SSC and MED Post G2009 Procurement Advice

On June 5th I wrote to the State Services Commissioner and the Ministry for Economic Development . In my role as President of the NZOSS I was seeking “advice on government agency procurement of software products following the recently concluded G2009 Microsoft negotiations.”

In particular I asked for “your confirmation that government agencies are required to tender for software procurement so that our member companies and others have the opportunity to tender open source products and services.”

The entire email to SSC is attached to this article. The email to MED was very similarly worded.

I have now had responses from both agencies and I will attempt to highlight some of the more salient points. SSC has been the key agency involved in leading the G2009 negotiations with Microsoft so the advice it are giving Government agencies subsequent to the failure of those negotiations is important.

In its reply, also attached to this article and which I urge members to read, SSC confirm that some procurement rules are mandatory but that it is up to individual agencies to implement those rules. They highlight the principles that must guide departmental procurement. These include “open and effective competition” and “full and fair opportunity for domestic suppliers”.

In response to the question about whether agencies are required to tender for software procurement SSC confirms again that Public Service departments are bound to follow the procurement rules but that it is up to them to decide in what circumstances those rules apply.

My comment on the above position is as follows. Should NZOSS individual members or businesses believe that a department has not complied with the rules of procurement and have not appraised themselves of the range options available to them that a complaint should be made to the Office of the Ombudsman.

In the final section of its response SSC refer to a series of workshops they have been running to provide support to agencies following the cessation of negotiations. SSC provided me with a hard copy of the slides they have produced for these workshops. These slides consist of a series of bullet points. Given I have not attended the workshop I can only repeat some of the more pertinent looking points but keep in mind that my and our interpretation may be different from the interpretation given at the workshops.

Interesting points picked from 40 odd pages are [my comments in these square brackets]:

- State Services Commission led re-negotiation
- [steering committee] Chaired by MED Deputy Secretary
- Agency licencing data shows not all Microsoft expenditure represents good value for money
- Software Assurance for the desktop may no longer be appropriate gven the low uptake of product upgrades and the expected levels of asset 'sweating'
- Desktop contestability programme [I would love to know more about this bullet point]
- Cease desktop assurance [! This is actually the title of one slide with a number of related sub-points]
- No Imperitive for agencies to move to Vista [well overdue advice and now dated anyway]
- Defer desktop upgrades
- Switch Visio & Project
- [these are] products that attract premium pricing but are typically underutilised
- Identify and evaluate a range of desktop solution [the NZOSS is here to help]
- Drive agency uptake of a mix of best-fit desktop solutions [the NZOSS is here to help as well]
- [under "Your Options" one point says] Investigate alternate solution [the NZOSS is here to help]

The final "Conclusion" point notes:

- Potential tipping point for government ICT investment

When I get time I will try and scan all the pages and add them to this article.

[UPDATE - Now scanned in the presentation, available here]

The response from MED was from its Government Procurement Development Group. Again, I have attached the full response to this article. Please do read it and make your own interpretations.

Some of the response is very similar to the advice given by SSC. What is interesting is that looking at the description of exemptions from the mandatory rules. MED states:

“The exceptions allow for departments to consider a specified range of possible circumstances in which competition is not viable e.g. where because of patent or copyright protection, or for technical reasons preventing competition, there is only one possible supplier and no reasonable alternative or substitute exists.  Other exceptions allow factors such as interchangeability requirements or extreme urgency (in strictly qualified circumstances), for example, to be considered.”

None of these exemptions would seem to apply to Microsoft software.

And MED make the same point as I do about the role of the Ombudsman:

“Suppliers may challenge this or other aspects of a department's procurement process in a particular case.  Departments are required to give fair and objective consideration to complaints from suppliers that they have not been given fair and reasonable opportunity, and unresolved complaints may be taken up by the Government Procurement Development Group, and possibly by the Auditor-General, the Ombudsmen or the courts.”

The question is, how many suppliers are brave enough to risk the ire of Government by making these sort of waves. That said, I am sure that it is not only suppliers that could lay complaints over failure to apply rules of procurement. It is after all taxpayers money being spent here.

It is fair to say that the overall effect of government agency implementation of procurement rules and guidance is that of consistent and unreasonable favouritism towards one incumbent technology and one technology company. Microsoft-only based solutions are sought in far too many cases and even when the technology supplier is not Microsoft this tendency re-enforces the distortion in their favour.

It really is time for the point to tip.

Note - I would like to thank SSC and MED for responding fully and thoughtfully to my questions. They were treated seriously and with respect.