Government Scraps £80 Million Microsoft NHS Licence Deal

In another sign of the spending squeeze, it has been reported that the Government has scrapped an enterprise agreement (EA) software licensing deal with Microsoft, for the NHS Connecting for Health (CfH) programme.

The Government has decided there is no business case or budget for the deal with CfH, a programme has had troubles in the past according to unnamed sources quoted by Computer Weekly.

The Microsoft agreeement had apparently been due to start on 1 July, but the value of the three year deal had already been reduced from the original £80 million to just £21 million. According to Computer Weekly, the EA was set to run for three years through Microsoft large account resellers Softcat, Trustmarque and Phoenix Software.

No More National Deals?

Efforts to get official confirmation of the cancellation however were not successful. The Cabinet Office told eWEEK Europe UK that it should contact the Department for Health (DfH). The DfH said that it was unable to provide a statement at the time of going to press.

It is understood that the EA deal was originally agreed back in 2004 for a total of nine years. This included three-year breakpoints to allow the NHS to review its application requirements.

Public sector IT is expected to bear a large part of the cuts imposed by the government’s austerity budget. Among other things, so called vanity websites have gone.

“Out of the blue, the Cabinet Office rejected the cut-down version of the renewal,” the source told Computer Weekly. “The noise from the top is that they are not sure national agreements work. It will be down to the trusts to make sure they are fully licensed.”

The EA covered about 800,000 desktops in all NHS regions in England, and was believed to be the biggest deal of its kind in the world.

The Cabinet Office did agree to pay Microsoft about £50 million however in order to cover software used in the previous agreement that was not licensed, but according to Computer Weekly this spend was attributed to the last administration’s budget. “The money is coming out of the same pot but, politically and on paper, it looks like the new government is saying it has not spent any money as the last lot used it all,” said another insider.

Pay Up

“There are around 400 NHS trusts in the UK and although they are licensed for some elements, there is a big hole out there that could be as large as £100m,” added the source.

Meanwhile it is thought that Microsoft is beginning the process of checking with the individual trusts to see if they have paid for the software they are using.

The then Labour Government had previously stated that it was looking to open source as a key to helping it reduce the IT costs of the public sector, during the downturn.