HomeMy WebLinkAboutAgenda Statement 1984/07/24 Item 9 COUNCIL AGENDA STATEMENT
Item 9
Meeting Date 7/24/84
ITEM TITLE: Resolution //742/ Waiving bid requirements, approving
agreements with Burroughs Corporation for purchase and lease
of data processing equipment, and authorizing transfer of funds
SUBMITTED BY: Director of Management Servi s (4/5ths Vote: Yes No X )
Finance Director&
REVIEWED BY: City Manager
At the June 18, 1984 budget hearing, the City Council approved an increase in
the FY 1984-85 Data Processing budget for the first year of a five-year
lease-purchase of a new central processor, related hardware and systems
software for the mainframe computer. At that time it was not clear whether a
Burroughs B-2925 or an older B-2930 should be recommended. Upon further
examination, staff recommends a B-2925, which will be Burroughs' front line
processor for the foreseeable future, as the most cost effective alternative.
In addition, staff has determined that by changing internal procedures and by
adding an additional $1 ,900 terminal , the purchase of the $11 ,500 card reader
can be avoided. However, the card reader and its supporting interfaces must
be leased for three months to enable the changeover to a cardless system.
Consequently, staff has negotiated and is submitting for Council approval a
contract with Burroughs for the acquisition of the central processor, an
operating lease for the cardreader and NRZ compatibility equipment, plus the
approval of the transfer of funds for the terminal (which will be purchased
separately, probably from a vendor other than Burroughs). A copy of the
Burroughs contracts is available in the Mayor/Council Office.
RECOMMENDATION:
1 . Adopt the resolution waiving bid requirements, approving the agreements
with Burroughs and authorizing the transfer of funds within the Data
Processing budget for the separate purchase of a terminal .
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION:
Section 2.56.170 of the Municipal Code provides the authority for the
recommended waiving of the bidding requirement. Support for the waiver stems
from the following:
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Page 2, Item 9
Meeting Date //24/84
1. Existing programs are 100% compatible with the proposed B-2925 processor.
2. Burroughs will forgive the remaining balance owed for our existing B-2805
processor.
3. Peripheral equipment currently owned and operating is compatible and will
be used with proposed equipment.
4. Burroughs is the only manufacturer which offers a processor and software
compatible with existing peripheral hardware and application programs.
5. The B-2925 is not available through the secondary used market or other
sources.
Analysis of Purchase Costs
Hardware
List Price (B-2925) $136,972.00
less 14.5% discount (19,860.94)
Net Hardware $117,111 .06
Software
Master Control Program (MCP) $ 25,000.00
Workflow Language (WFL) 1 ,815.00
Total Software $ 26,815.00
Total Hardware and Software $143,926.06
Sales Tax 0 .06 8,635.56
Total Purchase Including Sales Tax $152,561 .62
Payoff of B-2805 Peripherals on Remaining Commitment $ 2,927.24
TOTAL AMOUNT TO BE FINANCED $155,488.86
Financing of Lease-Purchase
A third party lease will be used to finance the purchase of the computer.
Rates and precise payment schedules will be determined by market condition at
time of delivery. The cost analysis provided in the June 8, 1984, budget
report assumed a 10% amortization rate for the financial lease of the central
processor. Since that time, the best rate available has risen to 10.82%. It
is hoped that this rate will not rise further before the final lease
arrangement can be made. There is still some leeway in the budget because of
the savings in the cardreader but, beyond that, additional funds may need to
be requested if the interest rates rise much further.
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Meeting Date 7/24/84
The best current rate available is 10.82% for 60 months with a payment of
$3,338.55 per month.
Short-Term Leases
As discussed previously, the separate purchase of a $1 ,900 terminal will avoid
the need to purchase the $11 ,500 card reader. The card reader and supporting
interfaces will , however, need to be leased for three months to enable the
changeover to the cardless system.
In addition, the June 8, 1984, budget report explained the advisability of
leasing a special adapter (NRZ-DLP) for three months in order for the proposed
B-2925 to be compatible with the existing thirteen-year-old key tape
machines. By the end of that transition period, staff should have implemented
new data entry microcomputers which will replace the old key tape machines.
The lease cost of the above equipment will be $991 .10 per month.
FISCAL IMPACT: Purchase price of the new machine will be $152,561 .62
including equipment, software, and sales tax. Target date for installation
will be August 30, 1984. Installation is included in the sales price.
Delivery charge will be less than $1 ,000 and will be absorbed from an existing
account when the precise charge is known.
A summary of affected accounts is shown below:
Account 5268-Service to Maintain Other Equipment
B-2805 2 months 0 2,205.70 = $ 4,411 .40
B-2925 10 months 0 1 ,538.50 = 15,385.00
$ 19,796.40
Account 5271-Rentals and Leases
B-2805 2 months 0 2,052.32 = $ 4,104.64
B-2925 10 months 0 3,338.55 = 33,385.50
B-2925 NRZ Mag Tape Compatibility
and Card Reader
3 months 0 991 .10 = 2,973.30
$ 40,463.44
Adequate funds are included in the FY 1984-85 budget for the above costs,
which are based on 10.82% interest. If interest rates increase significantly
prior to finalizing the lease-purchase arrangement, however, these costs could
increase to the point that additional funds may need to be requested.
In addition, a transfer of approximately $1 ,900 from the Data Processing
supplies and services budget to the "other equipment" account in Capital
Outlay will be required for the separate purchase of the additional terminal
to avoid the need for the card reader.
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