Napa County - File #: 26-1744

• File #: 26-1744
• Version: 1
• Type: Agreement
• Status: Agenda Ready
• File created: 9/21/2026
• In control: Board of Supervisors
• On agenda: 10/13/2026
• Title: Approve and authorize Enterprise Agreement No. 270190B with Microsoft Corporation for a maximum of $3,736,047.35 for Microsoft Enterprise Licensing; and approve a Budget Amendment to increase appropriations by $445,000 offset by available fund balance. (Fiscal Impact: $445,000 Expense; Information Technology Services Fund; Not Budgeted; Discretionary) [4/5 vote required]
• Sponsors: Board of Supervisors

TO:                     Board of Supervisors

FROM:                     Meg Ragan, Chief Technology Officer - Information Technology Services

REPORT BY:                     Julia Bordona, Staff Services Manager

SUBJECT:                     Budget Amendment and Enterprise agreement for the renewal of Microsoft Enterprise Licensing 

RECOMMENDATION

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Approve and authorize Enterprise Agreement No. 270190B with Microsoft Corporation for a maximum of $3,736,047.35 for Microsoft Enterprise Licensing; and approve a Budget Amendment to increase appropriations by $445,000 offset by available fund balance. (Fiscal Impact: $445,000 Expense; Information Technology Services Fund; Not Budgeted; Discretionary)
[4/5 vote required]

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BACKGROUND

To continue licensing Microsoft products efficiently and cost-effectively, the County is requesting approval to renew its Microsoft Enterprise Agreement (EA) for a new 36-month term through the statewide contract negotiated by Riverside County on behalf of California counties, commonly referred to as the Riverside Contract. Approximately 400 government agencies in California utilize this agreement, providing a standardized and cost-effective approach to Microsoft licensing.
The Enterprise Agreement provides volume-based pricing, access to current and future product upgrades, and predictable licensing costs over the contract term. This renewal maintains the Microsoft technologies that support County operations while providing an opportunity to secure substantial negotiated discounts on additional capabilities that support the County’s technology modernization, productivity, data protection, and security objectives.
Microsoft technologies form the foundation of the County’s information systems and are essential to delivering reliable digital services to the public. Through the Enterprise Agreement, the County licenses the Microsoft software and services required for daily operations, including Microsoft 365, OneDrive, SharePoint, Windows, Teams, Power BI, Windows Server, and other Microsoft products. County-managed devices are deployed with required Microsoft products to promote standardization, security, compatibility, and interoperability across departments.
Information Technology Services (ITS) recommends renewing the County’s existing Microsoft product licenses and adding Microsoft Copilot and enhanced Microsoft Purview capabilities. Although these additional capabilities are not required for basic system functionality, they provide opportunities to improve workforce productivity, strengthen data governance and protection, support compliance requirements, and reduce organizational risk through an enterprise solution. 

Strategic Pricing and Cost Savings
The proposed three-year agreement allows the County to proactively secure favorable pricing for the integrated Microsoft Copilot and Microsoft Purview capabilities. The discount schedule provides approximately 60% savings in Year 1, 55% in Year 2, and 35% in Year 3. Securing these licenses as part of the renewal allows the County to take advantage of negotiated pricing over the full contract term.
This approach builds on the County’s existing investment in Microsoft technology, provides greater predictability in software licensing costs, and creates an opportunity to expand the County’s use of AI, data governance, and security capabilities at substantially discounted rates. By incorporating these capabilities into the renewal, the County can align technology investments with long-term operational needs while taking advantage of available cost savings through the statewide agreement.

Microsoft Copilot
Microsoft Copilot integrates secure AI-driven capabilities into the County’s existing Microsoft 365 environment. Copilot can assist employees with routine administrative tasks, including summarizing and drafting documents, organizing information, analyzing content, and managing email and meetings. Because these capabilities are integrated into applications employees already use, the County can introduce AI-assisted workflows within its established technology environment. Microsoft serves as Napa County’s enterprise AI offering. Accordingly, individual reimbursement requests or P-card purchases for other AI services are not permitted using County funds. Establishing Microsoft as the County’s enterprise AI platform supports a more consistent approach to technology procurement, security, governance, and oversight.
The addition of Copilot is intended to improve employee efficiency and reduce time spent on repetitive tasks, allowing staff to focus on higher-value responsibilities, address backlogs, and respond more efficiently to departmental and public service needs. The licensing also supports the County’s broader efforts to responsibly incorporate AI into its operations using an established enterprise technology platform.
Microsoft Purview
Microsoft Purview expands the County’s ability to protect sensitive information, manage records, and support regulatory and compliance requirements. Enhanced licensing provides advanced data classification, auditing, compliance, legal discovery, data loss prevention, and insider-risk monitoring capabilities beyond those available through the County’s existing Microsoft licensing.
These capabilities are fundamental for data governance compliance, in addition to required functionality for enabling an enterprise AI offering. Purview provides tools to identify and classify sensitive information, monitor data movement, apply appropriate protections, and reduce the risk of unauthorized access, oversharing, or inadvertent exposure of confidential and regulated information, including personally identifiable information (PII), HIPAA-protected information, and Criminal Justice Information Services (CJIS) data, where applicable.
Without the additional Purview capabilities, the County would have limited tools to implement advanced data loss prevention, governance, auditing, and other protective measures across its Microsoft environment.

Financial Impact
The proposed three-year Enterprise Agreement has a total maximum amount of $3,736,047.35, as follows:
Year 1, FY 2026-27: $1,183,576.51
Year 2, FY 2027-28: $1,219,055.90
Year 3, FY 2028-29: $1,333,414.94
The FY 2026-27 adopted budget includes $742,025 for Microsoft Enterprise Licensing. The increase in contract costs reflects the renewal of the existing Enterprise Agreement and the addition of Microsoft Copilot and enhanced Microsoft Purview licensing. ITS is requesting a budget amendment of $445,000, offset by available ITS Fund Balance, to fund the additional FY 2026-27 cost.
The three-year agreement provides a structured approach to managing the County’s Microsoft licensing expenses while securing negotiated discounts for additional capabilities. Beginning in FY 2027-28, anticipated annual licensing costs are $1,219,055.90, increasing to $1,333,414.94 in FY 2028-29. These costs will be incorporated into the ITS operating budget and allocation process, subject to annual budget approval and applicable contractual terms.
The General Fund is not affected by the requested budget amendment.
The proposed renewal maintains the Microsoft technologies that support County operations while securing favorable pricing for capabilities intended to improve productivity, strengthen data protection and governance, reduce organizational risk, and support the County’s continued modernization of its technology environment.
Requested Actions:
1.                     Approve and authorize Agreement No. 270190B with Microsoft Corporation for a maximum amount of $3,736,047.35 for a three-year term for Microsoft Enterprise Licensing.
2.                     Approve a budget amendment increasing the Computer Software & Licensing account in the Information Technology Services budget (Fund 4200, Subdivision 4200004, Account 53415) by $445,000, offset by the use of available ITS Fund Balance.

FISCAL IMPACT

Is there a Fiscal Impact?	Yes
Is it currently budgeted?	No
Is it Mandatory or Discretionary?	Discretionary
Discretionary Justification:	Approval of the three-year Enterprise Agreement will maintain the Microsoft licensing necessary to support Countywide technology operations while providing predictable pricing over the contract term. The addition of Microsoft Copilot and enhanced Purview capabilities allows the County to secure negotiated discounts of approximately 60% in Year 1, 55% in Year 2, and 35% in Year 3. The proactive approach of leveraging the 3-year term negotiating power, coupled with the County’s existing Microsoft investment, secures favorable pricing, while improving enterprise security, employee productivity, data protection, governance, auditing, and compliance, with additional safeguards for the County’s responsible use of innovative technology in accordance with the Napa County AI Handbook.
Is the general fund affected?	No
Future fiscal impact:	Beginning in FY 2027-28, the anticipated annual software licensing cost is $1,219,055.90, increasing to $1,333,414.94 in FY 2028-29. These costs will be incorporated into the ITS operating budget and allocation process, subject to annual budget approval and applicable contractual terms.
Consequences if not approved:	If not approved, the County may forgo negotiated discounts available through the three-year Enterprise Agreement, potentially increasing future costs. The County would also delay planned enhancements to enterprise security, data protection, governance, auditing, compliance, and employee productivity, limiting its ability to responsibly expand the use of innovative technology and security in accordance with the Napa County AI Handbook. Additionally, failure to approve the renewal could jeopardize continuity of the Microsoft licensing that supports Countywide technology operations.
Additional Information	Strategic Initiative: Innovation and Learning

ENVIRONMENTAL IMPACT

ENVIRONMENTAL DETERMINATION: The proposed action is not a project as defined by 14 California Code of Regulations 15378 (State CEQA Guidelines) and therefore CEQA is not applicable.)