Long Beach Weighs $6.5M Technology Contract Increase Amid Project Delays

LONG BEACH, CA — Long Beach officials are seeking approval for a nearly $6.5 million increase to a technology services contract after delays to a major modernization project prolonged the city's reliance on mainframe computer systems used for budgeting, payroll and other essential operations.

The City Council is scheduled to consider the proposal Tuesday, Oct. 20, which would increase an existing contract with New York-based technology company Kyndryl by $6,498,212, bringing the total authorized contract value to nearly $12.5 million.

According to the City Council agenda, the amendment would extend the agreement through Sept. 30, 2029, with options for two additional one-year extensions.

The additional contract authority would cover continued mainframe hosting, disaster recovery services, operating system and platform upgrades, and assessments of applications still dependent on the city's mainframe infrastructure. The proposed increase follows years of delays to LBCOAST Phase 2, a project intended to move critical financial and administrative functions onto more modern computing platforms.

Delayed Modernization Project Drives Up Costs

Long Beach's mainframe supports applications used for budgeting, human resources, payroll and labor distribution, according to the Technology and Innovation Department's staff report. Those systems were originally expected to transition to newer platforms through LBCOAST Phase 2, but delays forced the city to reconsider how it would maintain its existing infrastructure.

In a January 2022 update, city officials acknowledged significant implementation difficulties involving the software intended to replace several existing systems. At the time, no launch date had been established for the project's second phase. The city subsequently moved to reduce the risks associated with its aging mainframe hardware, which had originally been purchased from IBM in 2008.

In August 2023, the City Council approved an agreement with Kyndryl to transfer the city's mainframe operations to a hosted environment rather than invest in replacement hardware. That transition has since been completed, but the applications themselves remain dependent on mainframe technology.

According to city officials, the original expectation was that the existing software environment would only be needed temporarily while LBCOAST moved forward. With the modernization project delayed, however, the city now expects to maintain its mainframe operations longer than anticipated.

The proposed renewal would therefore include upgrading the existing environment to a newer, supported platform, with improvements intended to strengthen security, system performance and disaster recovery capabilities.

Kyndryl would also assess the applications still operating on the mainframe, examining technical risks, dependencies and options for future modernization. City officials say the assessment would help establish priorities for eventually transitioning those applications away from the existing environment.

Annual Mainframe Costs Would More Than Double

Beyond the $6.5 million increase in overall contract authority, the proposal would significantly increase the city's annual spending on mainframe services.

Long Beach currently budgets $1.06 million annually for those operations, according to the staff report. The proposed agreement would add another $1,106,071 in annual costs, bringing the combined amount to approximately $2.17 million.

The Technology and Innovation Department is requesting an immediate appropriation increase of $1,106,071 from available funds, while additional ongoing funding would be requested through future annual budget processes.

Officials attribute the increase to the necessary platform upgrade, higher third-party software licensing costs and technical assessments intended to support future modernization. They maintain that continuing to operate the older software without upgrading would actually cost more because of additional licensing and support charges.

The department also argues that retaining Kyndryl would reduce the risk of service interruptions, given the company's existing role in hosting the mainframe and providing disaster recovery services.

Separately, the council is scheduled to consider another technology proposal authorizing up to $674,673 over three years for Optimizely North America to migrate and upgrade the city's public-facing and internal websites.

Although the two contracts address different systems, both involve continued investment in the city's technology infrastructure. The Kyndryl proposal appears as Item 14 on Tuesday's consent calendar, with city officials requesting approval to ensure services continue without interruption.