Many Bethlehem Area School District computers are over six (6) years old and need to be replaced because they cannot run current curriculum software, and they more frequently need repair because they are worn out from daily use. It is common practice for organizations to replace computers on a regular cycle, and a four-year replacement cycle provides an effective balance between functionality and cost. The district needs to replace about 25 percent of its computers to begin a four-year replacement cycle. The district would like to replace outdated desktop computers with laptop computers and desktop computers. Laptop computers will increasingly replace traditional desktop computers for students and teachers. Pennsylvania Education Purchasing Program for Microcomputers (PEPPM) vendors were invited to quote prices for laptop computers, and Apple Computer Corporation was the most competitive.
RECOMMENDATION:
That the Board of School Directors authorize:
a. To rescind the Board of School Directors June 23, 2003 resolution, Item 23, Technology Replacement Initiative; and
b. The administration to sign and execute the documents necessary to acquire
desktop computers, laptop computers, and related peripherals and software
from the Apple Computer Corporation per the attachment included with
this resolution.
c. The administration to sign and execute documents necessary to obligate the
school district to a four year lease with the Apple Computer Corporation or its
designated financing entity for the remaining cost of this purchase.
d. The administration to expend the 2001A Bond Funds to pay the annual school
district financial obligation of this lease.
A copy of the resolution is available in the Business Office of the Education Center, 1516 Sycamore Street, Bethlehem, Pennsylvania, for review.
Director Leeson questioned Terms and Conditions, number 7, on page 2 of the lease. She asked, if the district receives materials that are damaged or not usable, why it would pay for them. Mr. Majewski stated that built into the lease is the fact that the district has 30 days to be able to open equipment, inspect it and make sure it is functioning before there is any obligation. If during that 30-day period something is defective, it will be returned and a new piece of equipment received. If equipment is not inspected within 30 days, the district may be liable. The lease does include in number 4, the provision of 30 days in which to respond. Director Leeson questioned number 7 regarding warranties. Dr. Garrigan explained that the "written product warranty" is a one-year warranty and part of the lease is a four-year parts and repair provision so that the district should be covered through the normal one-year warranty and anything that should pose a problem during years 2, 3, or 4 would be covered by the parts and repair agreement. Dr. Lewis also referred to wording in number 7, "The system is being leased to you in as-is condition (which is the condition of the system at the time of acceptance)." He stated that number 4 is the result of the insistence of Mr. Majewski and Mr. Tucker that the district have ample time to open numerous boxes and to inspect. The 30-day period was agreed to by both parties. Dr. Lewis stated that both the solicitor and business manager shared the concern of Director Leeson with him and addressed it. Director Amato asked how many PCs are involved. Dr. Lewis stated these will not be shipped en masse. The equipment will come in parcels. Director Amato stated that if a large amount is shipped it would be impossible to open, examine, and test all pieces in 30 days. Dr. Garrigan stated anticipation that about 800 will arrive at one time and it is planned to get those to the recipients within a one-month period. Space in the old CA/MP facility near Miller Heights is being used to provide a system that is quite efficient in the set-up of systems. That one-month period is not an imposition. About four persons on-site will do the inspection. Each system requires approximately six minutes for configuration plus a couple extra minutes for inventorying and customization. In that six minutes all major systems of the laptop are checked. Any defective components would be replaced under terms of the warranty. Director Amato questioned that if the district does not find, in a 30-day period, a problem with laptops, we may not be able to use them if they are not covered by warranty. Dr. Garrigan stated that every component of the laptop is covered by warranty. In that 30-day period, staff will configure all parts, which means a thorough test of the screen, power circuitry, hard drive, I/O circuitry to get information in and out of the computer, network circuitry, the track pad, some of the keyboard. If there are out-of-the-box problems, typically, that is something that would be a DOA (dead on arrival) meaning that the system will not even start up. Any problem such as that would be identified. After the 30 days, the district has a full one-year warranty under which any problems coming up during that year are fully covered. After that year, in years two, three, and four, the district is covered by an extended warranty. Dr. Haytmanek stated that if 800 are received and there are 20 working days in that month, 40 a day are being checked. With four persons working, that is 10 systems per day per man. Dr. Garrigan stated that is the case. When in full steam on the configuration, the staff will check through at least 100 a day. Director Amato asked Solicitor Sonnenberg if the language in the contract is common. Solicitor Sonnenberg replied that the verbage in number 7 is often seen. The reason why it is often done is that the "Uniform Commercial Code" has been adopted by most states. If this language is not put in, thereีs many expressed and implied warranties under law that fall into play. The company is trying to make sure that any warranty and promises are falling solely under their written warranty provided and that they are not having to worry about anything else. Mr. Tucker has reviewed the warranty. Mr. Majewski stated that another reason such wording is fairly common is that the paper will not be held by Apple. The responsibility for the collection will go to General Electric. General Electric will not accept any responsibility for the equipment. This is built into the lease so General Electric can then take this obligation between the district and Apple and effectively sell it to someone else. Director Leeson stated that her question is that she thought the advantage to the lease is that the district would always have systems that are up and running and that they were unconditionally, basically, guaranteed to be operational. She stated she understands occasional downtime, but for most part that the computers are unconditionally guaranteed. That is why the district was leasing. If the district wanted to purchase, then it would have an extended warranty. Dr. Lewis stated the warranties are the same under lease or purchase from Apple. The advantage to the lease is that the district would roll the systems over during a four-year period and not be stuck with disposing of what would then be near-obsolete equipment. Apple takes the equipment back. The district chooses whether or not it wants to lease new equipment. Director Leeson asked if she remembers correctly that the cost of purchasing was approximately the cost of a two-year lease. She asked per unit, what the cost is to lease. Mr. Majewski replied that in this lease the interest rate is 1.9%. Effectively, the cost of the equipment is almost the same as the lease except for a small amount of interest, probably about $70,000 interest. Director Leeson asked the cost per unit. Dr. Lewis stated the total lease value is $1412 for the 12" PowerBook. Mr. Majewski explained that the lease cost is not what is being paid per unit per year. Payment is made per year for the total amount of the purchase. Dr. Lewis explained that if you take the $1.55 million, look at all items, that amounts to $173.16 per unit if you were to divide the entire amount roughly by four at 1.9% interest which appears at the top of the amortization schedule, to calculate an approximate value of the system per year. Included in the lease is also an itemization of how many pieces are part of the lease agreement. ROLL CALL RECOMMENDATION 14 Director Leeson moved the administration's recommendation 14. Director Venanzi seconded the motion. The question was called and roll call was as follows: Yea, Directors Koch, Venanzi, Williams, Amato, Haytmanek, and Heske - 6. Nay, Director Leeson - 1. Motion passed 6 - 1.