ADMINISTRATIVE REPORT

Date: July 15, 2002
Author/Local: Peter Mason/7208

RTS No. 02810

CC File No. 1203

Council: July 30, 2002

TO:	Vancouver City Council
FROM:	Director, Information Technology Manager - Materials Management
SUBJECT:	Direct Lease of Digital Photocopier

RECOMMENDATION

THAT Council approve execution of a five year lease with Xerox for a digital photocopier complete with software at a total five year cost of $358,911 and copy charges of approximately $321,000 over five years plus PST and GST (less any municipal rebate received) at no new cost to the City.

GENERAL MANAGER'S COMMENTS

The General Manager of Corporate Services RECOMMENDS approval of the foregoing.

COUNCIL POLICY

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

Contracts with a value over $300,000 are referred to Council.

PURPOSE

This report seeks Council approval to authorize staff to execute a five year lease with Xerox for the supply and installation of a Xerox 6100 digital copier with Digipath software.

BACKGROUND

The Printing and Graphic Services Division of Information Technology is a full service, in-house print shop filling the printing needs for internal and a few external customers. Photocopy jobs are currently run on Printing's two analog copiers during normal business hours. Approximately 7 million copies are made annually using a wide variety of paper-stock and involving several subsequent functions such as collating, stapling, hole-punching, and folding.

Printing and Graphic Services Division operates on a 5-year replacement cycle for its photocopiers and the equipment is now a year beyond the ideal replacement point with equipment downtime increasing due to repairs. The photocopiers were acquired via a lease-to-purchase, with a monthly lease cost of approximately $5,425.00, in addition to meter charges of $0.007 per copy.

At present, the System Operations and Production Division of Information Technology ("IT") is responsible for a variety of activities that support mainframe and network applications including print jobs such as payroll reports (approximately 32 bi-weekly), utility bills, water meter bills, sanitation beat sheets, by-law fines violation notices and summonses, business and dog license renewal notices and licenses. These print jobs require the capacity to deal with variable data, and both pre-printed forms and standard paper stock. It is also reasonable to assume that proposed network applications, such as a new utility billing system, will require large reports of laser printer quality.

Most of these jobs are run outside normal business hours in the evening and at night.

The two mainframe printers in the System Operations and Production Division are over 20 years old and have reached the point of obsolescence. Parts are becoming more difficult to acquire, a high failure rate and poor quality printing are adding to this obsolescence. The City owns this equipment which has operating costs of an annual maintenance fee of $8,256 and ribbon supplies of approximately $8,000 per year.

DISCUSSION

In the last few years, there has been a convergence of the services provided by Printing and Graphic Services and the System Operations and Production Divisions. It has become apparent that there is an opportunity to increase efficiencies and decrease costs by integrating these services.

Staff researched options that would provide a cost-effective solution that would provide centralized, high-volume IT print management services, enable migration to digital copier technology, position the two divisions to meet future demands of the organization and capable of integration with the City's current MFD strategy.

A single piece of equipment capable of replacing the obsolete machines in both Printing and Graphic Services and the System Operations and Production Division was the ideal solution as it would reduce the overall lease costs of having separate equipment and take advantage of non-standard employee shift schedules to maximize usage of the equipment 24 hours per day.

To meet these requirements, the chosen solution must include:
· digital capability;
· modular design, allowing for future expansion;
· the capacity to handle a variety of paper stock up to sheet size of 11" x 17";
· the capacity for double-sided printing;
· black and white printing;
· minimum speed of 60 impressions per minute;
· network connectivity;
· the capacity to process variable data; and,
· responsive service during standard and non-standard business hours.

Based on the identified requirements, the research done to date indicates that there are only two products in the marketplace that can provide the necessary solution: the Heidelberg 9110 and the Xerox DT6100.

Xerox is the only vendor for the DT6100. Equipment components and software are all provided by Xerox and full compatibility with the City's MFD fleet is guaranteed. In addition, granting of the lease to Xerox will trigger, once the City wide print volumes reach 18 million copies a rebate on MFD meter charges, valued at approximately $20,000 -$30,000.

The Heidelberg product is distributed by five vendors: Canon, Danka, Heidelberg, IBM and IKON. While each of these vendors provides the same hardware, they couple the equipment with their own front-end and software by integrating various third party software solutions. The front-end provides the coordination and connectivity functions of the machine. Because many vendors are involved coordination of upgrades becomes very complex, error prone and difficult to solve problems. End to end responsibility is difficult to achieve. There is also no assurance of compatibility with the City's existing, and expanding, MFD fleet. Our research indicated that as of December 31, 2001, there were only four of Heidelberg units installed in BC versus approximately 80 Xerox DT6100

Staff also reviewed a report by an American consultant, Scott Russell, who compared the Xerox and the Heidelberg software capabilities in four main areas: scanning; document assembly; documentation and support; and print submission. In total, Mr. Russell examined 46 different criteria. The maximum score possible was 230. Xerox scored 186 while Heidelberg scored only 87 thus confirming staff's opinion that the Xerox 6100 is the overall best unit in terms of functionality, ease of use, compatibility with existing equipment and ability to meet future needs.

FINANCIAL IMPLICATIONS

Currently, printing costs (before taxes) for the System Operations and Production Division are $16,256/year while Printing and Graphic Services Division lease costs prior to being paid off in 2001, was $65,100/year for a total annual cost of $81,356. Under a new lease, the combined lease ($54,982) and maintenance cost ($16,800) for the new Xerox equipment would be $71,782/year representing a cost reduction of approximately $9,600/year should Printing and Graphic Services Division achieve the expected level of activity. The total lease cost over five years is therefore $358,910. The lease cost reflects the trade-in of two City owned analog printers.

CONCLUSION

Given the Xerox DT6100's functional suitability, the higher install base for the Xerox units and thus the ready availability of service technicians, and the guarantee of compatibility with the rest of the City's MFD fleet at no additional cost to the City, staff recommend entering into a five year lease to purchase contract with Xerox Canada Ltd. for a Xerox DT6100 complete with Digipath software.

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(c) 1998 City of Vancouver