ADMINISTRATIVE REPORT

Date: February 27, 2001
Author/Local: M. Crocker/7647

RTS No. 01867

CC File No. 1805

Council: March 6, 2001

TO:	Vancouver City Council
FROM:	Director of Information Technology, in consultation with the Manager of Materials Management
SUBJECT:	Replacement of Obsolete Microcomputers and Request for Proposal PS01007 Award of Contract

RECOMMENDATIONS

A THAT Council approves the replacement of approximately 400 obsolete microcomputers and related components at an estimated cost of $760,000, to be funded from the Information Technology Long-Term Financing Plan;

B THAT Council approves the award of contract for Request for Proposal PS01007 to Microserve, whose proposal was the lowest bid for the supply of 300 microcomputers at a total capital cost of $417,216 plus taxes.

GENERAL MANAGER'S COMMENTS

The General Manager of Corporate Services recommends approval of the above.

CITY MANAGER COMMENTS

The City Manager notes that Recommendation A sets the budget for the replacement of the first 400 microcomputers and components of a total replacement program of 1500 in 2001.

Recommendation B awards a contract for purchase of 300 microcomputers only and does not represent full replacement of all components.

The City Manager RECOMMENDS approval and A and B.

POLICY
The policy of Council is to award contracts for the purchase of equipment, supplies and services that will give the highest value based on quality, service and price.

Purchases of a value greater than $100,000 are tendered to the public.
Contracts with a value of $300,000 are referred to Council for award.
On July 23, 1996, Council approved a "Long Term Financing Strategy - Information Technology Replacement Program", that recommended, amongst other things:

- THAT Council approve the financing strategy as outlined in this report to provide a sustaining source of funds for information technology implementation and renewal.

PURPOSE

The purpose of this report is twofold:

First, to seek funding approval for the replacement during the early part of 2001 of 400 City-owned microcomputers that are functionally obsolete. Funding is available from the Information Technology Long-Term Financing Plan.

Second, to seek approval for the award of a contract based on Request for Proposal PS01007 "Supply and Installation of 300 IBM Microcomputers". These 300 microcomputers are included in the 400 for which funding approval is being requested.

BACKGROUND

The City has approximately 4,100 microcomputers. On average, 1,000 must be replaced annually, based on a 4-year useful life.

Staff are developing a Request for Proposal which will invite vendors to propose a suite of services around the acquisition, management, and retirement of these microcomputers. Such a bundling of services has the potential to reduce the City's costs of owning its microcomputer "fleet". It may also change the pattern of expenditures, possibly through a leasing arrangement. An award will be referred to Council by the summer of 2001.

In the meantime, 400 microcomputers have to be replaced urgently because they stand in the critical path of implementation of new systems or systems upgrades. Request for Proposal PS01007 was issued to secure a supplier for the first 300. Request for Proposal PS01016, for a further 97 which were identified later, closes on February 23, 2001. Because it is expected to have a value of less than $300,000, it will not be referred to Council.

THE REPLACEMENT PROGRAM

New line-of-business systems and new releases of personal productivity software (e.g. spreadsheets and word processors) are designed to take advantage of current technology. Without upgrades, older model microcomputers do not run this software acceptably, if at all. They are too slow, their monitors are too small, they are failure-prone, and they become increasingly expensive to maintain and support. Because of the labour involved and the costs and limited availability of parts, it is generally more cost-effective to replace than to upgrade.

Staff report annually to Council on the number of microcomputer replacements planned for the year and the estimated cost. This is included in an "Infrastructure Replacement Program" request for funding approval, which includes not only microcomputer replacements but also other components of the City's information technology infrastructure that need upgrading or replacing, like the network, the telephone system, e-mail, web servers and other shared equipment, tools and services.

The full program has not yet been developed for 2001. However, because several systems are being implemented or upgraded early in 2001, and these systems will not run on the old microcomputers, it is important to start the microcomputer replacement program as soon as possible. Council will be asked to approve funding for additional microcomputer replacements and the other program components later in the year.

The City plans and schedules microcomputer replacements based on a four-year useful life. Most organizations use three years.

Unit replacement costs for the 400 microcomputers are estimated at $1,900, which includes:

· Replacement of Pentium 133, 166 and 200-class computers, predominantly desktop models with some laptops and purchased in 1996 and 1997;
· Replacement of some monitors, which are replaced less frequently, and of add-on components that are incompatible with the new models;
· An allowance for installation.

A total of approximately 1,500 microcomputers are scheduled to be replaced during 2001. Approximately 1,000 microcomputers are scheduled for replacement during 2002.

AWARD OF PROPOSAL PS01007

In an effort to reduce the cost of ownership of microcomputer equipment, the City maintains a standard of installing desktop equipment from a single tier-one manufacturer. The current City microcomputer standard is equipment manufactured by IBM. Applying this standard allows the City to reduce its internal support costs by:

· Reducing the number of microcomputer models it retains in inventory, and sominimising potential compatibility problems;
· Standardizing software configurations for faster deployment of new equipment and faster replacement of aging equipment;

In addition, the standard allows the City to save on microcomputer maintenance costs.

On January 12, 2001, the City released a Request for Proposal seeking the following goods and services:

· The supply of 300 IBM microcomputers of a particular model and configuration;
· Tagging and tracking services consistent with the City's computer asset management practices;
· Installation of standard City software;
· Installation of new microcomputers and removal of old. Proponents were asked to reimburse the City based on the assessed value of these microcomputers;
· Erasure of all City data from hard drives of microcomputers being surplused.

The Request for Proposal closed on January 31, 2001. Seven proposals were received:

Proponent Name	Proposal Cost (net of trade-in)
Computer Connections Inc.	$418,000
EDS Innovations	$461,961
FirmBuy Inc.	$433,209
LogiCorp	$580,050
MicroAge	$446,136
MicroServe	$417,216
Syscom Consulting Inc.	$460,000

Proposals were assessed by an evaluation team, which concluded that the lowest bid from Microserve offered the best overall value.

Total value of the contract will be $417,216 before taxes.

FINANCIAL CONSIDERATIONS

The Information Technology Long-Term Financing Plan provides for $4.15 million in 2001 for technology infrastructure replacement, including microcomputers. This includes all departments and Boards.

CONCLUSION

Replacement of obsolete equipment is necessary if the City is to continue to take advantage of the opportunities and efficiencies offered by information technology.

Council's approval of the recommendations of this report will permit the City to begin the replacement of obsolete microcomputers just ahead of the implementation or upgrade of systems that will demand them.

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(c) 1998 City of Vancouver