EC slapped over open source contract

The European Commission has been scolded for wrongdoing over a quasi-open source software system.
The European Ombudsman reprimanded the Commission after buying the system without holding a public competition.
The reprimand raises important questions about the open source business model. But the complex investigation into the contract has not provided answers because the Commission failed to explain what had really happened.
The Commission can now implement system, provided by UK-based Alfresco, despite the doubts raised by its procurement.
The Ombudsman said the European Commission was guilty of “maladministration” because it failed to explain why it had bought the software system without holding a public competition.
The Ombudsman did not name the parties involved but Computer Weekly can confirm the contentious deal was for an Alfresco system, and involved a Belgian middle-man called PC-Ware.
Investigators had been trying to find out whether there had been a much more serious case of maladministration over the Commission’s Alfresco deal, which involved the choice of a collaboration system to be implemented across all agencies of the European Union, and in the offices of every member state that may have cause to use the EC’s document exchange tools.
The question was whether the Commission arranged to pay millions of Euros to build its CICRABC collaboration system on Alfresco’s quasi-open source content management system, but bought Alfresco’s software as though it was truly open source and therefore fell outside normal competition rules.
Alfresco’s licensing model was at the heart of the problem, according to the Ombudsman’s report. The Commission’s technical requirements had been for an open source system. It chose Alfresco’s system, which in its Community version is open source.
The Commission told the Ombudsman that it did this without going to tender because it was an open source solution. It simply chose Alfresco after a technical evaluation.
But the Commission chose to use Alfresco’s Enterprise version, which is not open source. Alfresco’s Enterprise licence required the Commission to pay an annual subscription. That payment covered the provision of support services from Alfresco. The Commission went to competitive tender for someone to provide support services. But the support services were for an Alfresco system it had already chosen without a competition. Alfresco won the business through a partner.
“If [Alfresco] was the only company which could win the tender for the supporting services for its own platform, the Ombudsman does not see why the Commission did not comply with the [law] from the outset and organise a procurement procedure to select software for its new platform, which would have included support services,” said the Ombudsman in its decision.
Open source business model
John Powell, CEO of Alfresco, told Computer Weekly that the open source business model allowed customers to cut cost from the procurement process by cutting out sales people. They chose the technology they wanted and then went to tender for services to support the open source system. 
“Other people can support Alfresco,” said Powell. “We just tend to be the best.”
Powell said Alfresco’s software was open source and that his company was the second largest open source company in the world after Red Hat. But when pressed further, he confirmed that only the community version of Alfresco is issued under a certified open source licence. The Enterprise version required the purchase of a support subscription and though customers could carry on using the software and even modify its code after the subscription had finished, they were forbidden from redistributing the software.
Raluca Trasca, the EU lawyer who conducted the investigation, said the Ombudsman could not determine whether the Commission had been wrongful in not tendering for the software system because it supplied insufficient answers to her official questions.
“It…failed to justify its decision for having selected the supplier of this software without conducting an appropriate call for tenders,” concluded the Ombudsman’s decision.
“When the Commission acquires products and services against payment, it should do so only through procurement procedures.
“The Commission failed to put forward sufficiently convincing reasons why the contract with [Alfresco] was not a public contract…This constitutes an instance of maladministration,” it said.
The Commission had established a technical requirement for an open source upgrade to its collaboration system because there were so many external agencies that used it. It did not did not want to force them to buy expensive software licences just so they could collaborate on EU work.
Special licence
Powell said Alfresco struck an agreement to let the EC redistribute its Enterprise software under a European Union Public Licence in 2007. The Commission chose the software in 2006. EUPL was certified as an open source licence in 2009.
A source close to the investigation provided Computer Weekly with EC publicity material that said in 2007 the full system would cost €3.3m.
Powell said he did not know how much money the European Commission had paid Alfresco. He admitted that the deal had made the Commission one of Alfresco’s biggest customers. He thought it might be paying roughly €100,000 a year.
European Dynamics (Eurodyn), a Greek company whose complaint had caused the Ombudsman’s investigation, had tried and failed to get the Commission to stop installing Alfresco’s software on the basis that it had been chosen without a competition. Eurodyn had developed the previous version of the EC’s collaboration system, called CIRCA. It’s complaint did not include enough evidence to justify an order to cancel the Alfresco procurement, said the Ombudsman.
The Ombudsman’s decision allows the Commission to proceed with implementation of the Alfresco system, and its distribution across the EU. This was said in 2007 to involve 70 offices in 20 member states.
The Commission has until 31 May to explain what it has done to ensure it does not get pulled up over other quasi-open source procurements. It’s office did not reply to our request for comment.
Gerry Gavigan, chairman of the Open Source Consortium, said the Commission was free to ignore the Ombudsman’s decision. He asked why Eurodyn had not taken its complaint to the EU’s competition office, who had bigger teeth. 
Mark Henley, a lawyer with Wragge & Co., said the decision did not help clarify unanswered questions in open source procurement because it hinged on Alfresco’s enterprise licence. It did, however, provide assurances where that had been doubts that it was legitimate to opt truly open source software purely on the basis of technical requirements.