Item - 2018.AU13.17

The Audit Committee recommends that:

1. City Council request the Chief Information Officer to:

a. Review the existing wireless service contracts for best value and evaluate the feasibility of negotiating changes in price plans with the vendor(s) based on the City's current cellular voice and data needs.

b. Advise staff to use service contracts that offer best value to the City.

c. Develop and implement a process to ensure compliance with all contract terms and conditions, including annual review of price plans and service rates with the vendor(s). The annual review should be performed after an analysis has been completed on the comparison of cost of similar telecommunication services offered by contracted vendors, and the prices available in the market or to other public sector organizations.

2. City Council request the Chief Information Officer, in coordination with the Chief Purchasing Officer, to explore inter-governmental procurement opportunities for acquiring telecommunication services for the next RFP.

3. City Council request the Chief Information Officer to evaluate business and administrative feasibility for the introduction of a Bring Your Own Device (BYOD) program for wireless phones at the City. This feasibility and program should be evaluated in consultation with the City Solicitor, the Chief Financial Officer, the Executive Director of Human Resources and any other stakeholder(s).

4. City Council request the City Manager to forward the following Auditor General's reports to the Chief Executive Officers of City Agencies and Corporations for information and necessary action:

a. Toronto Transit Commission: Managing Telecommunication Contracts and Payments.

b. Improvements Needed in Managing City's Wireless Telecommunication Contracts.

5. City Council request the Chief Executive Officers of City Agencies and Corporations to consider and implement the recommendations relevant to their operations included in the following Auditor General's reports:

a. Toronto Transit Commission: Managing Telecommunication Contracts and Payments.

b. Improvements Needed in Managing City's Wireless Telecommunication Contracts.

The Auditor General completed an audit of the management of telecommunication service contracts and payments at the TTC in May 2018. The audit report entitled "Toronto Transit Commission: Managing Telecommunication Contracts and Payments" was tabled at the TTC's May 29, 2018, Audit & Risk Management Committee. The report is included as Attachment 2 to this report. The report is also available on the TTC's website at:

https://www.ttc.ca/About_the_TTC/Commission_reports_and_information/

Committee_meetings/Audit_Risk_Management/2018/May_29/Reports/

5_Auditor_General_Managing_Telecommunication_Contracts_and_P.pdf

During the audit of the TTC's wireless service contracts, the Auditor General identified potential annual savings of $218,000 that could be achieved by better aligning the wireless service contracts to the existing cellular voice and data needs, and acquiring services at price plans that offer best value. Since the TTC's wireless service contracts were based on the City's contracts, the Auditor General performed a similar analysis to explore whether the saving opportunities identified at the TTC also existed at the City.

The City spent $6.5 million for wireless phone services in 2017. It uses three vendors for these services: Vendor A, the preferred vendor for the City, from where the majority of services are acquired, and Vendors B and C. Our analysis showed that Vendor B offers the lowest prices for the same services that are also acquired from Vendors A and C.

Although each vendor offers various price plans, our analysis focussed on smartphone price plans that were most commonly used by the City. Vendor C has 80 of the City's smartphone lines with a monthly price similar to Vendor A (i.e., higher than Vendor B's price). If the services are acquired based on the prices offered by Vendor B, the City could save $1 million annually. There is a need to review price plans with the vendors annually as outlined in the contracts. The City has not completed this review for the past 3 years.

The City could also explore opportunities to include other municipalities during the RFP process to benefit from combined higher volumes to obtain better price plans.

The City should also consider and evaluate whether there are cost savings and efficiencies by introducing a 'Bring Your Own Device' (BYOD) program where staff members could use personal devices for business purposes.

This report provides recommendations to improve management of telecommunication contracts, consider inter-governmental procurement and evaluate a 'Bring Your Own Device' (BYOD) program for the City. We have also included recommendations for City Agencies and Corporations to receive the City and TTC reports on the audit of telecommunication expenses, and to implement recommendations that are relevant to their operations.

We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives.

We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.