City Council Regular Meeting - Includes Action Taken


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    I.1       
Meeting Date: 05/17/2021  
Recommended by: Aaron Card Prepared by: Aaron Card, Information Technology Manager
Finance Director Review: Angele Ozoemelam  
City Attorney Review: Brett Wallace  
Approved by: Larry Rains Date Submitted: 04/26/2021
Type of Action Requested: Ordinance

SUBJECT:
Request to use Arizona State Contract ADSPO18-216033 and Save Contract 2011113 to renew an agreement between the City of Casa Grande and Xerox Business Solutions to provide Managed Print Services.
RECOMMENDATION:
Staff recommends that the City Council approve the use of Arizona State Contract ADSPO18-216033 and Save Contract 2011113 to renew an agreement between the City of Casa Grande and Xerox Business Solutions to provide Managed Print Services.
DISCUSSION:
The City of Casa Grande has a considerable volume of printer hardware spread out across numerous sites. This printer hardware needs continuous service and supplies. The City of Casa Grande has a mutually beneficial agreement with Arizona Office Technologies (AOT) that has reached term. At the time, AOT was a subsidiary of Xerox but still operating under the AOT name. They are now operating as Xerox Business Solutions (XBS).

The City of Casa Grande originally engaged AOT / XBS to resolve systemic issues with the preceding Managed Print Services (MPS) provider. Overall, it has been a good experience, but the printer hardware supplied at that time is beginning to show its wear and tear. Staff satisfaction is dropping and there have been considerable improvements made to printer management technologies since the initial deployment.

After extended discussion with XBS it became apparent that a new term would be an excellent opportunity for the City of Casa Grande to:

(1) Leverage a new set of contracts with a better “cost per copy” cost structure to reduce recurring MPS costs.

(2) Use some of that cost reduction to refresh and standardize multi-function printer (MFP) hardware. This will allow the City of Casa Grande to take a more aggressive stance with respect to broader, long-term hardware reduction efforts.

(3) Implement PaperCut to accommodate easier / secure printing with audit capabilities. Once implemented the City of Casa Grande should expect to see additional cost savings with an overall decrease in print volume. Our XBS account manager has seen other agencies reduce print volume by up to thirty (30) percent after the implementation of cost containment technologies and stressing the importance of sending most print jobs to MFPs whenever possible.

While there may be some discussion about the choice to lease MFP hardware, after much consideration there is no compelling technical reason to outright purchase MFP hardware. It is expensive. There is planned obsolescence. Legacy MFP hardware is not usually included in updated cooperative contracts. It requires specialized technical skills to troubleshoot, and the long-term service / supply costs typically become excessive relative to overall MFP value.

Departments and site addresses listed on the Sales Order Device Schedule are not set in stone. It is only intended to provide a manifest of what XBS will ultimately provide based off a preliminary site assessment conducted by XBS and Casa Grande Information Technology (IT). A finalized assessment will be used to determine hardware distribution but not in an amount that would exceed the attached roster.

Additionally, there is no expectation that XBS will take possession of any existing / owned assets during the delivery stage. They are willing to do so, but there is no financial incentive or account credit option available. It is a convenience / disposal service. Casa Grande IT is discussing the matter with the Deputy City Manager to see if there is a viable storage location for any retired MFP hardware. It remains to be seen whether an auction / technology salvage company would be a worthwhile consideration to dispose of any retired print hardware.

To assist with the hardware reduction / cost containment effort it may be worthwhile to consider an agency-wide moratorium on the purchase of additional printers. There is a tendency to evade technology procurement processes by using purchase cards and low-dollar amount purchase orders. Casa Grande Information Technology (IT) does have the technical ability to periodically scan the City of Casa Grande Network for unauthorized printer hardware and physically remove it from service if empowered to do so. This would freeze the environment to prevent continued creep.

Finally, there is an item unique to the Casa Grande Main Library and Vista Grande Library. Today, there is MFP and MPS hardware accessible to the public. They pay by coin but none of that revenue is an off set for the service and supplies paid for by the MPS. None of this printer hardware should stay under the primary MPS. There is a separate Xerox Instant Print Kiosk (IPK) proposal getting put together that would isolate the libraries, introduce the requested ability to pay by credit card, and generate enough revenue / profit to self-sustain the solution.
FISCAL IMPACT:
The Master Lease Schedule is $3,339.22 per month for a sixty (60) month term. This will amount to a total spend of $200,353.20 over the initial term.

The Managed Document Services Agreement is $2,530.00 per month for a sixty (60) month term. This will amount to a total spend of $151,800 over the initial term.

That has a total cost of $352,153.20 over the initial term. That is $70,430.64 annually that would be paid out month-to-month at $5,869.22.  In addition to sales tax the department has added $53,000 as contingency funding, for a not to exceed amount of $441,617, in the event there are print overages during the term of the contract.

Under the present Mohave Contract the City of Casa Grande has a month-to-month spend of $7,789.00. 

This would lead to an immediate month-to-month cost reduction of $1,919.78 or $23,037.36 annually. 

That is before a possible and anticipated decrease in overall print volume. It will also accommodate a beneficial MFP hardware refresh without any steep, initial capital investment. Additionally, it does not account for any offset that may result from the auction / salvage of retired print hardware.

Casa Grande Information Technology (IT) did question the Purchase Option section of the Master Lease Schedule. The State of Arizona Copier and Printer bid was priced as a Fair Market Value (FMV) contract, non-inclusive of the $1 out after reaching term. 

We are discussing the Risk of Loss and Insurance clause on the Master Lease Schedule with the Risk Manager to determine if there is adequate coverage in place today, or if XBS will need to account for that when billing the City of Casa Grande.

Something that will present a challenge under this or any agreement is how to account for print volume overage costs. Theoretically, there should not be any, but reality has shown otherwise. The “cost per copy” rates are easy to identify, but the City of Casa Grande would still be obligated to pay overages as they occur throughout the term.

If the Xerox Instant Prink Kiosk (IPK) proposal is adopted, it would connect to the City of Casa Grande’s merchant account. There is a month-to-month lease of $619.80 that would need to be accounted for, but the Library Manager and Xerox have discussed present costs relative to print volume. There is a projected revenue of $2,548.50 with a profit of $1,300.07.
ALTERNATIVES:
There is a cash purchase option under the State of Arizona Copier and Printer contract if the lease option is not preferred. According to the Vice President of Strategic Accounts at Xerox Business Solutions that would equate to an initial investment of $170,492.88. 

The difference between the two options is $29,860.32. It would not impact the Managed Document Services Agreement month-to-month spend but it does appear to carry a variable term option that could range between thirty-six (36) to sixty (60) months. Obviously, it would eliminate the Master Lease Schedule month-to-month charge completely.

Another option would be to extend the present agreement under Mohave, but that contract has a higher “cost per copy” charge. It would do nothing to address problematic hardware and it would not accommodate the implementation of necessary cost containment technologies. One of the biggest challenges faced by Casa Grande Information Technology (IT) is holding staff accountable for excessive print volume and material waste. It is very difficult to budget and audit without the right enforcement mechanisms in place.

Another option would be to terminate Managed Print Services entirely. This is the least preferable alternative given the specialized nature of multi-function printer (MFP) hardware. It is exceptionally unlikely that Casa Grande IT will be able to service or repair existing MFP hardware at scale. It would also introduce a chaotic situation where everybody with access to a printer would be responsible for the procurement of supplies. The lack of a centralized supplier will come at cost and the City of Casa Grande will be no closer to a solution with achievable cost containment and control.
Attachments
Ord. 3267
City of Casa Grande Proposal April 2021 - Final
City of Casa Grande Price Sheet
Sales Order Device Schedule
Bridge Contract State of Arizona
Bridge Agreement SAVE

  

    

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