2.0. SR 03-31-2003
Item 2.
MEMORANDUM
TO: Mayor and City Council
FROM: Lori Johnson, Finance Director
DATE: March 3 I, 2003
SUBJECT: Consider Award of Phone System Bids
The city recently requested telephone system bids for a voice over internet protocol ry olP)
system. Staff wanted to evaluate this system against a traditional PBX to determine whether
the anticipated additional cost justified the additional V oIP benefits.
The city received bids from six vendors for seven telephone systems. Bid prices ranged from
$74,905.00 to $160,198.65. However, the low bidder did not include all of the required
equipment so that bid was not considered valid. The next lowest bidder, Inter-Tel, bid a
system that is V oIP enabled meaning it can function both as a traditional PBX and a V oIP
system. Inter-Tel's bid was $94,845.59. The lowest bid for a true VoIP system was
$105,131.00 plus the cost to connect the off site locations.
After much research and thorough review of the systems proposed, IT Coordinator Bob
Pearson is recommending that the city not proceed with the V oIP system because the
benefits do not out weigh the additional cost of over $10,000. The attached memo from
Bob provides more technical information on his recommendation to reject all of the
proposals and award the telephone contract through the State of Minnesota's Cooperative
Purchasing Venture.
Inter-Tel is a contract holder under the Cooperative Purchasing Venture; therefore, the city
may purchase off the State contract without going out for bids. Inter-Tel and state
representatives have confirmed that the city may purchase a system from Inter-Tel at the
price Inter-Tel submitted under the city's request for proposals. This price is substantially
less that the State contract price. Selecting this system will allow us to choose between
traditional or V oIP as it best fits our needs for the various city departments and locations
including the fire, public works, wastewater, and recreation departments. The system has also
been designed to accommodate the needs of Elk River Municipal Utilities. Although the city
will have one telephone system, it will operate as though there were two or possibly three
separate entities so that city hall, public safety, and utilities will each have individual systems
within the larger system.
Both Bob and I will be at the meeting to answer any additional questions you may have
about the telephone systems and staffs recommendations.
Action Requested
First, City Council is asked to reject all of the telephone bids received on March 13 because
the additional cost of a V oIP system exceeds the additional system benefits. Second, the
City Council is asked to authorize the purchase of an Inter-Tel telephone system through
Minnesota State Cooperative Purchasing Venture contract #428806 at a cost of
approximately $94,845.59.
S:\COUNCIL\Lori\phone bid award.doc
MEMORANDUM
TO:
Lori Johnson
FROM:
Robert Pearson, LT. Coordinator
DATE:
March 27, 2003
SUBJECT:
Request for award of phone system contract
The purpose of this memo is to give you my recommendations on the awarding of a phone
system contract for City Hall, Public Safety and our outlying locations.
We issued a request for proposal for an Internet Protocol Communications System on
February 26th. We had seven vendors attend a pre-proposal meeting on March 5th. We
received proposals from six of the seven vendors. The six vendors represented the following
phone systems manufacturers: Cisco, 3Com, Shoreline, Mite! and Inter-Tel. Our intent was
to explore the newer Internet protocol technology phone systems for price and function in
comparison to a traditional phone system.
Of the vendors that responded Cisco, 3Com, Shoreline and Mitel solutions represented
native/pure Internet Protocol phone systems. Inter-Tel responded with their traditional
phone system that has now been enabled to support the Internet protocol. We were looking
for IP phone systems to provide the following:
· Simplify station moves.
· Support for remote and teleworking applications - either fixed or mobile
· IP phones that can support features and functions that are not available with
digital phones.
· Compressed voice transmitted over WAN trunk circuits that reduce total
trunk circuit requirements.
Of the native Internet protocol phone systems all of the vendors overlooked
providing network ports except the Cisco bid which was also the highest bid at 160k.
Another area where the native Internet protocol phone systems (except Cisco) were
disappointing was that they all proposed providing power to the phone by having it plugged
into the oftice wall outlets. The downside of this would be during a power outage phones
would not be available. The preferred method is providing power to the phone over the
network cabling thru either a powered patch panel or a powered switch. One would then
have either the powered patch pane! or powered switch on an uninterruptible power supply.
This configuration would maintain phone availability during a power outage.
We communicated in the RPF that vendor IP solutions would be competing with
traditional phone systems and that we reserved the right to reject all of the proposals.
My recommendation is that we reject all of the proposals and award the phone contract
to Inter-Tel using the state contract.
The following are some of my reasons for the recommendation of the Inter-Tel solution:
· Their solution was both complete and cost less than any of the native IP
solutions
· Because their solution is IP enabled we can realized the above mentioned
benefits of an IP solution in targeted areas like: software phones in squad cars.
· Inter-Tel has the largest market share in the 100 to 400 station contlguration
· Northstar Access our local carrier just purchased an Inter-Tel solution and is also
in the process of deploying it using the Internet protocol to reduce total trunk
circuit requirements. This is exactly how we intend to deploy the Inter-Tel
systems to reduce circuit costs to outlying locations
· They had excellent references for both implementation and support.
· They were near the lowest in maintenance costs over a five year period
Inter-Tel is offering us use of the state contract with the pricing they submitted in the
RFP process which is about 40% better than the published state contract pricing
Action Requested
The award to Inter-Tel for and Inter-Tel phone system for City Hall, Public Safety and
outlying locations in the amount of $94,845.59. (per state contract 428806)
Ve d 8 . d 80 d B . d Am t M F G C ate
n 0 r I n I 0 U n 9 0 ry
Berbee Cisco Natlve-IP
7 1 45 Boone Aven ue North $ 1 6 1 9 8 6
SUite 1 40 X 0 5
, .
Brooklyn Park MN
763-592-5878
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Data Accessories Shoreline Native-IP
735 1 Kirkwood Lane $ 1 3 9 44 6 0 8
SUite 1 08 X
Maple Grove , .
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Marco $ 1 1 3 6 7 7 3 3COM Native-IP
3000 Division Street 5
P.o. Box 250 X , .
St. Cloud MN 56302 $ 1 0 5 1 3 1 0 0 Mitel Native-IP
320-259-3032 , .
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Eschelon Telecom Inc Mitel Native-IP
730 Second Ave South N/A $ 74 9 0 5 0 0
Suite 1 200
, .
Minneapolis MN
6 1 2-376-4400
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Matrix Communications I nc
1 7 1 Cheshire Ln D N B
SUite 700
Plymouth MN
763-475-5500
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INTER-TEL Inter-Tel IP-Enabled
5929 Baker Road $ 94 84 5 5 9
SUite 475 X
, .
Mlnnetonka M N
952-930-4400
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USA Telecom 3COM Native-IP
7400 Washinaton AVE $ 1 0 7 7 7 0 0 0
Eden Prarie MN X
, .
952-888-75 1 5
Ad m in M in nesota Materials Management Division
Room 112 Administration Bldg.. 50 Sherburne Ave., Sl Paul, MN 55155; 651.296.2600, Fax: 651.297.3996
For TrYrrDD communication, contact us through the Minnesota Relay Service at 1.800.627.3529.
CONTRACT RELEASE: T-680(5)
DATE: JULY 29, 2002
PRODUCT/SERVICE: TELECOM: INTER-TEL STATEWIDE EQUIPMENT AND SERVICE
CONTRACT PERIOD: APRIL 1, 2002, THROUGH FEBRUARY 28. 2004
EXTENSION OPTIONS: THREE YEARS AFTER FEBRUARY 28, 2004
ACQUISITION MANAGEMENT SPECIALIST: JOAN BREISLER
PHONE: 651296.9071 E-MAIL: Joan.breisler@state.mn.us WEB SITE: www.mmd.admin.state.mn.us
CONTRACT VENDOR
INTER-TEL TECHNOLOGIES
10555 Main Street
Fairfax, VA 22030
VENDOR NO.: 20001489301
CONTRACT NO.
TERMS
DELIVERY
428806
NET 30
25 DAYS
ZONES. 1~9
CONTACT: Angela Moore
PHONE: 800.697.4319
FAX: 703.359.0339
....,....*"*"**...... .......**....*1rJI....***..*H'*'*'*'..**...**.........................*....................................***..."..........................................**.........
DELL-COMM. INC.
4860 Mustang Circle
Mounds VIeW. MN 55112
428807
NET 30
14-30 DAYS
ZONES. 1-9
VENDOR NO.: 11401400400
CONTACT: Karen Aho
PHONE: 763.792.8061
FAX: 763.783.0296
--....*'*" ..............*****..........................*'*...*****.................................................................*.......**...............................
CONTRACT USERS. This Contract Is available to State agencies and to members of the State's Cooperative Purchasing
Venture (CPV) program at the same prices, terms, and conditions.
STATE AGENCY CONTRACT USE. This Contract must be used by State agencies unless a specific exception is granted
by the Acquisition Management Specialist listed above.
AGENCY ORDERING INSTRUCTIONS. Orders are to be placed directly with the Contract Vendor. State agencies
should use a contract release order (CRO) or a blanket purchase order (BPC). The person ordering should include his or
her name and phone number. Orders may be submitted via fax.
SPECIAL TERMS AND CONDITIONS
SCOPE. To provide a statewide Contract for the procurement, installation and maintenance of Inter-Tel equipment and
service for State agencies and CPV members. Agencies shalf contact the Telecommunications Analyst from the
InterTechnologies group to coordinate the project.
Contract Release 5 (03102)
cc +fA-ndOf~ 3/d/os
~escheloIr
March 31,2003
telecom, inc.
Mayor Stephanie Klinzing and City Council Members
13065 Orono Parkway
Elk River, MN 55330
Dear Mayor Stephanie Klinzing and City Council Members:
This letter is to document the discrepancies in the RFP process for the IP-based communications
system requirements proposed by the City of Elk River. Eschelon Telecom, Inc. went through the
bidding process in good faith, meeting the technical and company specifications contained in the RFP
delivered by Bob Pearson at the City of Elk River. The discrepancy occurred in the areas of price and
technical functionality.
As an organization that has worked with many cities, Eschelon Telecom, Inc. understands the need to
conserve finances. It has become even more evident with the current state of the economy and war
with Iraq. We have gained our understanding by working and maintaining cities such as City of
Bloomington, City of Savage, City of Eden Prairie and City of Brooklyn Center. With this in mind, it came
as a large surprise that the City of Elk River was planning to implement a system that did not meet the
public RFP specifications and was substantially more in price.
As we looked at the content of the RFP, there was a need for the City of Elk River to be a leader in
technology. The need for technology was not to be on the bleeding edge, but to put in a system that
would allow the functions as defined in the RFP. Some of these functions induded simple station
moves, increased functionality not accomplished with digital technology and support for fixed/mobile
teleworker applications. Having participated in the bidding process as well as attending the pre-bid
meeting, these requirements were made evident when a question had been asked by one of the
bidders about the possible use of digital telephones. Bob Pearson responded to this inquiry by stating
that digital telephones would not be accepted, only IP and analog telephones. With this in mind,
Eschelon Telecom, Inc. does not see the reasoning behind the City of Elk River going with a system
that does not meet the requirements stated in the RFP at a higher cost.
All of the bidders that participated in the process could have met the requirements of the city in regards
to the service needed. However, Eschelon Telecom, Inc. believes that it stands alone with it's service
level guarantees and city experience. If the city has decided to change the technical specifications in
the RFP by which it is judging all vendors, then Eschelon would like the opportunity to propose a
solution based on them.
Sincerely,
/
---------
Frank Millo
BTS Sales Manager
Eschelon Telecom, Inc.
r'
6160 Golden Hills Drive · Golden Valley, Minnesota 55416 · Telephone: 763-745-8000 · Facsimile: 763-553-2724
voice data internet