HomeMy WebLinkAboutAgenda Statement 1984/12/18 Item 19 COUNCIL AGENDA STATEMENT
Item 19
Meeting Date 12/18/84
ITEM TITLE: Resolution J/11 77 Authorizing staff and Victory &
Associates to enter into negotiations with TeleCom Plus for
final system configuration and cost for a NEAX 2400 telephone
swi tch
SUBMITTED BY: Sid Morris, Principal Administrative Analyst 74(A,20._
REVIEWED BY: City Manager2 (4/5ths Vote: Yes No X )
At its 1/24/84 meeting, the City Council awarded a contract to Victory &
Associates, Telecommunications Consultants, to conduct phases II and III of
the Telecommunication Feasibility Study for the City. Phase II of the
contract included a study of the existing telephone system to identify where
service can be improved and costs reduced; system planning; network and system
design and system evaluation. All Phase II requirements have been completed
and Victory & Associates' final report and recommendations have been
submitted. (A complete copy of said report is attached.)
The following report includes a summary of the issues and recommendations
related to a new phone system for the City. Because of the complexity of this
item, the City's consultant is available to respond to Council questions.
RECOMMENDATION: That Council adopt resolution authorizing staff to enter
into negotiations with Telecom Plus regarding final system configuration,
design, and cost.
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION:
In July 1984, the City issued a Request for Proposal (RFP) for a
telecommunications system for the Chula Vista Civic Center and its outlying
facilities. Proposals were sent to approximately 10 telecommunications
companies, including the 3 new companies created by the recent AT&T
divestiture - the City's present system provider, Pacific Bell Telephone;
PacTel Communications Systems; and AT&T as well as being noticed in the
Star-News and Daily Transcript. A prebid conference was conducted on
August 6, 1984, to discuss the RFP specifications with the potential bidders.
Sealed bids were due no later than Friday, August 24, 1984, at 1 p.m.
r- , ,
Page 2, Item 19
Meeting Date 12/18/84
BID SPECIFICATIONS
The bid specifications were prepared in a manner to allow submittal of
proposals for either the purchase or lease of a telephone system. While most
telephone providers sell rather than lease their equipment, the lease option
was left open to allow for a proposal from Pacific Bell Telephone for their
existing CENTREX System. In order to ensure that the bids received for the
City 's telecommunications were identical , the specifications outlined the
general telecommunication needs of the City without specifying a particular
type of system or equipment. This process was designed to encourage receipt
of proposals from numerous equipment suppliers suggesting a variety of
approaches to the City's telecommunications needs. The specifications
outlined the City's voice communications requirements while encouraging a
response to the City's anticipated data communication needs. Because the bids
received are not based on identical systems or equipment, they were evaluated
on the basis of their ability to provide cost effective service and meet the
City's current voice and data requirements and projected requirements for the
next 10 to 15 years.
The following five bidders responded to the RFP:
Bid Proposals
Cost Per Month
Vendor System Proposed Total Bid (5-Year Lease/Purchase)
TELECOM Plus NEAX 2400 $ 256,013.00 $5,273.87
AT&T Information Systems System 75 $ 263,851 .57 $5,435.34
*United Technologies
Communications (UTC) UTX 1200 (PBX) $ 288,195.00 $5,936.17
PacTel Communications SLIMS $ 302,655.06 $6,234.70
*United Technologies
Communications (UTC) UTX 1001-M $ 325,460.00 $6,704.48
Pacific Bell Telephone CENTREX $ 481 ,640.47 $7,991 .68
*UTC submitted two proposals.
Evaluation of all bids by Victory & Associates was based on the following
criteria and discussed in detail with City staff.
. System cost
. Company qualifications
. Technical approach
- Equipment features
- Reliability
- Installation and maintenance staffing
. Organizational size/structure
. Evaluation of references and successful installation and operation of
similar systems of at least five hundred (500) main station lines
. At least 1 system of the type proposed that has been operational for at
least 6 months
. Financial stability of the vendor
Page 3, Item 19
Meeting Date lz/I8/84
CONSULTANT CONCLUSIONS/RECOMMENDATIONS:
1 . The operational capabilities of the existing telephone system have been
evaluated and determined to be inadequate for efficient operation. Based
upon past expenditure history, it is estimated that a total 5-year
equipment lease cost approaching $645,209 will be encountered if the
existing system continues to be used. This represents a conservative
estimate based upon Pacific Bell 's, CENTREX cost of approximately $3,736
per month, equipment rental of approximately $4,168 per month, and a lease
cost escalation factor of 5% per year.
2. Both operational and financial considerations indicate that a new
telephone system should be installed. The proposed system can be procured
on an outright purchase or lease/purchase basis at reasonable rates from
private vendors.
3. Purchase of the existing telephone cable system is recommended thus
reducing ongoing cable rental costs.
4. Minor modifications to the present telephone network can provide long-term
cost savings without degrading operational capabilities. (The consultant
recommends that staff lease two San Diego FX (Foreign Exchange) lines for
toll call areas within San Diego County and two GTE SPRINT lines for
interstate calls. Cost savings regarding this recommendation are
discussed later in this agenda statement. )
5. In order to accommodate the 911 service, it is recommended that the Police
emergency numbers continue to be provided through a key telephone system
leased from AT&T. It is anticipated that the City would continue to lease
this equipment until after the proposed renovation of the Police
Communications Center is complete and new consoles are installed. The
monthly rate for this equipment, as projected by AT&T in their bid
response to the City, will be approximately $269 per month. This monthly
recurring rate is subject to rate increases and/or decreases.
6. That a conduit be installed between the main Civic Center and the Library
to eliminate 55 off-premise extensions at a cost of $990 per month.
Estimated cost of the conduit is $15,000. At a monthly off-premise
extension rate of $18/line/month, the City would amortize the cost of the
conduit in less than 16 months. For the remaining 8 years 8 months of a
10 year life, this represents an estimated $102,960 savings.
7. That Council consider purchasing a Station Message Detail Recorder (SMDR)
to provide telephone system management. This system provides translation
of call detail into usable information, such as user names, cost center
names and numbers, equipment inventory, job titles, identification of City
and State called as well as digits dialed, cost per call and length of
call , etc. The estimated cost of an SMDR, over the total system cost
ranges from $7,000 to $25,000.
911
Page 4, Item
Meeting Date 8/84
The SMDR will allow sound system management, prevent system abuse, and
enable staff to analyze telephone data and made recommendations regarding:
Ongoing maintenance of the level of service (features) provided to
each phone or group of phones,
System analysis regarding necessity of additional SPRINT or foreign
exchange lines or overall expansion of the system.
Purchase of a specific SMDR is still being evaluated, including evaluation
of development of an inhouse system. A final recommendation will be
included in staff's final report on award of contract following completion
of negotiations with Telecom Plus.
COST ANALYSIS
A cost analysis of four major cost components of the City's existing telephone
system, as compared to cost effectiveness of the proposed telephone systems,
was conducted by the consultants. The results of that analysis is detailed in
the following section.
1 . Telephone Network Design - Intrastate Calls: Victory & Associates
developed a network design to evaluate the pattern of City telephone calls
outside of the local area to determine which network configuration would
be most cost effective for routing outside calls. Two San Diego FX lines,
with a grade service level of 4% busy (4 circuits busy out of 100)* in an
average busy hour, are recommended to cover calls to La Jolla, Pacific
Beach, and El Cajon. These areas receive significant telephone traffic
from City staff as well as represent toll calls from the City of Chula
Vista. The implementation of the foreign exchange lines represents an
estimated savings of approximately $111 per month, or approximately 47%
more cost effective than the City's current cost of $236 per month.
2. Telephone Network Design - Interstate Calls: All calls to interstate
points outside California were also reviewed for possible application of
an interstate WATS service. A number of alternatives to telephone company
long-distance and WATS services are available in the San Diego area
including EXECUNIT and GTE SPRINT networks. Two dedicated access lines,
provided by GTE SPRINT, are recommended for both intra (outside of the 714
and 619 area codes) and interstate calling. The grade of service for the
GTE SPRINT service would be 8% busy (8 circuits busy out of 100)* in an
average busy hour, and the estimated monthly savings is $550 per month.
* It is more cost effective to use this level of service than to pay for
additional lines to increase service level .
°
Page 5, Item 19
Meeting Date 12/18/84
NETWORK SAVINGS SUMMARY
Present Proposed Estimated
Network Systems Monthly Cost Monthly Cost Monthly Savings
San Diego Foreign
Exchange $ 236.69 $ 125.5 $111 .19
GTE SPRINT $1477.84 $ 925.51 $552.23
TOTAL $1714.53 $1 ,051 .01 $663. 52
ESTIMATED ANNUAL SAVINGS - $ 7,962.24**
ESTIMATED 10-YEAR SAVINGS - $79,622.40
** These savings could also be achieved with the existing Pacific Bell
CENTREX system.
3. Off-Premise Extensions: The City currently has approximately 88
off-premise extensions (extensions located at some distance from the main
switch that could require rental of Pacific Bell lines) , 55 of which are
located at the Library. Cost of these extensions is projected at
approximately $990/month with the new system. Installation of conduit
between the main switch, to be located in the Police basement, and the
Library at a cost of approximately $15,000 will enable direct wiring of
these extensions to the switch allowing the City to realize a savings of
approximately $990/month.
ESTIMATED ANNUAL SAVINGS - $ 11 ,880.00
ESTIMATED 10-YEAR SAVINGS - $102,960.00
4. Ten-Year Cost Projection: A ten-year cost projection was developed to
evaluate the cost effectiveness of the proposed system versus the existing
Pacific Bell CENTREX. The cost analysis (see consultant's report Section
8. 4) includes comparison of costs related to maintenance, tax, insurance,
installation, access charges, etc. as well as a comparison of continued
rental of CENTREX versus lease/purchase and outright purchase options for
the Telcom Plus NEAX 2400.
Page 6, Item
Meeting Date
Summary-Cost Analysis Pacific Bell/NEAX 2400**
1st Year Cumulative Cumulative
Phone System Cost 5-Year Cost 10-Year Cost
Pac Bell $211 ,939 $718,373 $1 ,500,422
Telecom Plus (Purchase) 306,270 532,416 881 ,6421
Telecom Plus (Lease Purchase) 139,144 618,435 967,6612
1 Estimated 10 years savings over Pacific Bell - Purchase: $ 618,780
2 Estimated 10 years savings over Pacific Bell - Lease Purchase:$ 532,761***
A major factor contributing to the higher cost of Pacific Bell , CENTREX is
that under current Public Utility Commission regulations and additional
constraints related to the divestitute of AT&T, Pacific Bell cannot sell their
system (CENTREX) to the City. As a result, the City continues to incur
ongoing monthly system/equipment rental charges whereas with either the
lease/purchase or outright purchase plan, the City eventually owns the
equipment and is not subjected to ongoing equipment costs and rate increases.
SYSTEM FEATURES
In addition to the previously explained economic advantages, a feature
analysis was completed for each system to insure the City obtained
state-of-the-art technology in switching features for the least cost. Telecom
Plus again provided the most cost-effective system features. In addition,
when NEC developed its NEAX 2400 switch approximately 8 years ago, it used a
"building block" concept that enables its state-of-the-art technology to be
combined with older equipment without major equipment modifications. The
building block concept and as well as the fact that the NEAX 2400 provided the
largest growth potential of all systems bid before additional equipment
purchases are required were major considerations in the system evaluation.
Although the following is not a comprehensive list of system features, it does
provide Council with an explanation of the more prominant features included
with the NEAX 2400. (A more detailed description of system features is
provided in Section 10.2 of the consultant's report.) The NEAX 2400 is
manufactured by NEC in Melville, New York, and Santa Clara, California. It is
considered a "third generation" (i .e. , the latest in telecommunications
technology) switching system capable of switching integrated voice and data
transmi ssions.
** The cost analysis includes a 5% escalation factor for all cost variables.
The consultants indicated that this is very conservative and could
justifiably have been set at a higher percentage.
*** Estimated savings from Lease Purchase does not take into consideration
estimated revenue realized from reinvestment of City funds not spent on
outright purchase.
10\
Page 7, Item 79
Meeting Date IZ/18/84
DATA TRANSMISSION: The NEAX 2400 is capable of transmitting
simultaneous voice and data up to 19,200 bytes per second. However, the
transmission of data through the telephone switch is currently not cost
effective for the City. Data transmission through the telephone system is
considered likely to be important to the City in the future. Through the
acquisition of the NEAX 2400, that capability can be utilized when it
becomes cost effective.
DISTRIBUTED CONTROLLER: In the event of a malfunction, this feature
prevents the entire system from malfunctioning and thus results in the
loss of only a portion of the system rather than the total system.
REMOTE MAINTENANCE AND SYSTEM ADMINISTRATION: This feature allows
station/trunk changes or reassignment to be performed without a site visit
by a technician or service personnel and can also be used to perform
system diagnosis and detect potential problem areas before they cause down
time to the system.
DIGITAL SWITCHING NETWORK: This consists of a non-blocking digital time
division switch allowing all ports to be in use simultaneously (i .e. , if
all City employees were divided into two groups--A and B--and all A' s
phoned all B's at the same time, they could do so without receiving a busy
tone) .
PORT INTERFACE: This provides access to various types of terminal
devices including digital and analog telephones, data terminals,
computers, as well as numerous subsystems including voice mail , text mail ,
dataswitch networks, etc.
CAPACITY: Of the six systems bid, the NEAX 2400 has the largest system
capacity with 736 ports. The second largest system was bid by United
Technologies Communications at 576 wired ports. (Capacity of other
systems bid show in consultant's report, Section 6.0) System capacity is
extremely important to the overall economic efficiency of the system
because it allows future growth in both data and voice transmission
without the necessity of purchasing expensive additional "cabinet"
equipment necessary to expand the system. (A diagram of the proposed
system is shown in consultant's report, Section 5.4. ) As proposed the
NEAX 2400 will provide sufficient capacity for an additional 120 lines of
82 data devises.
FUNCTION FEATURES
The proposed telephone system includes the following function/operating
features offered as standard equipment that are currently offered as optional
features under the current system from Pacific Bell Telephone. In considering
feature selection the consultant examined feature costs and operational
efficiencies and found Telecom Plus, NEAX 2400 to be the most cost effective.
Page 8, Item 19
Meeting Date 12/18/84
Station Features
Callback
Ri ngback
Call Forwarding - Busy Line
Call Hold
Call Pickup
Call Transferred - All Calls
Consultation Hold - All Calls
Station Controlled Conference
Station Hunting
System Features****
Direct Inward Dialing (DID)
Data Line Security
Electronic Telephone Set
Integrated Voice and Data
Least Cost Routing ( 6-Digit)
Power Failure Transfer
Reduced Cable
Reserve Power
Remote Maintenance
Speed Calling
Station Message Detail System (SMDS)
Toll Restriction (6-Digit)
SYSTEM MAINTENANCE
System maintenance is provided by Telecom Plus for the first year and is
included in the total system cost. A second year option for maintenance was
also bid but is not included in the system cost. During the first year after
system installation, staff will be evaluating the cost effectiveness of
inhouse maintenance versus continuation of vendor maintenance.
CONCLUSION
At this point in the selection process, staff is requesting only that Council
authorize staff and Victory & Associates to enter into final negotiations with
Telecom Plus regarding final system configuration, general maintenance and
response times, maintenance staff availability and location, training, and
total system cost. It is staff's intent to address these supplemental issues
and return to Council with final recommendations and a request for
appropriation of funds. It should be noted at this point that the recommended
vendor's maintenance headquarters is located in Orange County. One of the
issues staff will negotiate is the possibility of locating a maintenance
office in San Diego County. Telecom Plus has already indicated a willingness
to locate a maintenance office in San Diego County.
**** Definitions for these features can be found in Consultant's Report
Section 8. 2.
Page 9, Item 19
Meeting Date 12/18/84
In conjunction with the above negotiations, Finance staff will develop and
distribute an RFP for financing the proposed system. Included in the
appropriating resolution will be total system cost and recommendations
regarding financing techniques. It is estimated that the total cost of the
proposed system would not exceed $295,000 based upon the turn-key installation.
When compared to other telephone systems on the market today, the City's
existing telephone system cannot be considered cost effective. Due to current
PUC regulations, CENTREX system costs will continue to escalate with the City
acquiring no equity in the system.
As indicated above, the City of Chula Vista can acquire a state-of-the-art
telecommunications system at a projected cost of approximately $295,000.
Based on projected savings over the next 10 years, this system would amortize
in approximately 5 years (purchase price only) . Although somewhat more
expensive for the first two years the cost differences begin to favor TeleCom
Plus dramatically over the next eight years, especially with amortization of
the system in year five. Under the current system, lease payments continue to
escalate with no equity being developed. Cost savings from Telecom Plus are
estimated between $532,761 - $618,780 for the first 10 years to as much as
$869,800 over 15 years.
FISCAL IMPACT: It is anticipated that the cost of this system will not
exceed $295,000. No funds are currently budgeted for purchase of a
telecommunications system. Staff will return with a recommendation regarding
the amount and method (i .e. , purchase, lease/purchase) of purchase.
WPC 0644D
CITY OF CHULA VISTA
DISCLOSURE STATEMENT
4PPLICANT'S STATEMENT OF DISCLOSURE OF CERTAIN OWNERSHIP INTERESTS ON ALL APPLICATIONS
r1HICH WILL REQUIRE DISCRETIONARY ACTION ON THE PART OF THE CITY COUNCIL, PLANNING
:OMMISSION AND ALL OTHER OFFICIAL BODIES.
the following information must be disclosed:
1. List the names of all persons having a financial interest in the application.
Telecom Plus Communications Co. Siemens Corporation
Telecom Plus International NEC Corporation
Telecom Plus of California Over 25 , 000 Shareholders of
Telecom Plus International Stock
List the names of all persons having any ownership interest in the property involved.
The individual "Property" (a complete telephone system) is owned by
Telecom Plus of California until the time of acceptance and final
payment by the City of Chula Vista.
'. If any person identified pursuant to (1) above is a corporation or partnership, list
the names of all individuals owning more than 10% of the shares in the corporation
or owning any partnership interest in the partnership.
Telecom Plus of California is a wholly owned ,ubsidiary of Tel-Plus
Communications Company which is 20% owned by Siemens Corporation and
80% owned by Telecom Plus International.
. If any person identified pursuant to ( 1) above is a non-profit organization or a
trust, list the names of any person serving as director of the non-profit
organization or as trustee or beneficiary or trustor of the trust.
Not Applicable
. Have you had more than $250 worth of business transacted with any member of City
staff, Boards, Commissions, Committees and Council within the past twelve months?
Yes No x If yes, please indicate person(s)
arson is defined as: "Any individual, firm, copartnership, joint venture, association,
)cal club, fraternal organization, corporation, estate, trust, receiver, syndicate,
'Os and any other county, city and county, city, municipality, district or other
)litical subdivision, or any other group or combination acting as a unit."
// a)
VOTE: Attach additional pages as necessary. )—�'-J ���`' -
Signat a of applicant/date
Joseph E . Sharkey, Direc or Major System
'C 0701P Engineering
•110 Print or type name of applicant
�� \ `OI TELECOM PLUS OF CALIFORNIA, INCORPORATED