Approve the attached purchase and support agreements between the City of Rancho Palos Verdes and Expanets regarding the replacement of the City Hall telephone and voice messaging system and authorize the Mayor and the City Clerk to execute them.

The City Council approved the Request for Proposal for a Voice Over Internet Protocol (VOIP) Telephone System (the "RFP") for the replacement of the City Hall telephone and voice messaging system and authorized the Finance Director to negotiate the terms and conditions of the purchase of the system and related support agreement during the City Council meeting on April 16, 2002. The April 16^th staff report related to the City Council’s action, including a substantial amount of background information, is attached hereto for your review.

Staff has summarized its recommendation to purchase the Cisco telephone and voice messaging system below. Staff has included additional information regarding its activities leading the recommendation presented in this staff report.

The City’s Information Technology consultant, Ted Vegvari, Director of Palos Verdes on the Net (PVNET), has led two technical interns and the City’s IT staff in a team environment (the "Project Team") during its efforts to replace the City Hall phone system. As described in the April 16^th staff report, the Project Team has solicited input from key departmental staff via meetings, the preparation of a user survey and two product demonstration presentations by telephone vendors. Additionally, the Project Team has reviewed the vendor’s replies to both the Request For Qualifications (the "RFQ") and the Request For Proposals (the "RFP") and conducted a site visit of the selected system prior to making it’s recommendation.

The cost of the proposed Cisco telephone and voice messaging system follows:

Both the initial and annual support costs were the lowest among the Vendors replying to the RFP. A summary of the proposed hardware and software follows:

The support of the proposed Cisco system includes:

• Level 1 Emergency (no phone service) will be responded to immediately via phone or on-site support within four hours, including replacement of hardware;
• Level 2 Emergency (every problem less than Level 1) will be responded to within 15 minutes by phone or on-site within 8 hours, and replacement parts (except phone consoles) provided and installed 8x5xNBD (next business day);
• Support will be provided by the Cisco Technical Assistance Center via telephone or email on a 24x7x365 basis;
• Periodic minor maintenance releases, bug fixes and patches plus major software upgrades;
• Phone consoles will be replaced within 5 days; and
• All of the above at no additional cost beyond the annual support cost.

The FY 2002-2003 budget includes an appropriation for $25,000 for annual support of the proposed telephone and voice messaging system. As described previously, the first year annual support cost for the proposed Cisco system would be $16,917.

• As you may recall, the Project Team solicited the input from staff regarding the level of importance of approximately fifty user features via the User Survey prepared in early 2002. Based upon the reply to the RFP presented by Expanets, the Cisco system meets all of the user features that were included in the User Survey (attached to the April 16^th staff report). None of the other systems offered by vendors that replied to the RFP were able to meet all of the user features.
• In the opinion of the Project Team, the Cisco system would be the easiest system to maintain. Based upon its review, the Project Team believes that the Cisco administrative software will enable the implementation of the system to meet the individual needs of each department at City Hall (e.g. multiple distinctive rings, pre-determined call forwarding of busy calls, the set-up of a user voice box on a department attendant console, number of rings before transferring to a nearby extension or a voice box). Making system changes appears to be straightforward.
• The administrative software used to configure general settings of the system is web-based; therefore, administrative staff could make configuration changes remotely with administrative password protection. This will become a more valuable feature if and when park facilities are connected to the phone and voice messaging system.
• The Cisco system is the only "open system" amongst the group of systems presented by chosen vendors. This will enable more design flexibility in the future in the event upgrades are deemed necessary. Perhaps only components of the next telephone and voice messaging system will need to be replaced (or enhanced), rather than the entire system.
• The Cisco system was the only system that provides full redundancy (without additional hardware) in the event of a shut down of the call handling server main processor (e.g. re-boot of the server) without interfering with call switching operations.
• The Cisco call handling and voice messaging servers can be backed up daily along with all other data stored from the City Hall network. Integration of the back up of the Cisco phone and voice messaging system with the rest of the City Hall network is not possible with the other systems presented by the other vendors that replied to the RFP.
• The Cisco system was the only system that reported to comply with all of the technical requirements of the RFP (attached to the April 16^th staff report).

• In the event Expanets ceases operations, the support arrangement would be assumed by Cisco. Cisco is one of the largest telecom equipment providers in the world.
• The Cisco system was preferred by all staff members participating in the second demonstration conducted after receipt of the RFP replies, as well as each member of the Project Team.

The Project Team conducted three phone interviews of three existing Expanets clients. The two primary questions asked of two IT Directors and one Finance/IT Director of a small California based financial institution and two small technology companies were:

• Are you currently operating a phone and messaging system installed by Expanets?
• Does the system meet your expectations?

All three respondents replied affirmatively to both questions and gave a favorable response, including a statement that they would choose Expanets again.

Expanets referred the Project Team to the Information Technology department of the Los Angeles County Sheriff Department for an on-site visit at their Norwalk administration facility. The same Cisco system described in the Summary of Proposed Cisco Hardware and Software on Page 2 is deployed throughout all four floors of the Norwalk administration building. The Sheriff will likely migrate to the Cisco system at all locations over time.

After a brief walk-through, including the installation of the voice gateway, call management and voice messaging servers, staff interviewed the IT Administrator responsible for the Cisco phone and messaging system. The Project Team’s questions included: (1) ease of user training: (2) ease of changing user preferences; (3) whether the remote use Softphone worked satisfactorily; and (4) satisfaction with installation and support services provided by Expanets. Based upon the answers to questions posed by Project Team, the Sheriff’s Cisco IT Administrator expressed complete satisfaction with quality of voice, operation and support provided by Expanets. The Cisco IT Administrator affirmatively recommended the Cisco system.

The Deputy City Attorney, Robert Pitman, has reviewed all agreements prior to inclusion with this report. Mt. Pitman has significant experience reviewing software-licensing agreements. All of Mr. Pitman’s comments have been agreed to by Expanets and incorporated into the attached agreements.

As a part of staff recommendation on April 16^th, the following qualified vendor (previously selected by telephone system providers (hereafter referred to as "Vendors") were invited to participate in the RFP process:

Subsequent to releasing the RFP, Real Time Communications (the vendor selected by Siemens) withdrew from the RFP process, citing the unavailability of Siemens solution that meet the City’s minimum standards until late 2002. All of the telephone solution providers selected to participate in the RFP are long-term telephone system industry members. Based upon the information provided, PVNET determined that each certified vendor appeared to be qualified to perform the installation and initial support.

The Project Team solicited input from key departmental staff via meetings, a user survey and product demonstrations presentations by telephone vendors. The Project Team attempted to incorporate staff’s feedback into the RFP.

The Project Team established the following criteria to evaluate the RFP replies and select the best solution for City Hall:

• Initial cost of hardware, software, services and training;
• The cost of maintenance and support agreements for the proposed system;
• Whether or not the proposed system meets the requirements and wishes of staff based upon the Vendor’s reply to the User Survey questions;
• Whether or not the proposed system meets the requirements and wishes of staff based upon information derived from observing system demonstrations by the Vendors after receipt of the RFP replies;
• Whether or not the proposed system meets the requirements and wishes of staff based upon the Vendor’s answers to standard technical and functional questions asked each Vendor during the system demonstration; and
• The cost of maintenance and support agreements for the proposed system.

1. The Altigen is not capable of providing video conferencing.
2. The Altigen voice messaging system is not capable of transferring a call directly to a user’s voice messaging box with bypassing the phone user.

1. The 3 COM system cannot be configured to forward busy calls only.
2. The 3 COM system is not capable of providing video conferencing.
3. The 3 COM voice messaging system is not capable of transferring a call directly to a user’s voice messaging box with by-passing the phone user.
4. The 3 COM system cannot provide the user with more than one voice-messaging greeting.

Avaya’s vendor, Salient Networks did not reply to the User Survey.

Cisco’s vendor, Expanets, responded that their system was capable of performing all functions included in the User Survey.

• The Cisco system appears easier to configure and use than all other systems demonstrated.
• Only the Cisco system can be configured offsite with an administrative password over the Internet.
• The configuration screens of the 3 COM and Avaya systems are complex.

After submitting their respective RFP reply, vendors demonstrated their system at City Hall. The Project Team asked the representatives of each vendor twenty-user questions and fourteen technical questions during the demonstration. The following is a brief summary of unfavorable vendor replies to standard user and technical questions asked during demonstration:

The Altigen system does not include department attendant consoles with at least 34 buttons, a minimum requirement of Planning, Building Safety and Pubic Works departments. The RFP reply included eight analog department attendant consoles, not meeting the minimum requirements.

• In the event a call is forwarded to a nearby extension, the voice message will be left to the forwarded extension, rather than the target extension, if the call is not picked up. This is a minimum requirement of all staff.
• System software upgrades are not free, even under a software support agreement. Upon further discussion, the cost of upgrades is generally in excess of $10,000. This is cost prohibitive.

No unfavorable replies were noted during the 3 COM demonstration, except those deficiencies already noted during the reply to the User Survey questions provided with the RFP reply and described in the proceeding page of this report.

Cisco’s vendor, Expanets, responded favorably to all of the standard user and technical questions asked during demonstration.

In the staff report dated April 16^th, staff described the need to install additional LAN lines throughout City Hall to provide connectivity of the proposed phone and voice messaging system in offices, conference rooms and other work areas where computers (and therefore LAN lines) don’t currently exist or additional LAN lines are necessary to plug into the new system. The report also informed the City Council that the installation of additional network switches would be necessary to connect additional LAN lines required for the VOIP phone and voice system.

The FY 02-03 budget includes the provision for the beginning of the implementation of: (1) use of electronic aerial photos of the City; and (2) a document imaging system. As you may already know, the increased bandwith demands required to transfer imaging data and giant aerial photos (as well as a geographic information system) will require gigabit ("GB") speed. In anticipation of the bandwith demands of such systems, along with the possible acquisition of a VOIP phone and voice messaging system, IT staff retained the Belkin group to perform bandwith speed testing of the existing City Hall network. The CATV 5 network cabling tested at 100 MB speed. CATV 6 cabling installed over the last couple of years tested at GB speed.

IT Staff recommends upgrading the data network (data servers, workstations, printers and storage devices) to GB speed at this time. By accelerating the installation of CATV 6 cabling with the proposed installation of the phone and voice messaging system, the cabling services for the gigabit network upgrade could be performed at the same time, saving approximately $10,000 of cabling labor cost. Staff recommends re-allocating an existing Information Technology ("IT") program budget appropriation, as explained in the FISCAL IMPACT section of this report, to pay for the cost to upgrade the City Hall network to gigabit speed.

A summary of the additional cost to upgrade the City Hall network to GB speed follows:

As a reminder to the City Council, the alternative phone system using digital technology would require a complete replacement of all phone lines throughout City Hall, in light of high incident rate of line failures currently experienced. The cost would be about the same as the cost of the proposed network upgrade described above.

The April 16^th staff report included the following significant information regarding the support of the existing Avaya System 25 phone system:

• Avaya notified the City’s Information Technology (IT) staff in January 2002 that the main processor has not been supported since 1999; and
• Avaya will terminate its limited hardware and software support on July 24, 2002;

Staff has arranged the continued support of the Avaya System 25 hardware and software by Expanets for an hourly cost of $80 per hour. Considering the fact that the main processor has not been supported since 1999, IT staff does not feel that the City is at any greater risk subsequent to the termination of Avaya System 25 support. Expanets is a certified Avaya dealer.

Regardless which system is purchased, its operating circuit will be connected to the City Hall stand by generator. IT has already coordinated the addition of the circuit to the City Hall stand by generator.

The FY 2001-2002 budget included an appropriation of $100,000 in the Equipment Replacement fund to provide the replacement of the existing phone and voice messaging system at City Hall. A summary of the use of the budget appropriation, staff’s recommendation for a FY 02-03 budget re-allocation and the estimated initial cost of the proposed Cisco voice and messaging system follows:

The FY 02-03 Equipment Replacement fund budget includes $80,000 for the replacement of all of the workstations. IT Staff actually performed an upgrade of all of the workstations, including Pentium 4 processors and additional RAM memory, during FY 01-02 at a cost of about $41,000. Approximately $30,000 - $40,000 was saved, resulting from the re-use of hardware parts (e.g. sound cards, graphic cards and hard drives) from the old workstations.

Therefore, the $80,000 Equipment Replacement fund budget appropriation is available to re-allocate to the proposed purchase of the voice and messaging system, without any further reduction of Equipment Replacement fund reserves. A summary of the computation of the proposed re-allocation of FY 02-03 Equipment Replacement fund budget appropriation (see E in the schedule titled Analysis Of Proposed Use Of Budgeted Appropriations In The Equipment Replacement Fund To Pay For The Initial Cost Of The Phone And Voice Messaging System presented immediately above) follows:

The FY 2002-2003 budget includes an appropriation of $25,000 for the cost of support of the proposed phone and voice messaging system, including hardware and software support as well as maintenance services provided by either the selected vendor and/or PVNET. The $25,000 budget appropriation is sufficient to pay for the cost of the annual support cost of $16,917 plus support services provided by PVNET during FY 2002-2003. Again, the purchase of the proposed phone and voice messaging system will not use additional reserves of either the General fund or Equipment Replacement fund.

Respectfully submitted,
Dennis McLean
Finance Director

Reviewed,
Les Evans
City Manager