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HomeMy WebLinkAboutItem 7f - Microsoft Office 365 Renewal STAFF REPORT ADMINISTRATIVE SERVICES DEPARTMENT DATE: October 21, 2025 TO: Honorable Mayor and City Council FROM: Henry Chen, Administrative Services Director By: Wilson Luo, Information Technology Manager SUBJECT: THREE-YEAR RENEWAL OF THE MICROSOFT ENTERPRISE LICENSE AGREEMENT (“MELA”) FROM CRAYON SOFTWARE EXPERTS, LLC FOR MICROSOFT OFFICE 365, IN THE ANNUAL AMOUNT OF $150,600, OR $452,000 OVER THE THREE-YEAR PERIOD CEQA: Not a Project Recommendation: Approve SUMMARY The City’s core software infrastructure is based on Microsoft’s product lines, which require constant maintenance and periodic upgrades to meet operational needs and information security standards. This software infrastructure requires an annual agreement to maintain a Microsoft Enterprise License Agreement (“MELA”), which the City will acquire through Crayon Software Experts, LLC (a subsidiary of SoftwareOne Inc). The MELA ensures the City follows software licensing requirements and allows Arcadia to consistently upgrade server and desktop operating systems, introduce new software features, and receive ongoing support and cloud-based services. The adopted budget for Fiscal Year 2025-26 includes $151,000 for the renewal of the MELA. Subsequent annual costs will be budgeted each year during the regular budget cycle. It is recommended that the City Council approve a three-year renewal contract with Crayon Software Experts, LLC (“Crayon”), under a cooperative procurement agreement with the County of Riverside (Contract Number: ITARC- 00931), totaling $150,600 annually, or $452,000 over the three-year period. BACKGROUND The City’s core software infrastructure is based on Microsoft’s desktop, server, productivity, and communication products that require continuous maintenance and Microsoft Enterprise License Agreement for Office 365 October 21, 2025 Page 2 of 4 security patching, as well as periodic version upgrades to meet operational needs and information security standards. While Microsoft provides the requisite patches and upgrades for several years following a product’s initial release, many of the City’s software products were more than 10 years old and beyond Microsoft’s support period. Prior to the MELA, there was no centralized mechanism enabling the City to directly manage and ensure compliance with software licensing requirements. Establishing the MELA has resolved this administrative limitation. Modern product lines, now licensed through the MELA, have supported numerous upgrades and streamlined the City’s technology platform across all City departments. DISCUSSION The City Council approved a three-year MELA agreement with SoftwareOne Inc. on September 6, 2022. Renewing the MELA allows the City to continue the modernization and maintenance of server and desktop operating systems, providing access to state-of-the-art enterprise collaboration tools, office productivity platforms, product version updates, vendor support, and cloud-based services. Included in the MELA is licensing for Microsoft’s Office 365 Government G3 platform, comprised of Office desktop applications, government-only cloud file storage and sharing, online meetings and instant messaging, HD videoconferencing, intranet and team sites, personalized search and discovery, self-service business intelligence, enterprise management of apps, eDiscovery tools, and other services that meet municipal security requirements that are suitable for law enforcement agencies. Examples of current operating systems and applications available to the City and eligible for continuous upgrades under the MELA, include the platforms identified in Table 1. Table 1: Current Product Version 1. Server Operating System (2025+) 2. Desktop Operating System (Windows 11 Enterprise) 3. Microsoft Exchange Server (2025+) 4. Office 365 (2025+) 5. Microsoft SQL Server (2022+) 6. Microsoft Project (2025+) Microsoft Enterprise License Agreement for Office 365 October 21, 2025 Page 3 of 4 Additional benefits from renewing MELA include the following: • Software Updates o New Version Rights for Applications o New Version Rights for Windows Desktop Operating Systems o New Version Rights for Windows Servers Operating Systems o New Version Rights for Server Client Access License (“CAL”) • Services and Programs o Consolidated License Management o Additional 7.5% discount above other volume licensing o Additional 15% discount across all 3 enterprise products o Home Use Program • Maintenance and Support o 24 x 7 Phone Support Incidents o Web Incidents • Transition Tools o Extended Hot-Fix Support for Windows Client and Servers SoftwareOne acquired Crayon Software Experts, LLC in July 2025, combining the two software companies into a single entity. Crayon is a national software distributor authorized to sell Microsoft licenses under the County of Riverside’s procurement contract. The City’s purchasing rules and procedures allow Arcadia to “piggyback” onto, or join, an existing written purchase contract that is prepared and awarded by another local, state, or federal government agency. This method allows for savings in time, resources, and costs by leveraging another agency’s successful competitive bidding process. The County of Riverside’s contract with Crayon offers favorable pricing and it is within the City’s budget, allowing predictable costs over a three-year period. ENVIRONMENTAL ANALYSIS The proposed action does not constitute a project under the California Environmental Quality Act (“CEQA”), as it can be seen with certainty that it will have no impact on the environment. Microsoft Enterprise License Agreement for Office 365 October 21, 2025 Page 4 of 4 FISCAL IMPACT The three-year MELA renewal agreement is in the amount of $452,000 (rounded), with an annual cost of $150,600. A budget of $151,000 has been appropriated in the Fiscal Year 2025-26 Adopted Budget, thus, sufficient funding exists for this contract. Subsequent annual costs will be budgeted in their respective years. RECOMMENDATION It is recommended that the City Council determine that this action does not constitute a project under the California Environmental Quality Act (“CEQA”); and approve a three-year renewal of the Microsoft Enterprise License Agreement (“MELA”) from Crayon Software Experts, LLC for Microsoft Office 365, in the annual amount of $150,600, or $452,000 over the three-year period.