EXHIBIT 99.445.01
REVISION TO OUR AUGUST 31, 1999 PROPOSAL TO
CALIFORNIA POWER
EXCHANGE (CALPX)
September 17, 1999
[PEROT SYSTEMS LOGO]
DISCLOSURE PROTECTION NOTICE
This proposal to the California Power Exchange (CalPX) is the property of Perot
Systems and contains confidential and/or proprietary information of Perot
Systems. It shall not be disclosed outside of CalPX and shall not be duplicated,
used, or disclosed--in whole or in part-for any purpose other than to evaluate
this proposal. CalPX's review of this material is considered acceptance of this
Disclosure Protection Notice. Should this be unsatisfactory, please return this
material to Perot Systems. This response and any contract subsequently awarded
to Perot systems as a result of in connection with-this submission shall be
subject to the agreed confidentiality, proprietary rights, and nondisclosure
provisions of the resulting contract.
Perot Systems and the perotsystems logo arc trademark of Perot Systems.
All other brands, product names, and trademarks are the property of their
respective owners.
Copyright (C) 1999 Perot Systems corporation, All rights reserved.
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Perot Systems Confidential September 17, 1999 Page ii
California Power Exchange Proposal Revision
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PROPOSAL REVISION
We submitted a proposal on August 31, 1999 to provide IT program management,
applications development and computer operations services to CalPX. This
revision reflects changes to our original proposal based on discussions with
CalPX executives regarding the scope of services ad CalPX baseline IT budgets.
Based on these discussions, we have revised our proposal to better reflect
CalPX's budget plans regarding baseline IT services. Our revised proposal calls
for increasing the scope of our services at CalPX to also cover applications
testing and desktop support and procurement services, It also entails changes in
implementation timeline, baseline staffing and baseline pricing by Perot
Systems.
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Perot Systems Confidential September 17, 1999 Page 1
California Power Exchange Proposal Revision
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IMPLEMENTATION TIMELINE
We propose to provide IT program management, applications development, computer
operations, applications testing and desktop support and procurement services to
CalPX for a period of 36 months beginning with the execution of the "Services
Contract", which is expected to be around November 1, 1999, Our proposal calls
for a phased transfer of CalPX IT services to Perot Systems according to the
following timetable.
CALPX IT SERVICE PROVISION IMPLEMENTATION TIMELINE
MONTH 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 TO 36
< --------------------------------------------------------------------------- >
- - CalPX accepts the proposal
- Contract negotiation and due diligence review
- Contract is signed
- Transition period for Program Management and Applications
Development
- Program Management and Application Development By PSC
- Study Computer Ops, Apps Testing & Desktop Support &
Procurement
- Transition Period for Computer Ops and Apps
Testing
- Computer Ops, Apps Testing by PSC
- Transition period for Desktop Support & Procurement
- Desktop Support & Procurement by PSC
According to our proposal:
1. CalPX and Perot Systems will start negotiation of a Services
Contract immediately after the acceptance of the proposal by
CalPX.
2. We foresee contract negotiations to last about one month
during which time Perot Systems will conduct a due diligence
study under the existing Task Order 5 between CalPX and Perot
Systems. All
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California Power Exchange Proposal Revision
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funds collected for the due diligence study will be credited
against the fees to be paid by CalPX under the Services
Contract if it is executed by both parties. Once signed, the
Services Contract will supercede Task Order 5.
3. We would start the transition of all program management and
applications development services to Perot Systems as soon as
practical after the Services Contract is signed. This
transition, described in the proposal, is expected to last one
month.
4. At the end of the transition time period IT program management
and IT applications development services for CalPX will be
provided by Perot Systems.
5. We will conduct a study of the computer operations,
applications testing and desktop support and procurement
services starting in month three and complete this study in
month six. In the same time period we will conduct a series of
studies as indicated in Appendix B ("Additional Projects") of
the proposal. At the end of this study, either party may
decide not to proceed with the transfer of computer operations
services, applications testing services or desktop support and
procurement services to Perot Systems. Failure to reach an
agreement by both parties to transfer computer operations
services, applications testing services or desktop support and
procurement services, will have no bearing on the transfer of
program management and applications development services to
Perot Systems.
6. Should both parties agree to transfer computer operations and
applications testing services to Perot Systems, we would
transition these services to Perot Systems over a one month
time period starting in month six. At the end of the
transition period, computer operations and applications
testing services for CalPX will be provided by Perot Systems.
7. Should both parties agree to transfer desktop support and
procurement services to Perot Systems, we would transition
these services to Perot Systems over a one month time period
starting in January 2000. At the end of the transition period
desktop support and procurement services for CalPX will be
provided by Perot Systems.
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California Power Exchange Proposal Revision
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PRICING
Our pricing is meant to help CalPX with predictability of its IT expenditure
while improving its business systems' reliability and enhancing services
provided to CalPX. In short, our pricing is as follows:
1. Subject to verification of our pricing assumptions during the due diligence
period, CalPX will pay Perot Systems $770,000 per month for the services of
up to 40 Perot Systems' associates and contractors who will provide program
management and applications development services. This fee will be adjusted
annually based on an IT Salary Index. This fee includes all travel costs to
the Los Angeles area for these associates and contractors -- but does not
include travel costs to locations outside the Los Angeles area on CalPX
business. Services of additional Perot Systems' associates (including
associates who perform the studies enumerated in Appendix B of the
Proposal) will be charged on a time and material basis using Perot Systems'
standard commercial rates for such resources, minus a 25% discount.
2. Subject to verification of our pricing assumptions during the due diligence
period, CalPX will pay Perot Systems $1,090,000 per month for the services
of up to 60 Perot Systems' associates and contractors who will provide
program management, applications development, computer operations and
applications testing services. This fee will be adjusted annually based
on an IT Salary Index. This payment includes all travel costs to the Los
Angeles area for these associates and contractors -- but does not include
travel costs to locations outside the Los Angeles area on CalPX business.
Services of additional Perot Systems' associates will be charged on time
and material basis using Perot Systems' standard commercial rates for such
resources, minus a 25% discount.
3. Subject to verification of our pricing assumptions during the due diligence
period, CalPX will pay Perot Systems $1,240,000 per month for the services
up to 65 Perot Systems associates and contractors who will provide
program management, applications development, computer operations,
applications testing services and desktop support and procurement services.
This fee will be adjusted annually based on an IT Salary Index. This
payment will cover an annual expenditure up to one million dollars by
Perot Systems for procurement of desktop hardware, operating system
licenses and
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software licenses for CalPX, CalPX will own all hardware and
software procured by Perot Systems for CalPX. This payment
includes all travel costs to the Los Angeles area for these
associates and contractors -- but does not include travel
costs outside the Los Angeles area on CalPX business. Services
of additional Perot Systems associates will be charged on a
time and material basis using Perot System standard commercial
rates for such resources, minus a 25% discount.
We will develop specific baseline staffing numbers for each area of program.
management, applications development and maintenance, computer operations,
applications testing and desktop support and procurement as a part of our
contract negotiation.
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California Power Exchange Proposal Revision
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BENEFITS TO CALPX
Our proposed solution will enable CalPX to have predictable IT performance and
costs and to have the flexibility to address CalPX business requirements in
California and beyond. In addition, we believe that our solution will allow
CalPX to meet its budgeted goals for IT services.
The following table presents the baseline cost of our solution along with
CalPX's IT budget numbers for the proposed IT services.
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YEAR 1 YEAR 2 YEAR 3 TOTAL
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CalPX budget for proposed $ 15,230,000 $ 15,230,000 $ 15,230,000 $ 45,690,000
services
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Baseline payments to Perot $ 11,480,000 $ 14,580,000 $ 14,580,000 $ 40,940,000
Systems for proposed services
and timeline
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We believe that there may be substantial additional savings that can be realized
if we are selected to perform these services. These savings include:
- Savings due to possible restructuring of CalPX's MCI and IBM:
contracts;
- Savings due to a potential earlier transfer of desktop support
and procurement services to Perot Systems;
- Savings due: to potentially moving the entire CalPX IT staff
to Pasadena;
- Savings due to potential elimination of backup disaster
recovery site at Folsom; and
- Savings due to consolidation of all IT services and
elimination of "phantom IT organisms" throughout CalPX,
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