Under the leasing option, the city may be foregoing any potential residual value of the machines at the end of 5 years. Also, there may be early termination lease costs if the city decides during the lease term that the machine is no longer needed.
If the city were to purchase the photocopiers, a funding source would need to be identified for the initial outlay. Maintenance of the machines is recommended to be through the cost per copy due to the potential complexities involved in having city staff maintain the machines. If maintenance were to be done in-house, additional staff may be needed and may need to acquire the expertise to maintain and repair the various models. There would also be the additional costs of replacement parts including toner and keeping a stock of the various common replacement parts. Given the leasing option remains financially advantageous even prior to consideration of these additional costs the analysis does not factor these costs into the comparative analysis.
Financial Matters:
Consistent with analyses of past Standing Agreements, the lease option continues to be preferred when compared to the purchase option. Appendix A summarizes the lease versus buy analysis under the proposed Master Agreement. As can be seen from the analysis, the leasing option is still the preferred methodology for the procurement of photocopiers, which would provide a roughly estimated savings of $1,500. The cost to purchase or lease the machines is similar with the cost per copy.
There are instances however where specific departmental requirements or unique functionalities of the photocopier units cannot be accommodated under the Ministry Master agreement. In those instances, it is administration’s view that the departments be enabled to pursue other options for the procurement of the required photocopier following standard protocols and the required guidelines under the City’s Purchasing Bylaw. It is expected that such instances may be few in number, however they do occur from time to time and as such this flexibility is required.
Lease costs will be charged to the appropriate departments as a charge to their respective budgets. There is sufficient funding in departmental budgets, as lease cost and cost per copy are generally lower than the last Standing Agreement for comparable models.
Notwithstanding that individual photocopier leases are generally considered to be not material and do not require Council approval, at the inception of every new Standing Agreement a lease versus buy analysis will continue to be performed to determine the preferred procurement option, which is subject to approval by Council.