Government faces crunch on Microsoft mega-deal

16 Apr 2008 | 07:42 BST

By Mark Ballard

THE UK government is about to start haggling a new mega-deal with Microsoft with only week to go before the last one expires.

OGC Buying Solutions, the business end of the government's procurement quango, said in January that it hoped to have the terms agreed in principle in February, when the last three-year mega-deal was due to expire.

The last deal, agreed by a Memorandum of Understanding drawn up in 2004, was extended to the end of May.

OGC Buying Solutions said in a statement today that negotiations hadn't even started yet: "We are about to enter into formal negotiations with Microsoft regarding a replacement agreement," it said.

The quango said in 2006 that it was saving £1 million a year on Microsoft software licences thanks to its MOU.

It told the INQUIRER today that the negotiations will be handled
personally by Alison Littley, its chief executive. Littley made a
reputation as a tough nut in the drinks industry before taking the helm at OGC Buying Solutions in 2006 under orders to "drive it hard".

Rumour has it that Microsoft hasn't been feeling appreciated in the
public sector, thinking its customers don't know what a good deal
they've been getting since the MOU was first negotiated in 2002. BECTA, the procurement quango for the education sector, has recommended schools don't upgrade to Microsoft Vista and Office 2007.

Terry Street, a procurement advisor at Socitm, said their was also
growing groundswell of support for open source in the public sector.

"There's a big anti-Microsoft lobby growing on the green agenda" he said, especially among local councils who were beginning to realise that PC's were power hungry and expensive to maintain. They were taking interest in think-client computers instead.

OGC Buying Solutions was not available to comment on the rumours.

However, it did say: "The negotiations will look at commercial aspects such as pricing but will also seek to establish better communication channels between Microsoft and the Public Sector".
"The starting point for negotiations is the recognition that the current MOU has delivered considerable benefits for the Public Sector," it added.

In 2003, the National Audit Office took at look at the MOU in its
earliest stages and concluded that it could save a lot of money. At the time, government departments and agencies spent about £610 million on software licences every year.

The OGC said at the time that it expected to save up to £36m across the whole public sector if all government departments made use of its then Memoranda deals with Corel, Lotus/IBM, Microsoft, Oracle, and Sun Microsystems.

The NAO said the Microsoft MOU alone could save up to £100m if you included "productivity improvements and efficiency gains" to be had from using Microsoft software. µ

© 2007 Incisive Media Investments Ltd. 2007