Title
Recommendation to Authorize the Interim City Manager to Execute a Three-Year Agreement with SHI International Corp. for Microsoft 365 Government Community Cloud Subscription Licensing Services for an Annual Cost of $343,911 and a Total Three-Year in an Amount Not-to-Exceed $1,031,734. (Information Technology 60626070-51040)
Body
To: Honorable Mayor and Members of the City Council
From: Adam Politzer, Interim City Manager
EXECUTIVE SUMMARY
Staff recommends that City Council authorize the Interim City Manager to execute a three-year agreement with SHI International Corp. for Microsoft 365 Government Community Cloud (GCC) subscription licensing services. Microsoft 365 GCC provides the City with a secure, cloud-based platform that supports email, document management, collaboration, cybersecurity protections, and productivity tools used daily by City staff.
Since 2023, the City has utilized Microsoft 365 GCC to support essential operations across departments. The Microsoft 365 GCC environment is specifically designed for public-sector organizations and provides enhanced security, compliance, and productivity capabilities tailored to government needs. The Microsoft 365 GCC platform enables staff to communicate, store records, collaborate on projects, and protect sensitive government data using systems designed specifically for public sector organizations. Staff have been very satisfied with the reliability, performance, and security features of this platform.
The proposed agreement ensures uninterrupted access to these critical services while providing the City with favorable multi-year pricing, continued availability of these essential digital services that support efficient operations, secure information management, and collaboration across City departments. Leveraging the County of Riverside's Microsoft Enterprise Agreement (MEA) allows the City to piggyback, per the City’s purchasing policy, on pre-negotiated government pricing and contract terms, thereby streamlining the procurement process and delivering meaningful cost savings to the City.
BACKGROUND
The City relies on a variety of digital tools to conduct daily operations, communicate with residents and partners, manage records, and coordinate work across departments. In 2023, the City transitioned to Microsoft 365 GCC to modernize its workplace technology and improve security protections for government data.
Microsoft 365 GCC is a version of Microsoft's widely recognized suite of productivity tools that include email, file storage, document collaboration, messaging, video conferencing, and other productivity tools that are specifically designed and certified for use by federal, state, and local government entities. Unlike standard commercial cloud services, the GCC environment stores all government data within data centers located exclusively in the United States, operated by personnel who have undergone background screenings consistent with federal requirements. This environment meets rigorous compliance standards such as the Federal Risk and Authorization Management Program (FedRAMP) and Criminal Justice Information Services (CJIS) ensuring that the City's sensitive information and communications are managed in accordance with applicable government security requirements.
Through reseller SHI International Corp., the City's licensing for Microsoft 365 GCC is facilitated through the County of Riverside's MEA which is a cooperative purchasing arrangement under which the County has negotiated volume-based pricing and agreement terms with Microsoft on behalf of participating public agencies. By piggybacking on the County of Riverside's MEA, the City is able to procure Microsoft licensing at government-negotiated rates without the time and expense of conducting an independent competitive solicitation, while remaining fully compliant with the City's procurement policies.
Since the initial implementation, City staff have been highly pleased with the Microsoft 365 GCC platform's performance. City departments have come to rely on Microsoft 365 GCC as foundational to their day-to-day operations across all departments, from inter-departmental communications to the secure handling of resident data and the coordination of public services. The current licensing cycle is approaching expiration, necessitating a new multi-year agreement to ensure there is no disruption to City services or the security of the City’s data assets.
DISCUSSION
Microsoft 365 GCC provides a secure, compliant, and stable productivity environment that aligns with the City’s operational requirements including email communications, document creation and storage, internal collaboration, and secure access to information. Key benefits include:
• Cost-savings: The City benefits from pricing negotiated at a much larger scale than it could achieve on its own. The County of Riverside's MEA structure allows the City to procure licensing at reduced rates while remaining compliant with the City's purchasing requirements.
• Enhanced security and compliance: The Microsoft 365 GCC environment meets federal and state public-sector compliance standards such as FedRAMP and CJIS, which is critical for safeguarding City data and supporting regulatory requirements.
• Reliable productivity tools: City staff depend on Microsoft Word, Excel, Outlook, Teams, and related cloud services for document creation, communication, remote collaboration, and public-facing service delivery. The Microsoft 365 GCC platform provides increased efficiency, collaboration, and system availability.
• Strong platform performance: Since 2023, the City found the overall performance and reliability of Microsoft 365 GCC to be satisfactory and supportive of operational needs.
• Continuity of IT services: Renewing Microsoft 365 GCC licenses ensures uninterrupted access to mission-critical tools across all departments.
Entering a new three-year contract with reseller SHI International Corp. through the County of Riverside’s MEA framework ensures uninterrupted access to Microsoft 365 GCC services and maintains compliance with procurement requirements. The reseller structure remains standard practice in municipal licensing agreements and the piggybacking on the County of Riverside’s MEA allows for deeply discounted pricing advantages.
City Council authorization for the Interim City Manager to execute this agreement is essential to maintaining uninterrupted access to these critical services.
ALTERNATIVES
• Approve a three-year agreement with SHI International Corporation for Microsoft 365 GCC Subscription Licensing services.
• Direct Procurement: The City could attempt to negotiate a separate agreement directly with Microsoft or another reseller. This is not recommended, as the City would lose the volume-discount pricing provided by the Riverside County MEA, resulting in higher costs.
• Short-term Renewal: The City could opt for a one-year renewal. However, this would result in a loss of long-term price protection and would require repetitive administrative effort to bring the item back to City Council next year.
FINANCIAL IMPACT
The cumulative cost over the three-year period is not-to-exceed $1,031,734. Funds for the first year of this agreement for Microsoft 365 GCC were included in the approved Fiscal Year 2025-27 Biennial Budget. The remaining second and third year of the agreement are subject to future City Council approval.
|
Contract Year |
Amount |
|
2026-2027 |
$343,911 |
|
2027-2028 |
$343,911 |
|
2028-2029 |
$343,912 |
|
TOTAL: |
$1,031,734 |
MUNICIPAL CODE/POLICY DOCUMENT CROSS REFERENCE
The action is consistent with the Alameda Municipal Code. This agreement also supports the City Strategic Plan project TIE 33 to implement increased cybersecurity measures under the Priority to Invest in Transportation, Infrastructure, Economic Opportunities and Historic Resources.
This action is subject to the Levine Act.
ENVIRONMENTAL REVIEW
This action does not constitute a “project” as defined in CEQA Guidelines Section 15378 and therefore no further CEQA analysis is required.
CLIMATE IMPACT
There are no identifiable climate impacts or climate action opportunities associated with the subject of this report.
RECOMMENDATION
Authorize the Interim City Manager to execute a three-year agreement with SHI International Corp. for Microsoft 365 GCC Subscription Licensing services for an annual cost of $343,911 and a total three-year not-to-exceed amount of $1,031,734.
Respectfully submitted,
Demetrius Cagampan, Information Technology Director
Financial Impact section reviewed,
Ross McCarthy, Finance Director
Exhibits:
1. SHI Quote
2. Riverside Agreement