Government putting Data#3's exclusive Microsoft licensing deal out to tender

The federal government is preparing to shake up its long-standing Microsoft licensing deal with exclusive supplier Data#3, potentially expanding the contract to other resellers.

Data#3 has been the federal government’s exclusive volume licensing reseller for the Microsoft volume sourcing arrangement (VSA) since 2008, and sells core desktop licences to a central agency which then distributes the licences per seat.

Any expansion of the volume licensing panel would be welcome news to Microsoft's other Australian licensing solution provider (LSP) partners, which include Datacom, Dell, Dimension Data Australia, Insight, Software One, Staples, Rhipe and HP.

However, the government could again choose to award an exclusive contract to Data#3 – as it has done twice before. The government will go to market for the new Software Licensing and Services Panel in August.

This is not the first time Data#3 has faced competition for the contract. The reseller won back the deal in 2012 for a further three-year term, but not before the former Australian Government Information Management Office (AGIMO) had tried to open the panel to a wider pool of large account resellers.

Last year the Department of Finance – which established the whole-of-government panel before it was usurped by the Digital Transformation Agency in May – extended the agreement by a further three years.

In doing so the amount spent on Microsoft desktop licences annually jumped by a third, increasing from around $50 million to $67 million per year. Finance put this down to price increases in Microsoft products and the extended range of products covered under the extension.

At the time, Finance also indicated it would conduct a review to determine whether the government’s first co-ordinated procurement arrangement was still of value, and whether it would extend it for a further 12 months or approach the market.

It conducted the review in early 2017, and found that the arrangement was of ongoing benefit to the government.

But following agency consultation, the Digital Transformation Agency has decided to replace the LSP panel with a whole-of-government software licensing and services panel when the arrangement expires next year.

The panel will initially have one category: Microsoft licensing support and provision of services from a Microsoft LSP, however it could also extend to other software products as required.

“The whole-of-government software licensing and services panel will allow for expansion to additional providers and other software in the future," a spokesperson told iTnews.

“The large account reseller agreement did not allow for this.”

It also intends to add further panellists through additional approaches to market.

“Depending on the result of the tender, one or more supplier(s) will be appointed to the whole-of-government software licensing and services panel to offer Microsoft licensing solutions," the spokesperson said.

The spokesperson said the new panel would not alter the existing VSA with Microsoft.