ADMINISTRATIVE REPORT
Date: April 18, 1997
File No. CREP063.wpd
CC File No. 1153
TO: Vancouver City Council
FROM: Director of Finance
SUBJECT: Disposal of Surplus Computer Equipment
RECOMMENDATION
A. THAT the Manager of Purchasing Services be authorized to
dispose of the City's surplus personal computers and related
software resulting from the City's recent introduction of its
information technology replace-ment program, along the
following lines:
the surplus equipment first be offered as-is, where-is to
the Vancouver School Board and the City's not-for-profit
community organizations, on the basis of a proportional
allocation of 90% and 10% respectively, and the transfer of
the equipment be under a grant/purchase program managed by
Purchasing Services and Social Planning to accord with the
provisions of the Vancouver Charter. Eligible agencies
would be invited to submit a request to Purchasing Services
outlining their requirements for the surplus equipment. The
source of funds for the grant would be the proceeds from
the gifting program, noting that the equipment disposal
revenues are not currently included in the City s operating
budget.
the remaining surplus equipment not taken up by any of the
eligible agencies be sold by auction and/or through the
solicitation of offers in the normal manner, on the basis
that the community organizations first have their
proportional allocation adjusted by any residual computer
equipment that is not required by the School Board.
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B. THAT Council approve an initial $10,000 grant to the Vancouver
School Board for its acquisition of surplus personal computers
and related software from the City of Vancouver, at the net
price of $100 per system, as outlined in this report; and
FURTHER THAT staff be instructed to report back to Council at
the appropriate times around the gifting of additional surplus
computer equipment to the Vancouver School Board.
(Approval of this grant requires eight
affirmative votes of Council.)
C. THAT staff be instructed to periodically report back to
Council for approvals around the gifting of surplus computer
equipment to individual not-for-profit community organizations
based on the allocation slice recommended above.
GENERAL MANAGER'S COMMENTS
The General Manager of Corporate Services notes that the City has
been approached by not-for-profit community agencies, and the
Vancouver School Board, to consider gifting surplus computer
equipment for use in their operations and/or educational programs,
recognizing that the normal budgets of these organizations are
unable to accommodate the acquisition of computer technology in the
open market. Up until recently, the City did not have surplus
equipment in the numbers which would justify the creation of a
formal program for this purpose, but the recent introduction of a
planned information technology replacement program in-house will
generate a steady supply of surplus equipment over the next several
years for routine disposal.
The options available to the City with respect to the disposal of
this surplus equipment are: (a) to auction/sell it off to the
highest bidder, or (b) to gift/donate it to community services
and/or educational organizations. Although the equipment may be
obsolete in terms of the City's requirements, it does have residual
value and could effectively be put to use for training purposes
(e.g., learning keyboarding skills, introducing computer
technology, learning the fundamentals of various software tools,
etc.) and for other ancillary purposes by the eligible community
agencies.
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Given the leveraged benefit flowing from the gifting of the City's
surplus computer technology to community organizations and the
Vancouver School Board, I RECOMMEND approval of A, B and C.
COUNCIL POLICY
Council policy is to dispose of surplus equipment through public auction
or the solicitation of offers.
Approval of grants requires eight affirmative votes of Council.
PURPOSE
This report recommends the gifting of the City's surplus computer
equipment to the Vancouver School Board and eligible not-for-profit
community agencies subject to the approval of Council.
BACKGROUND
During the next 12 months, the City's information technology replacement
program is expected to require the disposal of up to 400 obsolete
computers that are in operating condition, but without the computing
power and/or capacity to support the City's client-server technology
direction. The replacement program will also continue to generate
surplus computer equipment beyond the one-year timeline in smaller
numbers.
At recent auctions the City has obtained an average price of $63 and
$147 respectively, for "286" and "386" computer systems that were in
operating condition and had colour monitors. The respective net prices
(after auction and transportation fees) were $45 and $120. We estimate
that the potential recovery to the City from the sale of 400 surplus
computer systems in operating condition would be about $40,000, or $100
per system.
On the other hand, the Vancouver School Board has registered an interest
in obtaining (through a gifting mechanism) surplus computer equipment
from the City, preferably of the "386" variety. Many not-for-profit
community agencies would be interested in participating in a gifting
program as well.
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DISCUSSION
The alternative to disposal by auction and/or sale (the City's current
policy) is to establish a gifting program to eligible community
organizations as discussed below. The cost to the City of a gifting
program would nominally be about $40,000 in terms of the first 400
surplus computers, using a net proceeds value of $100 per system
available from auction/sale. Arguably, that $40,000 sum could be
levered into a more sizable benefit to the community at large if the
same computer systems were gifted to "eligible" organizations as
determined by Council.
Based on the interest expressed to date from the Vancouver School Board,
and other not-for-profit community organizations, your staff have put
together a grant/purchase program for the disposal of surplus computer
technology to those same organizations. The program is based on a
recommended target allocation to the two groups who have contacted the
City, as follows:
90% to the Vancouver School Board on the basis that children are
our future and this program would put certain students in touch
with technology sooner than it otherwise would be available in
the school system; and
10% to not-for-profit Community Organizations on the basis that
computer technology, however basic, would improve the
administration around the delivery of their services to the
community.
Obviously, Council has the option of adjusting the allocation slice
available to each organization group during the course of the gifting
program.
Since the City is technically precluded from "granting" equip-ment to
outside organizations under the Vancouver Charter, the gifting program
would be enabled by a money grant to the receiving organizations, which,
in turn, would be returned to the City as payment for the surplus
computer systems. In other words, the cost of the program is
revenue/expenditure neutral and has the benefit of being recorded in the
City's financial records and annual reports for information purposes.
Additionally, Council would be obliged to approve these grants in the
normal manner (eight affirmative votes) and would therefore have
appropriate oversight on the program.
The Manager of Purchasing Services would also continue to monitor
potential auction values of the surplus computer equipment to maintain a
handle on the opportunity cost of the gifting program for periodic
reporting to Council.
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CONCLUSION
Over the next several years, the City will be disposing of a large
number of surplus computer systems. Following normal practice, the City
would sell these systems at auction or through a solicitation of offers.
The alternative to disposition in that manner is to gift these systems
to the Vancouver School Board and other not-for-profit community
organizations for use in their own programs. Staff consider a gifting
program would have a leveraged benefit in the community and recommend
the establishment of such a program at a nominal cost to the City's
taxpayers.
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