European Commission renews controversial Microsoft contract

The European Commission has extended its controversial Microsoft software contract, while under intensifying scrutiny over its deals with proprietary vendors.

The European Commission has extended its controversial Microsoft software contract, while under intensifying scrutiny over its deals with proprietary vendors.

Computer Weekly has learned that the EC Directorate for Informatics (Digit) renewed its €49m contract with Microsoft reseller Fujitsu on 8 December, the day after the Free Software Foundation Europe (FSFE) launched a campaign against this and other large proprietary software deals. The contract was not due for renewal until February. Digit then proposed an extraordinary increase of its expenditure on Microsoft software, according to further reports.

A Digit spokesman confirmed the unit had extended the Fujitsu contract for 12 months to 29 February 2012. This was the last of two optional one-year extensions the 2008 contract allowed without any further competition or notification.

But questions have been raised over the legality of the Fujitsu contract. The deal allows the commission and 45 other public bodies to buy Microsoft software, while excluding competing firms who might otherwise vie for the business.

FSFE president Karsten Gerloff raised the matter in a letter to Digit director general Francisco Garcia-Moran on 15 December, the day Digit opted to extend its purchase of Microsoft software using exceptional procurement procedures.

The legal question concerns the contract's specification of the Microsoft trademark, a practice normally forbidden in European tenders because it prevents anyone but the trademark holder from competing for the business.

"It's like they are asking for cars as long as they are from Volkswagen," said Gerloff. "I wonder if that sort of request would be permissible if it wasn't for software but for something else."

The EC has repeatedly claimed the contract was permissible because it did not establish a direct relationship with Microsoft. It sought supply from a Microsoft dealer, called a Large Account Reseller (LAR). Since any Microsoft LAR could apply for the business, their competition with one another made the EC's stipulation of "Microsoft" a permissible part of the procurement procedure.

The commission said this was dissimilar to the example set by Intel, where EC infringement proceedings have been pursued against member states on numerous occasions. The EC sought to prohibit public procurements that stipulated "Intel" in procurement competitions between computer hardware suppliers.

The practice was deemed impermissible because it excluded suppliers who used different microprocessors: most notably AMD, whose complaints prompted the EC's infringement actions. The EC said in 2008 the Microsoft/Fujitsu procurement did not carry the same basis to complain as the Intel procurements.

The New York Times reported last week that Digit was seeking to upgrade the 36,180 computers covered by the Fujitsu contract to the Microsoft Windows 7 operating system. The proposal would involve paying €4.5m (£3.8m) a year on Microsoft upgrades without opening the business to competition.

The newspaper was sent the minutes of a meeting in which Digit proposed purchasing the upgrades using an extraordinary procurement procedure that precluded competing software suppliers.

There appeared to be uncertainty over whether the terms of the Fujitsu contract allowed the purchase of Windows 7. The Fujitsu terms were determined in part by a licensing agreement formed directly with Microsoft: an Inter-institutional Licensing Agreement (ILA) it signed with Microsoft Ireland Operations Ltd that came into force on 1 June 2007.

Digit told Computer Weekly it renewed the Microsoft ILA last year. It was allowed to do so without issuing a public notice. The renewal used a sole optional 12-month extension, which will terminate on 31 May 2011. Digit agreed the Microsoft ILA using the same extraordinary "negotiated procedure" by which the New York Times said it intends to use to purchase Windows 7 upgrades to the exclusion of competitors. Digit refused to supply further details of the Microsoft frameworks, and said they were confidential.

The commission and other participating EU bodies bought €16.8m of Microsoft software using the Fujitsu and Microsoft arrangements in 2008 and 2009, according to published EU figures (see here, for example). 2010 numbers have not been published.

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