Agenda Item No. 8(c)











Approval was sought for the use of delegated powers to award a contract for the supply of licences of Microsoft software.


Cabinet had previously granted delegated authority  (Minute No. C2787 refers (2015/16)) to award a three-year contract for the supply of Microsoft software.   This contract was now due to expire on 30th June, 2018 and required to be renewed.


In addition to the above report, there was also a subsequent report to Cabinet at its meeting held in April 2018 (Minute No. C291 refers) which also granted delegated authority to award a tender before the end of April 2018 to mitigate against the known price rises of between 220% and 350% that Microsoft would impose on their software licences from 1st May, 2018.


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.


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.


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the quotation tendered by the supplier who tendered at pre-price increase levels was incorrect and that it would be withdrawn by the supplier.


The business case therefore to renew the Microsoft licences like-for-like as per the previous Cabinet decision was no longer valid, due to the price increases from 1st May 2018, than to switch over to other 'cloud' based software solutions such as Microsoft Office 365.


For comparison, the current EA cost £105,382 per annum to licence 2,000 users to use Microsoft software.   Post-increase costs like-for like were anticipated to be significantly higher than the current costs.


Microsoft licensing provided a range of options for organisations to license their software requirements.  To provide a rounded view of the options and associated costs, it was 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 Microsoft was actively incentivising their customer base to migrate over to their cloud software services, and was offering fairly substantial discounts to do so.  There was currently no discounts for any non-cloud products offered by Microsoft.


Indicative costs for renewing the EA to licence Microsoft Office 365 cloud products were set out in paragraph 11 of the report depending on the specification.


“Cloud” functionality would allow some 'Digital Strategy' and 'Reshaping Services' projects to be fast-tracked to implementation, and deliver the associated savings earlier.


Some Microsoft Office 365 products would replace certain existing software applications. These legacy applications would 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.


As the software licences covered by an EA were essentially 'off the shelf' items, the cost element of this procurement process would be the predominant factor. However, it was proposed that a quality element would be built into the tender evaluation process as there were potentially a number of value added services that the supplier could include.


This matter was for Executive decision.




(1)       T H A T the Head of Finance, in consultation with the Managing Director and the Leader, be granted delegated authority to award the tender to the winning supplier prior to the expiry of the existing Microsoft Enterprise Agreement (EA) on 30th June 2018.


(2)       T H A T the Head of Legal Services in consultation with the Head of Finance be granted delegated authority to execute a contract with the successful tenderer for the provision of Microsoft Licenses.


(3)       T H A T a new contract be awarded on the most economically advantageous terms to the Council based on 80% cost and 20% quality.


(4)       That the Urgent Decision Procedure be approved to implement Resolutions (1) - (3) above.


Reasons for decisions


(1)       To allow the award of the contract.


(2)       To have an appropriate contract in place for the provision of Microsoft Licences


(3)       To have an appropriate contract in place for the cost effective supply of Microsoft Licenses.


(4)       To enable the Council to tender the work and enter into a contract in a timely manner in accordance with Section 14.14 of the Council’s Constitution.