Cabinet Office claims £15m Microsoft licence-fee saving on Common Technology Services deal extension

Government dodges cloud and on-premise licence fee hikes with extension to current agreement

The government has struck a deal with Microsoft to shield it from licence-fee increases following the software giant's decision to raise the cost of on-premise licences by 13 per cent and cloud by 22 per cent, according to reports.

Those raises were attributed to "sustained currency changes" following the Brexit vote and the halving of interest rates by the Bank of England.

The government had a fixed-priced deal expiring in June 2017, but Microsoft has agreed with the Cabinet Office's Common Technology Services to extend the terms of this deal by a further year, according to The Register.

The deal will freeze the prices across government at pre-increase December 2016 levels, saving an estimate £15m. Computing is seeking official confirmation of the reports at the time of writing.

Negotiations between the government and Microsoft over licence fees is a regular feature. Back in 2012, the Cabinet Office deviced a new framework that purported to exempt the UK public sector from licensing hikes that saw many organisations pay between 7.5 per cent and 33.4 per cent more for the privilege of running Microsoft software.

The Cabinet Office, in contrast, was only hit with a one per cent licence-fee increase, with years two and three of the contract linked to the Consumer Price Index.

However, by 2014, the Cabinet Office minister Francis Maude was making noises about open source software as the government geared up to renegotiate.

"The software we use in government is still supplied by just a few large companies. A tiny oligopoly dominates the marketplace," said Maude at the time.

He continued: "I want to see a greater range of software used, so civil servants have access to the information they need and can get their work done without having to buy a particular brand of software."

In the end, though, the government ended up signing its current cloud and on-premise software licensing deal with Microsoft, rather than shifting to open source.

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