PURPOSE:

The purpose of this report is to request City Council approval to enter into a five-year lease with OCE North America, Inc. (OCE) for a black and white duplicating machine.

BACKGROUND:

In 2001 the City purchased a black and white reproduction machine from OCE.  That machine has now become obsolete and in fact, as of December of this year, will no longer be serviced by OCE. As a result it has become necessary to replace the black and white machine in order to continue to provide the most cost effective and efficient printing services to each department.

The City already has a long-standing and excellent working relationship with OCE as they not only manufactured and serviced the City�s existing black and white machine, but also the existing color reproduction machine.  As such, staff believes it is in the City�s best interest to continue our successful business relationship with OCE.  OCE has a proven, stellar maintenance track record, and has always been extremely responsive to the needs of the City.  Thus the Management Services Department, with the support of the Financial Services Department, entered into discussions with OCE.  As a result of these discussions and comparison studies done with other users of OCE products staff ultimately determined that a lease was the best option.  A lease in-lieu of purchasing is more cost effective and would place the City in the best position to update technology in a timely fashion, as this is an ever changing industry 

ANALYSIS & CONCLUSION:

The most economical route is to enter into a five-year fixed price lease with OCE to obtain a black and white press to replace the current machine.  Leasing the machine makes the best sense in that the digital/computer technology in this area is advancing so quickly that by the end of our lease period this machine will most likely be obsolete and have little or no re-sale value.  The lease agreement includes maintenance and regular service.  Also it is important to note that as part of the contract we are waiving the right to a jury trial in any disputes about this contract.  The City Attorney�s Office has reviewed and approved the attached lease agreement.

FISCAL IMPACT:

The cost of the lease will be $2,366 a month.  This fee will cover the rental of the machine, maintenance and up to 360,000 impressions per month.  Under the proposed lease, surplus impressions not used in a given month can be carried over to subsequent months and used as needed.  However, any impressions over 4,320,000 annually will be accessed an overage charge of $.0045 per copy which will be calculated at the end of the year. Management Services has encumbered funds in the budget from ongoing maintenance as well as depreciation of the existing black and white machine which will more than cover the cost of the 5 year lease on the new machine.  As such, there is no fiscal impact. 

RECOMMENDATION:

Staff recommends that the City Council adopt the proposed resolution.