UK government talks licences with Microsoft

The Office of Government Commerce (OGC) has today confirmed reports that it is in talks with Microsoft to bring down the rocketing government licence bill for Microsoft software.

A report in the The Times over the weekend quoted government insiders saying the OGC was already looking at alternative sources for 500,000 government desktops, despite the fact the NHS and the Ministry of Defence have both signed massive contracts with Microsoft.

Today the OGC, which is in charge of ensuring effective procurement across government, admitted it is in negotiations with the US giant to bring down the price.

The government is thought to be dissatisfied by increased costs brought about by Microsoft's intended changes to its licensing policy, which many estimate will double the cost of using Windows.

Peter Gershon, chief executive of OGC, told the newspaper: "The OGC will not stand by and tolerate suppliers who seek to raise prices of products which are in widespread use across the public sector, where the increases take advantage of our dependence on these products and simply cannot be justified on value for money grounds."

The news comes as Microsoft makes increasing overtures to the UK government.

Aside from big contract wins, Bill Gates will next week meet Health Secretary Alan Milburn and over a hundred NHS trust executives to discuss the future of NHS IT.

He is also rumoured to be visiting representatives from other departments including education, social services and local government.

Government spend on Microsoft is thought to be in the region of £120m per year. The OGC has the power to set framework IT contracts which other government departments are expected to copy.

However, the OGC's moves are in line with a growing feeling - in the private as well as public sector - that Microsoft's recent licensing changes are a step too far.

Microsoft has been caught unawares by the strength of resistance to its plans to move towards a rental model, and has pushed the change back to the end of July 2002.

David Roberts, chair of the Infrastructure Forum (TIF) which has been campaigning against the changes, welcomed the intervention by the OGC. "I'm extremely pleased someone speaking on behalf of the government is going public with these concerns, which exactly echo the concerns of UK business. Hopefully we can all speak with one voice on this," he said.

Microsoft was unavailable for comment on the story, but confirmed it was in discussions with the OGC.