Agenda Index City of Vancouver

ADMINISTRATIVE REPORT

TO:

Vancouver City Council

FROM:

Director of Information Technology in consultation with the Manager of Materials Management

SUBJECT:

Metropolitan Area Network Enhancement - Proposal No. PS00047
Award of Contract

 

RECOMMENDATION

GENERAL MANAGER'S COMMENTS

COUNCIL POLICY

PURPOSE

The purpose of this report is to seek Council approval to enter into contractual relationships with two service providers - Sprint Canada and Telus Advanced Communications - giving the City access to a variety of telecommunications services that will enhance communications among City facilities. Approval is also sought to proceed with the upgrade of the City's telecommunications network, contracting with one or the other of the two proponents as needed for services to individual work sites.

BACKGROUND

Over the last 5 or 6 years, the City's telecommunications network between City work sites has enabled widespread sharing of information and information systems, greatly improved communications, and new options for service delivery.

The success of VanLink, as this network is now known, has led to steady growth in its use, to the point where it is now running out of capacity. This results in slow response for both staff and public users at branch libraries, fire halls, and community centres. Some potential benefits of data networking are being foregone. As examples, some public access terminals have to be shut down during peak periods, the backup of the Manitoba Yards file server to the centralized data backup facility at City Hall can no longer be completed overnight and has had to be suspended, and a client database to be shared between several of the City's community-based programs cannot be implemented. In each case, network capacity alone is the limitation. The ability of the network to carry data must be increased.

To address this need, the 1999/2000 Information Technology Infrastructure Expansion and Replacement Program report, approved by Council on March 30, 2000, described a "build/lease" approach to providing higher network capacity. That report stated that the City would initiate a public process to evaluate telecommunications services.

In July, 2000, the City issued a Request for Proposals "to supply one or more solutions which will enable the City of Vancouver to upgrade its telecommunications connectivity between work sites to accommodate current and future bandwidth demands". Evaluation ofthe responses confirmed that the best way to achieve this goal is to build some sections of the network and to utilize leased services for others.

DISCUSSION

1. Evaluation of Responses to the Request for Proposals

Eleven proponents responded to the July 2000 request for proposals. Three proponents each provided two proposals, for a total of fourteen. The following proposals were submitted:

 


Sites
Serviced

One-Time
Cost

Annual Operating Cost

       

4th Utility Inc.

32

404,978

0

AT&T Corporation

99

99,150

818,568

Bell Intrigna - "Full Solution"

97

490,368

1,371,648

Bell Intrigna - "Priority Focus"

35

399,795

521,448

Bell Nexxia - "Full Solution"

98

739,383

519,504

Bell Nexxia - "Priority Response"

35

399,795

852,060

BMS Communications

79

457,511

0

Celterra Vancouver

108

2,450,000

271,104

MaxLink Communications Inc.

99

114,250

897,120

Microserve

59

1,240,747

0

SCC Inc.

98

1,610,739

176,460

Sprint Canada

98

171,588

617,232

Telus - "Alternate Proposal"

99

1,000,000

292,824

Telus - "Primary Proposal"

97

198,385

278,196

Notes to table:
1. Annual operating costs quoted are based on a five-year contract.
2. Proposals are not directly comparable. Differences include number of sites served and characteristics of equipment and services.
3. Costs are based on the core proposal and exclude quoted options and installation costs

An evaluation team consisting of the Manager of Materials Management, Manager of Technology Planning, Manager of Systems Infrastructure and Messaging, IT Manager of the Parks Board, and a financial analyst from Business Support Services assessed the proposals on the basis of price, support, technology, proponent, delivery and security. The Systems & Technical Services Director, Vancouver Public Library, provided additional specification and evaluation assistance.

The initial selection process identified three proposals for further review as probable "bestvalue", but subsequent research and vendor presentations indicated service deficiencies, technical shortcomings or financially unacceptable elements in each proposal. Further inquiries were directed at vendors to verify that the most favourable elements from each proposal could be effectively combined, to confirm that equipment proposed as an option would offer improved security, and to estimate installation services, quoted only as an hourly rate. Based on the vendor responses, a solution was developed that uses fibre optic cabling provided by Telus Advanced Communications to provide a high-speed backbone, combined with wireless equipment and SDSL services from Sprint Canada.

Services to be provided by the two vendors can be summarized as:

 

Costs

Vendor/Service

One-Time

Annual Operating

Sprint Canada

    

Wireless bridges, related communications equipment and services

$367,000

$35,000

SDSL services and related communications equipment

$115,000

$247,000

 

Sprint Canada equipment and services sub-total

$482,000

$282,000

Telus Advanced Communications

    

Telus "Municipal Link" services

$25,000

$55,000

2. Relationship with Proponents Under the Proposed Contract

The current VanLink upgrade plan calls for telecommunications services to 85 work sites to be upgraded over three years; 44 in 2001, 36 in 2002 and 5 in 2003. Both this distribution and the total number of sites are likely to change as business needs and the ability of the technology to meet them are re-assessed.

Under the contracts recommended in this report, the proponents will become preferred suppliers of the goods and services identified in their proposals. Master contracts to be developed with both suppliers will permit the City to acquire goods and services as follows:

· Telecommunications equipment will be purchased as needed and subject to the availability of funding. No purchase volume will be specified in the master contract, and the City will be free to terminate the arrangement at any time;
· Telecommunications services will also be leased as needed. The City will enter into lease agreements (either three-year or five-year) on a worksite-by-worksite basis. No purchase volume will be specified in the master contract. Once agreements for individual connections are entered into, the City will be committed to pay the ongoing operating costs, and penalties may apply for early termination. To accommodateeither growth in demand or the emergence of other opportunities, like City-installed optical fibre, the City will seek upgrade and early termination contract provisions for a small number of sites.

In short, under the master agreements recommended in this report, the City will be free to purchase equipment and services from these preferred vendors based on the specific needs for the individual connection, the suitability of the technology offered and the availability of funding. Once individual services are contracted, the City will be committed to utilize the services for the period of the contract or pay penalties to be negotiated for early termination. However, the City is not committed to purchase services from these vendors if a more suitable combination of technology and costs are offered by others.

FINANCIAL CONSIDERATIONS

1. Maximum One-Time and Ongoing Costs

Based on the current plan for upgrading VanLink and assuming the full upgrade program is undertaken, the proponents would jointly receive approximately $507,000 (plus applicable taxes) in one-time payments, primarily for equipment. In addition, the program would incur the costs of additional network equipment, spares, and implementation costs estimated at $161,000 over the three year implementation period.

In addition, by contracting for the provision of services, the City would incur ongoing service lease costs estimated at a maximum of $1,346,000 over the five year term of the contract. These would be offset by savings in existing system costs of approximately $561,000 so that the operating cost increase related to the contracts would be a maximum of approximately $785,000 (plus applicable taxes) over five years.

As noted, these are the maximum costs that would accrue under the contracts if the City were to purchase all of the planned services from the vendors. Decisions to proceed on individual connections would be dependent on the availability of funding.

2. Funding Sources

The Information Technology Long-Term Financing Plan, approved by Council on April 6, 2000, includes approximately $3 million annually for replacing and upgrading the City's information technology infrastructure. Funding from the plan is allocated to specific projects/programs by Council on an annual basis. The long term financing plan would be the funding source for the one-time costs contracted under the master agreements as follows:

· funding of $317,000 for telecommunications network expansion and upgrade is available from the 2000 Information Technology Infrastructure Expansion and Replacement Program approved by Council in April 2000. Of this amount, $240,000 is available for allocation to the services under the contracts.
· funding of $150,000 is available to Vancouver Public Library through the Government of Canada's Urban Community Access Program for network upgrades serving public Internet access at the branch libraries.
· The 2001 and 2002 Information Technology Infrastructure Expansion and Replacement programs will request additional funding, estimated at $345,000 over two years, from the Information Technology Long-Term Financing Plan, where it is budgeted. As described above, if this additional funding is not approved as part of the 2001 /2002 programs, the City will be committed only to the lease agreements entered into up to that time.

Each connection contracted for will also have ongoing operating costs that extend at least for the term of the contract. For the sites under consideration in the upgrade program, these ongoing costs are currently $142,000 per year. Under the proposed upgrade these costs will rise to approximately $340,000 per year by July, 2003. Over the term of the contract, the maximum costs to be incurred if all services are contracted will be $1.35 million. Offsetting savings in connection charges of $561,000 will reduce the incremental costs associated with these services to approximately $785,000 (plus applicable taxes) over the term of the contract.

Additional costs for 2001 estimated at $50,000 will be absorbed within the existing operating budget. Operating costs after 2001 will be funded through savings in the existing telecommunications budget and from the Information Technology Long-Term Financing Plan.

These cost projections are detailed as an appendix to the report.

CONCLUSION

The services proposed under contracts with Sprint Canada and Telus Advanced Communications will provide, on average, ten times the existing network capacity to about 85 City sites. The implementation plan behind this report is not cast in stone. The capacity and availability demands on the network are sensitive to the nature of its use, which is driven by business needs. Additional sites may be identified as requiring connectivity, while changing requirements for an existing site may lead the City to deploy a different technology solution from that currently proposed.

The combination of services proposed here represents an approach which will cost-effectively remove existing capacity constraints, while providing the flexibility to address future demands on VanLink. VanLink is a core component of the City's information technology infrastructure.

- - - - -

APPENDIX

VanLink Upgrade: One-time and Operating Costs

One-Time:

Costs (excluding taxes)

    

Amounts to be paid to the proponents

$

507,000

Additional equipment and project administration

$

161,000

Total (excluding taxes)

$

668,000

Applicable taxes

$

67,000

Total (including taxes)

$

735,000

Sources of Funds

    

Balance from approved 2000 infrastructure funding

$

240,000

VPL funding from federal CAP Program

$

150,000

Future funding requests (2001 and 2002 I/T Infrastructure Programs)

$

345,000

Total

$

735,000

Annual Operating Costs (taxes excluded):

  
 

Cost of current services /budget

Additional services (from proponents)

Reductions (retirement of existing services)

Cost of proposed services

Cost increase

2000

$ 142,000

n/a

n/a

$ 142,000

n/a

2001

$ 142,000

$ 78,000

$ (28,000)

$ 192,000

$ 50,000

2002

$ 142,000

$ 261,000

$ (117,000)

$ 286,000

$ 144,000

2003

$ 142,000

$ 333,000

$ (138,000)

$ 337,000

$ 195,000

2004

$ 142,000

$ 337,000

$ (139,000)

$ 340,000

$ 198,000

2005

$ 142,000

$ 337,000

$ (139,000)

$ 340,000

$ 198,000

5-yr Total

$ 710,000

$ 1,346,000

$ (561,000)

$ 1,495,000

$ 785,000

* * * * *

ag010605.htm

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