Defence today announced Data#3 was the successful tenderer for its Microsoft Large Account Reseller contract. The contract is for three years.
Defence issued an open tender in July this year to consolidate its procurement of Microsoft products and to achieve reduced costs. The tender specified Defence would become the lead agency to negotiate a whole-of-government volume sourcing arrangement.
The Government (primarily Minister Tanner) has made strong commitments to use the Government's collective buying power to extract more favourable prices from vendors. This was the first step towards co-operative IT procurement across agencies. As lead agency, Defence was to negotiate reduced costs for Microsoft licensing agreements that could be accessed by other agencies.
It is understood the Federal Government previously spent around $40 million each year on Microsoft software licensing. The value of the contract with Data #3 has not been disclosed, but the Government would be hoping for a significant reduction for this whole-of-government contract.
According to the recommendations of Sir Peter Gershon, pressure will be placed on agencies to justify why they will not purchase goods and services from such contracts.
One of the implications of such whole-of-government contracts is the level of service agencies might expect when margins for vendors have been cut. As Kevin Noonan (Intermedium's Head of Consulting) mentioned in a recent press article (Australian IT), "cost reductions would probably affect the level of service, as lower margins on both sides of the deal would leave little room for resellers to add any value above acquiring licenses.