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Agenda Item No 9

The Vale of Glamorgan Council


Cabinet Meeting: 21st May 2018


Report of the Leader


Microsoft Licence Renewal 2018 - 2021


Purpose of the Report

  1. To obtain approval for delegated powers to award a contract for the supply of licences of Microsoft Software.


  1. That delegated authority is granted to the Head of Finance, in consultation with the Managing Director and the Leader, to award the tender to the winning supplier prior to the expiry of the existing Microsoft Enterprise Agreement (EA) on 30th June 2018.
  2. That delegated authority is granted to the Head of Legal Services in consultation with the Head of Finance to execute a contract with the successful tenderer for the provision of Microsoft Licenses.
  3. That a new contract is awarded on the most economically advantageous terms to the Council based on 80% cost and 20% quality.
  4. That Section 14.14 of the Council's Constitution (Urgent Decision Procedure) be authorised for the recommendations of this report.

Reasons for the Recommendations

  1. To allow the award of the contract.
  2. To have an appropriate contract in place for the provision of Microsoft Licenses
  3. To have an appropriate contract in place for the cost effective supply of Microsoft Licences.
  4. To enable the Council to tender the work and enter into a contract in a timely manner


  1. Following a Cabinet report in June 2015, minute number C2787 granted delegated authority to award a three year contract for the supply of Microsoft software. That contract is due to expire on 30th June 2018 and therefore requires to be renewed.
  2. There was a subsequent report to Cabinet in April 2018, minute number C291, which granted delegated authority to award a tender before the end of April 2018 to mitigate against the price rise of between 220% and 350% that Microsoft would impose on their software licences from 1st May 2018.
  3. The tender was run and submissions were received from four software suppliers. Three suppliers' tendered quotations based on the new (higher) pricing model and one supplier tendered their quotation using the pre-increase pricing model.
  4. During the tender process, Microsoft contacted officers to advise that guidance previously received from a Microsoft licensing partner advising that software licences could be procured at pre-increase pricing levels if the new EA was signed before 30th April 2018 (two months before the expiry of the current EA) was incorrect and that the existing EA could not be renewed until after it had expired on 30th June 2018.
  5. Officers were subsequently advised that the quotation tendered by the supplier who tendered at pre-price increase levels was incorrect and that it would be withdrawn by the supplier.
  6. The business case therefore to renew the Microsoft licences like-for-like as per the previous Cabinet recommendation was no longer valid, as it would be more expensive to do so following the price increases from 1st May 2018 than to switch over to other 'cloud' based software solutions such as Microsoft Office 365.
  7. For comparison, the current EA costs £105,382 per annum to licence 2,000 users to use Microsoft software.   Post-increase costs like-for like are anticipated to be significantly higher than the current costs.

Relevant Issues and Options

  1. Microsoft licensing provides a range of options for organisations to license their software requirements. To provide a rounded view of the options and associated costs, it is proposed to tender for a number of different licensing scenarios, and to determine the most functional and economically advantageous option as part of the tender evaluation
  2. Microsoft is actively incentivising their customer base to migrate over to their cloud software services, and is offering fairly substantial discounts to do so. Discount levels vary depending on which licensing 'Stock Keeping Unit' (SKU) or mix of SKU's are specified but they are generally between 27% and 35% off list price. There are currently no discounts for any non-cloud products offered by Microsoft.
  3. Indicative costs suggest that renewing the EA to licence Microsoft Office 365 cloud products could be somewhere between. £280,000 and £470,000 per annum depending on the specification. The actual tendered costs are likely to be slightly less than these indicative costs taking into account the competitive nature of the tender process.
  4. Microsoft Office 365 products could facilitate more mobile, remote and collaborative working by virtue of the fact that the software can be accessed anywhere there is a connection to the internet. This cloud functionality would allow some 'Digital Strategy' and 'Reshaping Services' projects to be fast-tracked to implementation, and deliver the associated savings earlier.
  5. Some Microsoft Office 365 products would replace some existing software applications. These legacy applications could be decommissioned, delivering savings on software licences and support and maintenance costs for those products going forward. These savings would mitigate some of the increase in annual revenue costs by moving to the Office 365 suite of products.
  6. Microsoft does not deal directly with corporate customers, so the Council would need to procure the licences through a reseller. If approved by Cabinet, a tender will be advertised through the Crown Commercial Services Framework Agreement number: RM3733/Lot 2.
  7. As the software licences covered by an EA are essentially 'off the shelf' items, the cost element of this procurement process will be the predominant factor. However, it is proposed that a quality element is built into the tender evaluation process as there are potentially a number of value added services that the supplier could include such as training or consultancy vouchers / credits and account management services.
  8. A lot of flexibility will be built into the new EA which will allow licences to be 'trued up or down' at each anniversary within the contract period to cater for evolving business demands and fluctuations in staff numbers to ensure that the Council only pays for the software that is being used.

Resource Implications (Financial and Employment)

  1. The outcome of this procurement process will result in a significant increase in ICT costs; however, these systems are integral to the way in which this Council operates.
  2. It is proposed that the purchase of the licences is funded from the ICT fund initially.

Sustainability and Climate Change Implications

  1. There are no such implications that arise as a result of this report.

Legal Implications (to Include Human Rights Implications)

  1. The Council will need to enter into a contract for the supply of Microsoft Licences under the terms and conditions of a Crown Commercial Services Framework Agreement with the winning supplier.

Crime and Disorder Implications

  1. There are no crime and disorder implications for this report.

Equal Opportunities Implications (to include Welsh Language issues)

  1. There are no Equal Opportunities implications for this report.

Corporate/Service Objectives

  1. This project comes under the priority outcome of Community Leadership

Policy Framework and Budget

  1. This is a matter for executive decision by Cabinet.

Consultation (including Ward Member Consultation)

  1. No ward member consultation has taken place.

Relevant Scrutiny Committee

  1. Corporate Performance and Resources Scrutiny Committee.

Background Papers

Crown Commercial Services Framework Agreement number: RM3733/Lot 2.

Contact Officer

Nick Wheeler - Operational Manager of Strategic ICT

Officers Consulted

Head of Finance

Business Improvement

Senior Procurement Officer (ICT)

Responsible Officer:

Rob Thomas - Managing Director