016 -17, the increase OMEA will receive is 1.5 %. This results in a fee for FY 2016 -17 of
$1,337,542.37.
8. ATTACHMENTS
Third Amendment to Information Technology Services Agreement
ITEM 2 3/8/2016