Report to General Committee

 

 

 

 

 

TO:

Mayor and Members of Council

 

 

 

 

FROM:

James Allen, Chief Information Officer

 

 

 

 

PREPARED BY:

Francis Poon, Manager of Client Delivery

Sugun Rao, Manager of Technology

Ivy Ho, Purchasing Supervisor

 

 

 

 

DATE OF MEETING:

June 20, 2005

 

 

 

 

SUBJECT:

Tender Award - 107-T-05, Microsoft Licencing Agreement

 

 

 

 

RECOMMENDATION:

THAT the report dated June 20, 2005, entitled “Tender Award - 107-T-05, Microsoft Licencing Agreement” be received;

 

AND THAT Tender 107-T-05 for “Microsoft Licensing Agreement” be awarded to the overall lowest priced bidder, ASAP Software Express, Inc., in the estimated total amount of $784,605 inclusive of 8% PST and exclusive of GST, for Part A “Microsoft Enterprise Agreement” for a term of three years to expire on November 30, 2007;

 

AND THAT the Fixed Discount Rate of 19.76%, as submitted in Part C, be accepted from the overall lowest priced bidder - ASAP Software Express, Inc and applied to the acquisition of products listed in Part B under the Microsoft Select Agreement for a term of 3 years to expire on November 30, 2007;

 

AND THAT staff be allowed to enter into a 3-year Enterprise Agreement and Select Agreement with Microsoft Canada and ASAP Software Express, Inc in a form satisfactory to the Town Solicitor for the provision of the licensing of Microsoft desktop and server products at discounted rates;

 

AND THAT the Mayor and the Town Clerk be authorized to execute the agreement;

 

AND THAT the 2005 Enterprise Agreement annual payment will be funded from ITS Department’s 2005 Capital Account 49-5350-6738-005, ITS Base Architecture, with an upset limit of $283,500, inclusive of 8% PST and exclusive of GST;

 

AND THAT the 2005 licensing requirements for Microsoft products covered by the Select Agreement be funded from ITS Department’s 2005 Capital Budget, Account # 049-5350-6738-005 with an upset limit of $65,580; inclusive of 8% PST and exclusive of GST;

 

 

PURPOSE:

The purpose of this report is to obtain Council approval to award Tender 107-T-05 and proceed with the Capital Project.

 

BACKGROUND:

The Town has been deploying the Microsoft suite of products since 1995 and the products have since formed the basis of the Town’s Information Technology desktop computing environment standards. The Town entered into the Microsoft Select Master Agreement in 1998 and has been receiving a discounted price for products since then.

 

In 1999, the City of Toronto had entered into a Microsoft Enterprise Agreement (EA) providing further licensing savings in addition to the Select Master Agreement. At that time, an EA was only offered to organizations having a large number of desktop computers (5000+); therefore, the Town was not able to negotiate as a separate organization. Since the City of Toronto agreement offered a clause to allow other municipalities that have over 500 computers to join as affiliates, the Town took the opportunity and participated in the City of Toronto agreement in 2000.

 

The City of Toronto agreement was for three years, with a one-year renewable option at its expiration in 2002. However, City of Toronto had frozen all contract renewals and did not renew the EA. Hence the Town could not unilaterally renew this contract as an affiliate and was left without an EA.

 

In November 2004, the Province of Ontario Management Board Secretariat (MBS) negotiated and signed a new EA and Select Agreement which is available as a coterminous agreement to all interested municipalities. However, under the MBS arrangement, municipalities are not allowed to directly purchase these agreements from Microsoft and require the use of a third-party Licensing Administrator.

 

As with the last EA, the benefits include the ease of licensing administration and legal compliancy, the ability to upgrade and downgrade to any version of a product included in the EA, the elimination of large one-time budget impacts by splitting the cost over multiple years, and the significant discount level over individual licensing purchase models.

 

In addition, although MBS negotiated the agreement on behalf of all interested municipalities and government entities, the Town can individually enter and manage our own private agreement. This will avoid the past experience of not being able to renew because of contractual dependencies on other organizations.

 

The products included in the EA are Windows Operating Systems upgrade, Microsoft Office Suite, Client Access License for file and print servers, Exchange (for email), System Management Server (for asset management), Development Network (for research and development), TechNet (for server maintenance) and Essential Support Level-C (for applications and technical support). Another additional benefit of EA is that staff can install one copy of Microsoft software covered under EA for their home use.

 

 

FINANCIAL CONSIDERATIONS:

Staff has investigated other licensing alternatives. It has been determined that the EA is the most cost-effective option for the Town’s desktop computing products based on the current software replacement strategy. All other Microsoft products that are not covered by the EA will be covered by the Microsoft Select Agreement.

 

Staff made a presentation to the Information Technology Sub-committee of Council on April 26, 2005, which included the comparison of the different licensing options, and requirement for tender.  The presentation was received by this Committee on the same day.

 

This tender was subsequently released according to the plan set out in the presentation to the Information Technology Sub-committee of Council. The tender was a three part tender:

 

Part A was for the pricing of Microsoft Enterprise Agreement Master #75E60216 to fulfill the licensing requirement for standard productivity software for 650 desktop and laptop computers.

 

Part B was for the Microsoft Select Master Agreement # 75S60721 for ongoing and future acquisition of licensing for products that are not covered under the EA - e.g. Microsoft Visio and Microsoft Project.  The attached Appendix A listed the current unit prices for the projected product licensing requirements in 2005.  These unit prices were set by Microsoft Corporation and could fluctuate for all suppliers according to market conditions over time.

 

To reduce the risk of price fluctuation, Parts C became necessary and was for the fixed discount rate offered by each Contractor applied to the unit prices submitted in Part B.  The discount rates are over and above those provided within the Microsoft Business Agreement (MBA) #U8364444 and Select Master Agreement #75S60721 between the Province of Ontario Management Board Secretariat and Microsoft Canada, based at 10% under the Government Level pricing.  The discount rates are guaranteed for the duration of the 3 year contract and are applied to products acquired under the Microsoft Select Master Agreement.

 

The tender was issued in accordance with the Purchasing By-Law 2004-341.  The tender closed on June 8, 2005.  12 companies obtained the bid document and 8 companies submitted qualified bids as follows - all costs below are inclusive of PST but exclusive of GST:

 

Contractor

Part A:

Total Cost of Enterprise Agreement

over 3 Years

 

Part B:

Total Cost of products listed under Select Agreement requires in 2005

Part C:

Fix discount rate applies to future Select Agreement products purchases

Asap Software Canada

$   784,604.65

$ 65,578.40

19.76%

NexInnovations

$   785,659.01

$ 65,680.75

17.00%

Insight Canada

$   792,645.52*

$ 66,392.96

0%

Software House International

$  795,356.76

$ 66,351.21

18.50%

Dell Canada

$   796,155.18

$ 67,021.15

17.70%

Software Spectrum Canada Ltd.

$   801,010.36

$ 65,010.51

20.17%

SoftChoice Corporation

$   812,413.27

$ 68,272.31

16.20%

Acrodex

$   836,334.95

$ 67,021.15

0%

*  Corrected for mathematical error in Part A which has no impact on the award result

 

The bid documents have been verified for accuracy and compliance with the tender specifications and staff are satisfied that all terms, conditions and bid prices comply with the Town’s requirements.

 

Staff had positive experience with the previous EA and Select Agreement, and the new agreements will continue to provide economic benefits and serves as a good strategy to maintain current versions and manage licenses for Microsoft products that the Town has deployed over the past 10 years.

 

Staff recommends that Tender 107-T-05 for “Microsoft Licensing Agreement” be awarded to the overall lowest priced bidder, ASAP Software Express, Inc., in the estimated total amount of $784,605 inclusive of 8% PST and exclusive of GST, for Part A “Microsoft Enterprise Agreement” for a term of three years to expire on November 30, 2007;

 

AND THAT the Fixed Discount Rate of 19.76%, as submitted in Part C, be accepted from the overall lowest priced bidder - ASAP Software Express, Inc and applied to the acquisition of products listed in Part B under the Microsoft Select Agreement for a term of 3 years to expire on November 30, 2007;

 

AND THAT staff be allowed to enter into a 3-year Enterprise Agreement and Select Agreement with Microsoft Canada and ASAP Software Express, Inc in a form satisfactory to the Town Solicitor for the provision of the licensing of Microsoft desktop and server products at discounted rates;

 

AND THAT the Mayor and the Town Clerk be authorized to execute the agreement;

 

AND THAT the 2005 Enterprise Agreement annual payment will be funded from ITS Department’s 2005 Capital Account 49-5350-6738-005, ITS Base Architecture, with an upset limit of $283,500, inclusive of 8% PST and exclusive of GST;

 

AND THAT the 2005 licensing requirements for Microsoft products covered by the Select Agreement be funded from ITS Department’s 2005 Capital Budget, Account # 049-5350-6738-005 with an upset limit of $65,580; inclusive of 8% PST and exclusive of GST;

 

ENVIRONMENTAL CONSIDERATIONS:

None

 

ACCESSIBILITY CONSIDERATIONS:

None

ENGAGE 21ST CONSIDERATIONS:

None

BUSINESS UNIT CONSULTED AND AFFECTED:

None

 

ATTACHMENTS:

Appendix A: Bid Comparison Table

 

 

 

 

 

______________________________                        ____________________________

James Allen,                                                                 Andy Taylor,                                                   

Chief Information Officer                                              Commissioner of Corporate Services

           

                       

Q:\Finance and Administration\Finance\Purchasing\2005 File Management\Contract Management\107-T-05 Microsoft Licening Agreement\107-T-05 Award Report F & A.doc