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


        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

               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.

                                     - 2 -

        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.


        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

                                     - 3 -

        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 is to dispose of surplus equipment through public auction
   or the solicitation of offers.

   Approval of grants requires eight affirmative votes of Council.


   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.


   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

   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.

                                     - 4 -

   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

   Obviously, Council has the option of adjusting the allocation slice
   available to each organization group during the course of the gifting

   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.

                                     - 5 -


   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

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