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COUNTY OF SAN MATEO
Inter-Departmental Correspondence
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Information Services Department
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DATE:
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March 2, 2006
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BOARD MEETING DATE:
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March 28, 2006
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SPECIAL NOTICE/HEARING:
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None
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VOTE REQUIRED:
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Majority
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TO:
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Honorable Board of Supervisors
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FROM:
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Chris Flatmoe, CIO/Director of Information Services
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SUBJECT:
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Master Tax Exempt Lease/Purchase Agreement with Key Government Finance, Inc. for Network Equipment.
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RECOMMENDATION:
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Adopt a Resolution:
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A) Authorizing the execution of a master tax-exempt lease/purchase agreement with Key Government Finance, Inc for the term March 28, 2006 to March 27, 2009 for five year equipment leases in an amount financed not to exceed $4,000,000; and
B) Authorizing the Purchasing Agent to execute lease/purchases under the terms of this Master Lease Agreement.
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VISION ALIGNMENT:
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Commitments: Responsive, effective, and collaborative government.
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Goals 20,21, and 22 :.Government decisions are based on careful consideration of future impact rather than temporary relief or immediate gain. County employees understand, support and integrate the County vision and goals into their delivery of services. County government effectively communicates, collaborates, and develops strategic approaches to issues affecting the entire County.
This lease/purchase agreement contributes to these goals by spreading cost over the useful life of the equipment instead of creating spikes in annual network equipment purchases for all County departments.
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Performance Measure(s):
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Measure
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FY 2004-05
Actual
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FY 2005-06
Projected
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Percent of Information and Technology service available
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99.9%
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99.8%
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BACKGROUND:
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The County’s Information Services Department (ISD) provides County departments with procurement and maintenance services for IT network infrastructure. ISD’s OBM network system availability goal is 99.8%. Network equipment has a useful life of three to five years. Most of the network equipment currently in service reached the end of its useful life several years ago. New equipment was not purchased in an effort to keep rates charged to departments flat during recent fiscal challenges. The life of the equipment was extended through the use of spare parts. The time has come to systematically replace the County’s network equipment without causing hardship to the budget.
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DISCUSSION:
A master lease agreement will allow the scheduled acquisition of IT network equipment, including but not limited to switches, routers, hubs and uninterruptible power supplies. Additionally a lease agreement will provide a mechanism for spreading the cost over several fiscal years. San Mateo County issued a Request for Proposal (RFP) for network equipment leasing services on October 14, 2005.The RFP process was used to find a suitable vendor to provide a systematic technology replacement lease plan where equipment life cycles could be established along with predictable network equipment expenditures. Key Government Finance, Inc. is recommended to provide a Master Lease Agreement that will encompass the required services plus include appropriate interest rates, terms, and conditions.
IT staff will create a prioritized equipment replacement plan. The price of the network equipment will continue to be determined using the County purchasing process. The County’s Purchasing Agent and Key Government Finance will arrange payment to the equipment vendor through the Master Lease Agreement. ISD will manage the lease payback process, making annual payments from a fund established by participating departments for this purpose. The 4 million dollar not to exceed figure is based on the anticipated replacement cost of the equipment over the next three years. Equipment purchased in the last month of this three-year lease will not be paid off until five years after the master lease agreement expires.
Key Government Finance is compliant with the County’s Equal Benefits Ordinance 2.93 and Jury Selection Ordinance 2.94. County Counsel has reviewed and approved the Resolution and Agreement as to form.
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FISCAL IMPACT:
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The term of this agreement is March 28, 2006 to March 27, 2009. The total amount financed is not to exceed $4,000,000. Funds have been included in the FY2005-06 budget. Future years’ cost will be recommended in subsequent years’ recommended budgets.
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