AGENDA STAFF REPORT

Agenda Item AGENDA STAFF REPORT ASR Control 12-001448
MEETING DATE:	10/16/12
legal entity taking action:	Board of Supervisors
board of supervisors district(s):	All Districts
SUBMITTING Agency/Department:	County Executive Office (Approved)
Department contact person(s):	Bob Franz (714) 834-4304
	Mahesh Patel (714) 834-2525

Subject: IT Sourcing Recommendations

ceo Concur	County Counsel Review		Clerk of the Board
Concur	N/A		Discussion
			3 Votes Board Majority

Budgeted: N/A		Current Year Cost: N/A		Annual Cost: N/A

Staffing Impact: Yes		# of Positions:		Sole Source: N/A
Current Fiscal Year Revenue: N/A
Funding Source: N/A

Prior Board Action: 10/4/11

RECOMMENDED ACTION(S):

1.	Approve the IT Sourcing Executive Committee’s recommendation to enter into negotiations with SAIC as the primary and Xerox as the secondary vendor for Scope 1 services.

2.	Approve the IT Sourcing Executive Committee’s recommendation to enter into negotiations with Xerox as the primary and Verizon as the secondary vendor for Scope 2 services.

3.	Direct the CEO to return to the Board with final negotiated contract(s) for approval by the Board.

SUMMARY:

On February 2, 2010 your Board authorized the development of a Request for Proposal (RFP) for a managed services contract for Information Technology services that are provided through CEO/IT via the current staff augmentation contract with Xerox State and Local Solutions. The Board also authorized the inclusion of requirements for a Countywide converged voice and data network in the same RFP. The RFP process has been underway and final evaluations have been completed. Results of the evaluations were presented to the Source Selection Committee which made recommendations to the IT Sourcing Executive Committee. This Committee concurs with their recommendations as follows:

Select SAIC as the primary and Xerox as the secondary vendor to enter into negotiations for Scope 1 services.

Select Xerox as the primary and Verizon as the secondary vendor to enter into negotiations for Scope 2 services.

We are requesting your Board’s approval to proceed with final negotiations with the primary vendors mentioned above and we plan to return to your Board with a final contract(s) in mid-December 2012.

BACKGROUND INFORMATION:

The original ten year term of the County’s contract with Xerox expired in June 2011 and has been extended through February 19, 2013, with an additional optional extension through June 19, 2013. The County is seeking a new IT sourcing service delivery model, which is critical in light of the following business drivers and the objectives behind this model:

--	Necessary infrastructure upgrades
--	Opportunity for Countywide assessment of IT service delivery, lowering cost, and improving services
--	County’s severe economic pressure
--	Leverage current IT sourcing models – there have been dramatic improvements in the last 10 years in how IT services are delivered
--	Board of Supervisors’ expectations of cost-justified IT

The established sourcing strategy goals include:

--	Improved service delivery
--	Guaranteed service levels
--	Timely technology refresh and legacy system renewal
--	Maximum resource flexibility
--	Innovation (continuous improvement)
--	Increased cost efficiencies

The RFP included two separate scopes of work. Scope 1 includes Data Center Operations, Service Desk, Desktop Support and Applications Services. In addition to CEO/IT, four other Agencies have shown interest and have been included in Scope 1 for pricing. Scope 2 includes Countywide Voice and Data Network. This scope proposes to transform the County from its current end-of-life voice system with separate data network lines to a converged voice and data network infrastructure with Voice over Internet Protocol (VoIP) capabilities.

Vendors were allowed to bid on either scope or both scopes. In addition, they will be required to provide all services within the United States and services must be staffed by U.S. located resources. Finally, vendors had the option of providing services through the Orange County Data Center, from their own facilities located within the U.S., or a combination thereof.

RFP Development

Following your Board’s direction, RFP development began in February 2010. Over a period of several months CEO/IT held numerous workshops with Agency/Department IT Managers and subject matter experts from CEO/IT to develop the Scopes of Work (SOW). Representatives from Health Care Agency, Social Services Agency, OC Community Resources, District Attorney, Public Defender, Probation, Clerk-Recorder, Auditor-Controller, Assessor, OC Public Works, OC Waste & Recycling and Sheriff’s Department assisted in the development of the SOWs. In addition, several full days were dedicated to development of the Voice and Network Scope of Work with assistance from Agency IT managers.

In June 2010, the Board established a Board IT Committee to review the recommendations and findings from the Performance Auditor reports of CEO/IT, before considering release of the RFP. The RFP development process was put on hold until January 2011. On March 1, 2011, the Board authorized the release of the RFP, which was formally released on April 8, 2011. Following release of the RFP the County conducted a Pre-Proposal Conference to answer questions from prospective vendors. The County also made available to the vendors the County Reference Library which included County confidential information such as network diagrams, Standard Operating Procedures, Policies & Procedures, etc. In addition, tours of the Orange County Data Center were provided to prospective vendors. Finally, the County received and responded to almost 600 questions from vendors before the initial proposals were submitted. Proposals were due on June 29, 2011. The County received proposals from six vendors. Four proposed only Scope 1, three proposed only Scope 2 and one proposed both Scopes 1 and 2.

Evaluation Process – Initial 6 Vendors (7 Proposals)

Given the complexity and criticality of the RFP, the proposal evaluation process has been extensive. The evaluation teams were comprised of over 40 County stakeholders from Agencies/Departments and CEO/IT, and non-County entities. These teams were staffed with individuals possessing technical expertise in specific service areas. Additionally, a Source Selection Committee was established, consisting of County and non-County participants, to view the consolidated scoring and recommendations from each technical evaluation team. Furthermore, an IT Sourcing Executive Committee, comprised of County executive management and led by the County Executive Officer, provides oversight.

Beginning immediately after the proposal due date, the evaluation teams began reviewing the proposals. Vendor presentations were held from August 29 – September 7, 2011. After initial review of the written proposals and presentations by vendors, it was apparent that the vendors needed clarification on the voice and data network scope of work. Due to the size and complexity of the County’s voice and data network systems, additional clarification efforts (additional information, due diligence by vendors, and question and answer sessions) were made to ensure that the proposed solutions will meet County’s current and future needs.

In lieu of down-selecting vendors in November 2011, the decision was made to include all six prospective bidders in the due diligence process and allow them to participate in the Best and Final Offer (BAFO) process. The original schedule was based on the assumption of entering this phase with four vendors (two for Scope 1 and two for Scope 2). This decision provided for a thorough vetting of all six bidders and resulted in a six-month delay in the project due to the additional work.

Evaluation Process – Best and Final Offer (BAFO)

BAFO instructions were released in February 2012. Following evaluation of the BAFO proposals, in May 2012 the IT Sourcing Executive Committee recommended that the County down-select and proceed with three Vendors for Scope 1 (HP, SAIC and Xerox) and two Vendors for Scope 2 (Verizon and Xerox). (The original plan was to down-select to two vendors for each scope). Additional time was added to the schedule to accommodate the additional vendor in Scope 1 and to complete the final BAFO process – including time to develop negotiation strategies; allowing vendors an additional opportunity to perform due diligence, including visits to County facilities as chosen by vendors; question and answer sessions; detailed discussions with Scope 2 vendors on their proposed solutions; performing preliminary negotiations; and evaluating final BAFO responses. Throughout the entire procurement process the County continued to accept and responded to written questions submitted by vendors. Responses to questions submitted by vendors that pertained to the general technical scope were made available to all vendors. Questions regarding a vendor’s specific solution were not shared with other vendors.

Final Evaluations – 4 Vendors (5 Proposals)

At the end of July 2012, the County released final proposal instructions to vendors. Final proposals were received at the end of August and final evaluations have been completed. Vendor proposals were evaluated on several criteria including:

--	Completeness, quantifiable benefit to the County and quality of the vendor’s proposal
--	Vendor’s ability to deliver services
--	Vendor’s business profile
--	Range of services offered by the vendor
--	Solution offering across each service area
--	Flexibility and creativity offered by vendor
--	Technical fit
--	Solution cost
--	Relationship management approach (governance)
--	Qualifications of the vendor’s proposed team

In addition, the County conducted several reference checks on each vendor to verify that the vendor had successfully provided similar services to other clients. These reference checks were conducted with both government entities (at the federal, state and local level) and private companies.

All vendors proposed using both the Orange County Data Center and vendor facilities located within the United States. Members of the evaluation team conducted on-site meetings at these remote locations to assess first-hand the vendors’ facilities, teams, processes and tools. The results of these assessments were factored into the evaluation results.

Results of the evaluations were presented to the Source Selection Committee which made recommendations to the IT Sourcing Executive Committee. This Committee concurs with their recommendations as follows:

--	Select SAIC as the primary and Xerox as the secondary vendor to enter into negotiations for Scope 1 services.
--	Select Xerox as the primary and Verizon as the secondary vendor to enter into negotiations for Scope 2 services.

The chart below provides summary scores resulting from the evaluations:

(Scope 1)

SAIC (Scope 1)

Xerox (Scope 1)

Xerox (Scope 2)

Verizon (Scope 2)

Total Weighted Score

299.9

362.7

318.0

359.7

282.2

Rank Number

We are requesting your Board’s approval to proceed with final negotiations with the primary vendors mentioned above and plan to return to your Board with a final contract(s) in mid-December 2012.

FINANCIAL IMPACT:

The County is currently operating on a maintenance basis with the current network and voice system. The Scope 2, Countywide voice and data network scope of work will enable the County to transform from its current end-of-life voice system with separate data network lines, to a converged voice and data network infrastructure with VoIP capabilities. It is expected that the County will need to invest in one-time costs to upgrade to the new infrastructure, which will result in future cost avoidance. Ongoing costs for both Scope 1 and Scope 2 services are anticipated to be in-line with current expenditures. The County intends to provide a comparison of the current cost model with the new contract model after completion of negotiations with the recommended vendors.

STAFFING IMPACT:

It is anticipated that implementation of the new IT Sourcing contract(s) will have an impact on Countywide IT staffing positions. CEO/IT is working in conjunction with the Human Resources Department and County Counsel to mitigate these impacts and to conduct the necessary meet and confer sessions with impacted labor organizations.

ATTACHMENT(S):

IT Sourcing High Level Process Timeline
Evaluation Scoring Sheets