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    8.    
Finance Committee
Meeting Date: 11/29/2022  
FROM: Bill Gallardo

Subject:
Lease and Maintenance of Digital Printing/Copying Equipment
RECOMMENDATION
Issue annual purchase orders and execute lease and maintenance agreements with Xerox Corporation for a total cost of $175,591 based on a 60-month lease of digital printing/copying equipment including as-needed print charges.
BACKGROUND/DISCUSSION
The City's Reprographics Services Division utilizes digital printing and copying equipment to facilitate its operations. This equipment generates an estimated 1.4 million documents per year for the City and its client agencies.  Among the items produced are color brochures, business cards, catalogs, event programs, invitations, postcards, and presentation documents for various meetings.
 
In 2017, City staff conducted an internal review of reprographic needs and selected the proposal from Xerox Corporation (Xerox) based on a competitively bid National Joint Powers Alliance (NJPA) cooperative purchasing contract for the current lease agreement. The leased equipment has met the City’s print production needs and has provided a significant cost savings from earlier agreements with previous vendors. To ensure that the proposed agreements remain competitively priced, staff has analyzed and reviewed proposals from Xerox and Canon, two of the top providers in the industry. The current lease and maintenance agreements will be reaching the end of their 60-month term in December 2022 and staff is recommending Xerox due to the annual cost difference of $13,575.
 
The first two years of the new proposed agreement will allow the City to continue utilizing two separate machines, one specifically for black-and-white projects and the other with capabilities for both color and black-and-white.  The proposed equipment, maintenance, and supplies, excluding paper, is about $28,667 annually for years one and two.  These leases also include a per page print charge, which is in addition to the equipment lease and maintenance fees. Based on the fixed meter rates and an estimated annual volume of 1.4 million documents, the print charges would be approximately $11,232 per year.
 
To maintain a reduced cost, the black-and-white copier has a lease term of 24 months, which will allow staff to evaluate the need for this specific copier. In year three, the City could contractually eliminate the machine designated for black-and-white only projects to assess the ongoing viability of utilizing the color copier for all jobs.  The annual fees in years three through five for equipment, maintenance, and supplies, excluding paper, is $14,692. The annual print charge rate would increase resulting in an estimated $17,239 in print charges for an annual total cost of $31,931.  The net effect is an overall savings; however, further review will need to be completed to determine if this single unit will become a permanent change to the lease agreement moving forward.
 
In an effort to provide the City with the most up-to-date technology and graphics capabilities, Xerox recommends replacing the legacy Versant 180 with the Versant 280 production platform and modifying the agreement.  This will allow for increases in productivity, media flexibility, and project turnaround time while reducing print usage rate.

The terms of the lease and maintenance agreements allow for termination with 30-days’ notice prior to the beginning of each fiscal year, should the City's printing needs change.
SUMMARY/FISCAL IMPACT
The lease and maintenance agreement will secure the necessary equipment for the City to continue providing the best possible reprographics services for our organization and our client agencies, while maximizing savings through a competitively secured proposal. The estimated five-year costs associated with the new agreements are provided below:
 
  Lease Fees Print Charges TOTAL
Year 1 $28,667 $11,232 $39,899
Year 2 $28,667 $11,232 $39,899
Year 3 $14,692 $17,239 $31,931
Year 4 $14,692 $17,239 $31,931
Year 5 $14,692 $17,239 $31,931
TOTAL $101,410 $74,181 $175,591

The lease with Xerox will result in projected savings to the General Fund of $67,874 over the five-year agreement.  Sufficient funds for the execution of the lease agreements are available in the General Fund operating budget.
RESPECTFULLY SUBMITTED
William Gallardo, City Manager
Prepared by: Anthony Godoy, Management Analyst II
Concurrence: Kristin Griffith, Director of Administrative Services
Monica Lo, Deputy Director of Administrative Services
Attachments
Equipment Recommendation
Agreement (D110)
Agreement (VR280)

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