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		July 14, 1998 To:Budget Committee From:City Clerk Subject:Project Approval and Procurement Authorization - General Business Computer Recommendation: The Urban Environment and Development Committee on July 13, 1998, recommended that increased project financing approval in the amount of $1,608,395.00 gross be granted to City Project No. 710 of the Toronto Transit Commission, "Computer Equipment and Software - Various". Background: The Urban Environment and Development Committee had before it a communication (June 19, 1998) from the General Secretary, Toronto Transit Commission (Commission) advising that the Commission on June 17, 1998, approved the recommendations contained in the attached report, entitled "Project Approval and Procurement Authorization - General Business Computer". City Clerk N. Rickford/lv Attachment Copy to:General Secretary, Toronto Transit Commission Chief General Manager, Toronto Transit Commission Chief Financial Officer and Treasurer Commissioner of Urban Planning and Development Services Mr. Shekhar Prasad, Director, Finance Department Mr. John Di Lallo, Finance Department Mr. Andres Hachard, Finance Department (Letter dated June 19, 1998 from the General Secretary, Toronto Transit Commission) At its meeting on Wednesday, June 17, 1998, the Toronto Transit Commission (Commission) considered the attached report, entitled "Project Approval And Procurement Authorization - General Business Computer". The Commission approved the Recommendations contained in the above report, as listed below: "It is recommended that the Commission approve: (1)awarding a contract to GlassHouse Systems Inc., in the amount of $1,433,900.00 to replace the existing IBM 9121/480 with an IBM 2003/225, including the hardware and IBM operating system software; (2)an additional $350,000.00 for the transfer and upgrade of existing third party (non-IBM) software; (3)an additional $24,495.00 required to pursue the option to purchase nine additional channels, for a total upset limit of $1,808,395.00; (4)approval to declare the current IBM 9121/480 surplus and authorize the Manager of Materials and Procurement to dispose of it in the best interest of the Commission; (5)forward this report to the City of Toronto Council requesting that increased project approval be granted in the amount of $1,608,395.00 gross ($731,820.00 net) by advancing approved expenditures from future years; and (6)authorize staff to proceed with the award of this contract, due to the critical nature of the request and hold in TTC accounts, pending City Council approval." The foregoing is forwarded to City of Toronto Council for the necessary approval, as detailed in the report. (Toronto Transit Commission, Report, entitled "Project Approval and Procurement Authorization - General Business Computer.") Recommendations: It is recommended that the Commission approve: (1)awarding a contract to GlassHouse Systems Inc., in the amount of $1,433,900.00 to replace the existing IBM 9121/480 with an IBM 2003/225, including the hardware and IBM operating system software; (2)an additional $350,000.00 for the transfer and upgrade of existing third party (non-IBM) software; (3)an additional $24,495.00 required to pursue the option to purchase nine additional channels, for a total upset limit of $1,808,395.00; (4)approval to declare the current IBM 9121/480 surplus and authorize the Manager of Materials and Procurement to dispose of it in the best interest of the Commission; (5)forward this report to the City of Toronto Council requesting that increased project approval be granted in the amount of $1,608,395.00 gross ($731,820.00 net) by advancing approved expenditures from future years; and (6)authorize staff to proceed with the award of this contract, due to the critical nature of the request and hold in TTC accounts, pending City Council project approval. Funding: Funds are available in the 1998-2002 Capital Program under Information Technology Infrastructure Project within the Computer Equipment and Software Program (pages 541-550), in the amount of $200,000.00 for 1998 and $1,975,000.00 in the years 1999-2001. The total amount of $1,608,395.00 is to be advanced to 1998 from future years upon the approval from the City of Toronto. Background: In planning the 1998 budget it was not known that the IBM mainframe (General Business Computer) system software (VM/ESA and VSE/ESA) were not year 2000 compliant. An amount of $1,975,000.00 was budgeted for the years 1999-2001 to cover additional DASD requirements and mainframe hardware/software replacement. Subsequent to the budget plan IBM declared that the VM/ESA and VSE/ESA system software are not year 2000 compliant and must be replaced along with an appropriate expanded mainframe. The cost of this upgrade is $1,808,395.00. An advance of $1,608,395.00 from the years 1999-2001 is required immediately. For the period 1998-2001 the total budget amount is reduced from $2,175,000.00 to $1,808,395.00, yielding a savings of $366,605.00. The General Business Computer is an IBM mainframe supporting many mission critical applications, including Materials Management, Vehicle Maintenance, Personnel/Payroll and Finance - General Ledger and Accounts Payable. These applications are crucial to running daily businesses at the TTC in order to operate an efficient and safe public transit system. The current version of the system software required to operate the IBM mainframe is not compliant to the year 2000 standards. The applications running in this operating environment will fail as year 2000 approaches. All date-dependent information will become inaccurate. In order to provide the necessary testing environment immediately and the future product environment, both system software components (VM/ESA and VSE/ESA) must be upgraded immediately. In order to run mainframe applications successfully in year 2000, full-scale testing of all applications on a mainframe that is fully year 2000 compliant must commence no later than September 30, 1998. Failure to thoroughly test these applications in a certified year 2000 compliant operating environment will expose the Commission to the risk of being unable to maintain service. Discussion: Staff issued a tender for the replacement of the IBM mainframe. Four companies were invited to submit tenders in addition to a public advertisement appearing in the Globe and Mail on Wednesday, April 22, 1998. Three companies submitted responses (see Appendix 'A'). Glasshouse Systems Inc. was judged to offer the best solution package at a cost of $1,433,900.00. In its tender response Glasshouse Systems Inc. identified the need for additional channels to match the total number of channels on the existing IBM 9121/480. An additional $24,495.00 is required to pursue this option. This includes the hardware and IBM operating system software and technical assistance and installation, as specified. The vendor will certify that both the hardware and operating system software of the replacement mainframe will satisfy the year 2000 compliance requirements. The vendors were requested to submit a trade-in offer and removal costs for the current IBM 9121/480. None of the vendors offered a trade-in value. A leasing analysis was conducted and the difference over three years was approximately $5,000.00 more to own. The purchase option is recommended because at the end of the term the Commission will own the IBM 2003/225 mainframe, whereas under the lease option, the Commission would have to buy the mainframe at the end of the lease, bringing the total cost of the lease/buy option over the straight purchase cost. As a matter of note, the lease term would be three years. The Commission intends to keep this mainframe for as long as seven years. Justification: Failure to immediately award a contract to replace the IBM mainframe and software within the current schedule would result in our inability to create a year 2000 test environment which would negatively impact the current Management Information Services' initiatives to rectify year 2000 problems with application code. Not addressing these problems would impact the ability of the TTC to maintain service. -------- Appendix A Tenders were requested for the supply and installation of an IBM Mainframe: Company: GlassHouse Systems Inc. (Leasing Option)$ 1,428,161 GlassHouse Systems Inc. 1,433,900* (1) GSS Marketing Inc. (Leasing Option) 1,437,947 GSS Marketing Inc. 1,450,270* GlassHouse Systems Inc. (Option 2) 2,392,224 Cover-All Solutions Ctr. Inc. 4,501,969* *Prices have been adjusted. (1)Recommended for award.
		Please note that council and committee documents are provided electronically for information only and do not retain the exact structure of the original versions. For example, charts, images and tables may be difficult to read. As such, readers should verify information before acting on it. All council documents are available from the City Clerk's office. Please e-mail clerk@city.toronto.on.ca.

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