AgdaPkt 2008-06-23 Clsd and Special

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6.18 Page 1 of 12 R'.. .'. It......... p..' 0'''' T ;":c:. ~","" " ,. . - ,~, ... .. To the Honorable Mayor and City Council Fn>,m th~ Ci, iM~n~ er June 23, 2008 SUBJECT Three-year agreement to continue providing information technology services to the City of East Palo Alto. RECOMMENDATION Approve, by motion, the three-year agreement to provide information technology (IT) services to the City of East Palo Alto and authorize the City Manager to sign the agreement under which the City of Redwood City will provide information technology services to the City of East Palo Alto between July 1, 2008 and June 30, 2011. BACKGROUND In May, 2007, the City of East Palo Alto was notified by their provider of IT services that they would no longer be providing these services. Upon becoming aware of this, Redwood City's IT Division of Finance approached the City of East Palo Alto and negotiated a contract under which Redwood City's IT Division would provide services to East Palo Alto. On July 17, 2007, the City of East Palo Alto's City Council approved the contract and authorized their City Manager to sign an IT services agreement with Redwood City for the period of September 1, 2007 through June 30, 2008 at Redwood City's current cost recovery rate of $123.69 per hour for approximately 171 hours per month. On August 13,2007, the Redwood City Council approved the authorization of the City Manager to sign the agreement providing IT services to East Palo Alto. In December, 2007, Redwood City Information Technology and the City of East Palo Alto began discussions for a three-year agreement to benefit both Cities. The City of East Palo Alto would be guaranteed stabilized rate increases of between four and six percent in exchange for purchasing a minimum of 2,000 hours per year from Redwood City IT. The controlled increases are the same as agreed to in June 2007 for the City of Burlingame in exchange for their five-year commitment. On May 6, 2008, East Palo Alto's City Council agreed to the foregoing terms and authorized their City Manager to sign the three-year agreement. ALTERNATIVES The Council could elect not to approve the three-year agreement and continue with one- year agreements, thereby offering no guarantee on the maximum annual hourly rate increase. This is not a desirable alternative to East Palo Alto, the second largest customer in terms of hours purchased. Without an agreement in place, East Palo Alto could seek information technology services elsewhere. This would decrease Redwood City revenues, requiring a reduction of staff or finding one or more clients to purchase an equivalent number of hours.