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By | Paul Kunert 31st May 2012 12:48

UK.gov beats down Microsoft software price hike to 1pc

Redmond and Cabinet Office ink 3-year deal

Government bodies and agencies will pay 1 per cent more for Microsoft volume licences from 1 July under the newly penned Public Sector Agreement (PSA) 12, The Register can reveal.

This compares to the massive 29 per cent average upswing in prices that is expected to hit commercial organisations in the UK when Microsoft aligns pricing across the EU to the euro.

A spokeswoman for the Cabinet Office said: “We can confirm that Microsoft and Cabinet Office have signed a new three-year licensing framework for all eligible UK public sector organisations.

"The framework fully supports the government’s goals of reducing expenditure while at the same time transforming public services through the adoption of new technologies," the mouthpiece added.

The outcome will not surprise regular Reg readers as early last month sources revealed that Microsoft Large Account Reseller boss Edward Hyde had told them on a conference call that the government would not feel the squeeze of the hike.

The Cabinet Office voice box refused to comment on the financial details of PSA12 at this point.

But sources familiar with the talks said that Cabinet Office Minister Francis Maude and his Efficiency Reform Group had "hammered Microsoft to get what they wanted and [Microsoft] conceded a 1 per cent rise".

The tacit threat of another moratorium on Microsoft - last year the Cabinet Office halted all but emergency software procurement with the vendor as it negotiated better Ts&Cs - was enough to force the firm to capitulate.

The spending freeze was finally lifted in December, when the Cabinet Office negotiated a temporary deal with Microsoft.

Suppliers accredited on the Commodity IT Hardware and Software framework can supply public sector organisations with the volume licences until next April, when a new agreement is likely to be negotiated.

A Microsoft spokeswoman rattled out the same quote as the Cabinet Office but when responding to questions about the deal's financial details said: "That information is confidential."

She added: "What I can tell you is that we have negotiated a framework that offers substantial savings to the public sector, in support of the UK government's goal of reducing the deficit." ®

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