Agenda Item No
The Vale of Glamorgan Council
Cabinet 11th June 2012
Report of the Leader
Microsoft Software Licencing
Purpose of the Report
1. To obtain approval for delegated powers to award a contract for the supply of Microsoft Software.
That delegated authority is granted to the Director of Finance, ICT & Property in consultation with the Leader to award the tender to the winning supplier
That a new contract is awarded
Reasons for the Recommendations
To allow the award of the contract.
To have an appropriate contract in place for the cost effective supply of Microsoft Licencing.
2. The Council has been buying Microsoft products via a standard select agreement for at least ten years. The current corporate desktop standard is Windows XP as the operating system and Microsoft Office 2003.
3. Both of these products will become unsupported in the next 12 months and the various security policies that we subscribe to such as the Government Connect Secure Xtranet (GCSx) do not permit the installation of unsupported software as this could lead to a serious breach of security. No further security or other patches or upgrades for this software will be made available once it becomes unsupported.
4. The new corporate desktop standard agreed by the ICT Strategy is Windows 7 as the operating system and Office 2010 and as the existing software will become unsupported the Council has no choice but to move a new standard. The tender has been designed to provide the most cost effective solution available.
5. As licences have been required they have been procured at whatever was the current version at the time, but have been downgraded to the corporate standard to ensure compatibility across the estate. This means that the Council will already have acquired a number of Office 2010 licences. However as software assurance has not been purchased with the licences, due to cost implications, it is unlikely that Microsoft will allow these licences to be included in any new procurement unless we continue with the current select agreement.
6. The pace of change in technology is increasing and the frequency of new versions of the Microsoft operating system and Office software is no exception and has been changing every 3 or 4 years. Although the proposal is to move to Windows 7 and Office 2010, the next versions Windows 8 and Office 2015 are already in testing and are scheduled for release next year. If the Council stayed on its current select agreement it would have to upgrade again to the latest version when the current ones become unsupported. Microsoft has moved to a policy of supporting only the current version and the previous one.
7. The Council has previously procured the Office Professional Licence which included other software such as Microsoft Access, but a review of software usage has revealed a relatively low number of Access database users and it may therefore be financially advantageous to move to procurement of the Office Standard version and buying the limited number of access licences separately. This is being explored as part of the tender process.
8. Microsoft has recently announced a price increase in the region of 25% that would have come into effect on the 1st July 2012. This has largely been negated by a re-negotiation of the Public Sector Licencing Agreement, but will still result in a 1% or 2% rise in licence costs. As Microsoft's financial year ends on the 30th June, that is usually the best time to purchase from them as they will be keen to win the business within the current financial year. Given that and the potential price rise now is the most opportune moment for the Council to buy.
9. The intention would be to complete the procurement before the end of June 2012.
10. Microsoft does not deal directly with corporate customers, so the Council would need to procure the licences through a reseller. Our current reseller is Computacenter, but given that the cost of this procurement will exceed EU thresholds, the Council has advertised a tender through the Government Procurement Services Framework Agreement which is for three years.
11. The prices for Microsoft licences have been agreed nationally for the public sector and are made available to all resellers, so the tender will focus on the margin added on to the Microsoft costs for dealing with the order. This has traditionally been around 1/2 % to 1% of the order value, however some resellers have been known to supply at cost in order to win the business as a method of developing a better business relationship with the purchaser.
12. The tender includes a quality assessment of any value added services that the supplier can provide such as assistance with implementation, training, after sales support etc. The cost/quality ratio has been set at 70/30.
Relevant Issues and Options
13. There are currently five main options to procure Microsoft licences all of which attract different pricing and benefits. The tender has asked suppliers to provide costs and to clearly outline the pros and cons of each option.
Option 1 Enterprise Agreement - Perpetual - The Council owns the software and can upgrade to whatever is the latest version during the 3 years of the contract. At the end of that time the Council has an option to take a break for say up to two years, but cannot upgrade during that period.
Option 2 Enterprise Agreement - Subscription - The Council rents the software but never owns it, but can upgrade to whatever is the latest version during the 3 years of the contract. At the end of that time the Council could enter into another agreement or revert to another type of agreement or stop using the software. There is a potential penalty to moving to another type of agreement which if incurred would increase the cost of any software procured by a factor of 1.7 above the Public Sector pricing.
Option 3 Select Agreement - Perpetual -The Council owns the software but has no rights to upgrade during the 3 years of the contract. At the end of this period the Council would have to buy the licences again to move to the latest version.
Option 4 Select Agreement with Software Assurance - Perpetual -The Council owns the software and can upgrade to whatever is the latest version of the software during the 3 years of the agreement.
Option 5 Microsoft Office 365 - Licenced - the Council rents the software on a flexible, per user, per month subscription plan with Microsoft hosting and managing the software.
Appendix A gives more detail for each of these options.
14. All of the options apart from Option 3 provides additional benefits as a result of having software assurance built in. These benefits are also outlined in Appendix A, but include on line training, 24x7 support and a home use program for staff.
15. Options 1, 2 and 5 also include a bundle of additional licences which the Council would have to procure separately and which could save the Council money. For example anti-virus, sharepoint and video conferencing software is included.
Resource Implications (Financial and Employment and Climate Change, if appropriate)
16. It is proposed that the purchase of the licences is funded from the ICT fund and then recharged to user departments.
17. Indicative costs have been obtained prior to going out to tender and it is likely that Options 1 and 2 are the most advantageous to the Council in terms of costs and associated benefits. The indicative costs are shown below based on 2000 user licences.
Option 1 £225,860 per year 3 years - £677,580
Option 2 £136,580 per year 3 years - £409,070
Option 3 £544,960 one off cost
Option 4 £857,120 one of cost
Option 5 £267,120 per year 3 years - £801,360
Legal Implications (to Include Human Rights Implications)
18. The Council will need to enter into a contract for the supply of Microsoft Licences under the terms and conditions of the Government Procurement Services Framework Agreement RM721/Lot 3 with the winning supplier.
Crime and Disorder Implications
19. There are no Crime and Disorder implications for this report.
Equal Opportunities Implications (to include Welsh Language issues)
20. There are no Equal Opportunities implications for this report.
21. To exercise robust financial management and explore all opportunities to improve efficiency and service quality including collaborative working.
22. To deliver One Vale, the Council's transformational change programme and to put information and communications technology to its most effective use in order to support service delivery.
23. To deliver cost effective support and service desk functions to monitor performance, meet customer needs and communicate effectively.
Policy Framework and Budget
24. This is a matter for decision by Cabinet.
Consultation (including Ward Member Consultation)
25. Consultation has taken place with all Heads of Service as part of the ICT Strategy.
Relevant Scrutiny Committee
26. Corporate Resources Scrutiny Committee
Vale of Glamorgan ICT Strategy
David Vining - Head of Strategic ICT
Mike Bumford - Finance
Mike Walsh - Legal
Graham John - ICT
Neil Thomas - Procurement
Sian Davies - Director of Finance, ICT & Property