On August 20, the European Commission published a call for tender (DIGIT/R3/PO/2015/019 LSP). This call is worth an extra look.
The Inter-Institutional Licensing Agreement
The purpose of this tender is to select a service provider that can assist the European Institutions with “the acquisition of Microsoft software products and licenses under the Inter-institutional licensing agreement (ILA)”. This “Inter-institutional licensing agreement” is signed between the European Commission, on behalf of a long list of European Institutions, and Microsoft and is essentially a “Microsoft enterprise agreement” (see the Microsoft website for more information on this enterprise agreement).
For more than 20 years, European Institutions claim that they cannot function without Microsoft software. Originally they relied mainly on MS Windows and MS Office but over time they decided to also use other Microsoft products such MS Exchange and MS Sharepoint. Every few years, the European Commission starts a “negotiated procedure” with Microsoft, resulting in a new “Inter-institutional licensing agreement” being signed with Microsoft (see the documents for the most recent one). These agreements with Microsoft have “no associated financial value” because the Institutions do not pay the licenses directly to Microsoft but use an intermediary “selected after an open call for tenders”. Because the financial value of the agreement with Microsoft is zero, the Commission claims that public procurement procedures are not applicable – but that they use the negotiated procedure to provide transparency to the process.
The Call For Tender – The Selection Phase
The purpose of the present call for tender is to select a new intermediary. As dictated by Microsoft, this intermediary needs to be a Microsoft partner, a “Licensing Solutions Provider” (LSP). Microsoft LSPs help Microsoft customers to manage their licenses throughout the life of the enterprise agreement.
Ironically, the full open call for tender procedure is followed to select this intermediary. As required by the relevant European legislation, there will be a selection phase to determine which tenderers are capable of providing the service; followed by an evaluation phase to find the tenderer with the best offer.
In the selection phase, the tenderer must provide evidence that he is qualified as a Microsoft LSP (Licensing Solutions Provider). There are some additional requirements1 but the main selection requirement is that the tenderer must be certified by Microsoft as an LSP. In other words, Microsoft determines who passes the selection phase.
The Call For Tender – The Evaluation Phase
Selected tenders will then be evaluated. Evaluation criteria includes: the quality of the procedures and infrastructure proposed to deliver the services, the quality of the supporting services and the quality and completeness of procedures and tools to meet the services level requirements and fulfill the services level agreement. However, as all selected tenderers must be certified by Microsoft (and it can be assumed that Microsoft only certified companies that can provide quality services), it is very unlikely that their offers will greatly vary in quality.
At the end, the overall outcome will be determined 90% by price and 0% by the outcome of the technical evaluation. Price must be expressed as a discount that the tenderer is capable/willing to give to the Institutions on top of to the price as specified in the agreement signed between the Commission and Microsoft. It is interesting to note that licenses price are agreed between Microsoft and the Commission, but the Institutions want to get their licenses at lower prices from the chosen LSP. It can be assumed that the LSPs have to cover their own costs and have to be economically viable; hence it looks like if there are separate price negotiations between Microsoft and individual LSPs, and such negotiations can greatly influence which LSP can offer the best conditions to the Institutions.
In short, this call for tender is a very complex and costly procedure to find a contractor that first must be selected by Microsoft and then make a price offer based on whatever agreement he is able to make with Microsoft; essentially for providing the Institutions for access to Microsoft software and to pass money on to Microsoft.
So the contractor is selected after an open call for tender to which (theoretically) every economic actor can respond. So there is no visible flow of money directly from the Institutions to Microsoft. But this construction certainly gives the wrong message and is very discouraging for the hundreds of public administrations that are trying to get rid of IT vendor lock-in, to create a level playing field and to foster a healthy competition in the IT market. And it goes directly against all good intentions expressed by the Commission it its Digital Single Market Strategy.