U.K. government to extend three-year contract with Microsoft

In a deal that appears to buck the growing trend among governments to adopt open-source alternatives, the U.K.’s Office of Government Commerce (OGC) is negotiating a renewal of a three-year agreement with Microsoft Corp.

Both the software maker and the OGC confirmed this week that they have discussed extending an existing memorandum of understanding (MOU), which is set to expire next year, although terms of the new deal have yet to be revealed.

OGC spokesman Martin Day said that while the existing MOU primarily covers software licensing fees, the new three-year contract will focus on services and support.

“We wanted to put something in place to have a seamless transition between the two contracts,” Day said.

He added the new MOU isn’t expected to be signed until the end of next month. Microsoft released a statement saying that it is pleased to have reached an agreement with the OGC but is not in a position to give details while talks are still underway.

The OGC procurement office, which negotiates volume deals for the public sector, initially sewed up an agreement with Microsoft in 2002 to offer competitive licensing fees on desktop software for the country’s nearly half a million public servants.

The agreement came after a tough round of negotiations over the fees. At that time Microsoft wanted to raise fees on government contracts and the OGC said that it would consider finding cheaper software elsewhere if a deal was not reached.

The two sides came to an accord, signing a contract on March 1, 2002, although the deal’s value was not revealed. At that time, the OGC also entered software agreements with Sun Microsystems Inc. and IBM Corp.’s Lotus division. It hailed its negotiations with the three suppliers as a collaborative purchasing success, and estimated that the government would save

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