Inter-Departmental Correspondence

Information Services Department


February 24, 2009


March 17, 2009







Honorable Board of Supervisors


Chris Flatmoe, CIO/Director of Information Services


Amendment No. 1 to the Key Government Finance, Inc. Master Tax Exempt Lease/Purchase Agreement



Adopt a Resolution authorizing the President of the Board to execute an Amendment to the master tax-exempt lease/purchase Agreement with Key Government Finance, Inc. for leasing services ,to add up to $1,000,000 to the Agreement, for a new total amount financed not to exceed $5,000,000, and extend the term end date to March 27, 2011.



Commitments: Responsive, effective, and collaborative government.

Goals 20 and 22: Government decisions are based on careful consideration of future impact rather than temporary relief or immediate gain. County government effectively communicates, collaborates, and develops strategic approaches to issues affecting the entire County.

This lease/purchase Agreement contributes to these goals by distributing the cost of network computing equipment over multiple fiscal years, eliminating one-time spikes associated with network computing equipment purchases. In addition, County departments are able to leverage the purchasing power of the County when purchasing network computing equipment in volume and/or from the same master agreement.


Performance Measure(s):


FY 2007-08

FY 2008-09

Percent of IT devices and applications meeting availability goals: Network Devices



Percent of time information and technology services available





The Information Services Department (ISD) is responsible for providing all County departments with purchasing recommendations, support and maintenance for a network computing environment that provides 99.8% availability. Network computing equipment has a useful life of three to five years and needs to be replaced within its useful life to ensure vendor support. San Mateo County issued Request for Proposal (RFP) #1165 for network computing equipment leasing services in 2005.The RFP process was used to find a vendor that could best provide a lease/purchase and finance plan in support of the County’s ongoing need for network computing equipment. On March 28, 2006, the Board approved Resolution 067871 which established a master lease/purchase and finance agreement with Key Government Finance, Inc.



Because network computing equipment purchased through Key Government Finance was acquired over a period of years, that equipment requires replacement on a staggered schedule. The extension of the County’s current master lease/purchase agreement will support the staggered acquisition schedule of network computing equipment to include: network switches, routers, hubs, mass storage devices and uninterruptible power supplies. Additionally, extending the lease/purchase agreement will provide a mechanism for distributing the cost over several fiscal years.


IT staff is following a prioritized network computing equipment replacement plan. The price of the network computing equipment will continue to be set 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 process, making annual payments from funds established by participating departments. The $1,000,000 increase in the not to exceed figure is based on the anticipated replacement cost of the network computing equipment over the next two fiscal years. By extending the current agreement two years and adding additional funds, ISD will maximize utilization of the already-negotiated terms through the existing equipment cycle. It is the intention of ISD to complete another RFP and establish a new contract with the selected vendor early in Fiscal Year 2011-2012 before the next cycle of network computing equipment purchases.


The Contractor has assured compliance with the County's Contractor Employee Jury Service Ordinance, as well as all other contract provisions that are required by County ordinance and administrative memoranda, including but not limited to insurance, hold harmless, non-discrimination and equal benefits. The County Manager has approved extending the contract term past three years, Risk Management has reviewed and approved Contractor’s insurance, and County Counsel has reviewed and approved these documents as to form.



The new term of this Agreement is March 28, 2006, to March 27, 2011. The amended total amount financed is not to exceed $5,000,000. Funds have been included in the Adopted FY2008-09 Budget. In out years, funds will be included in subsequent budgets and funded through service charges to appropriate departments.