Government to end Microsoft contract with NHS

16 July 2010

17 July 2010 | Angeline Albert

The Department of Health (DH) has told the computer software giant Microsoft it will terminate its NHS-wide deal – worth £80 million a year – to buy Windows software licences.

The DH decided to make use of a break clause for 2010 and end its nine-year contract signed in 2004, as part of the coalition government’s white paper proposals to devolve buying power from Whitehall to GPs.

A DH spokesman said: "The DH has already invested so that NHS trusts are able to have access to the latest versions of Microsoft desktop software. Future investment decisions will be taken at a local level in line with the proposals set out in the white paper published this week [12 July]."

The DH does not expect GP practices and hospitals to wait until the estimated 500 groups of GP consortia are set up, as outlined in the government’s white paper. It is instead urging individual GP practices (of which there are 8,200 in England) and each local hospital (270 acute general in England) to source IT operating systems software, before the NHS-wide Microsoft Windows contract expires this summer.

Most servers and desktop computers used in the NHS (a total of 900,000 computers in 2004) currently use Microsoft’s Windows operating software. Microsoft’s dominance of the market, together with lower costs of support skill, means there are few practical alternatives to Microsoft.

Mario Varela, director of procurement and e-commerce at Barts and The London NHS Trust, said:  “I am very surprised by the government’s decision. One of the benefits being given away is the leveraging of purchasing power of an enormous organisation with 1.2 million people. It makes absolute sense from a commercial and process aspect to do things once only. Some 500 different GP groups will have to negotiate contracts for themselves and it will involve a huge waste of resources.

“Everyone uses Microsoft applications. These groups are duty-bound to go and talk to Microsoft because as far as I can see [Microsoft has] have a monopoly in this market. I’d like to know where is the rational in this decision? When there are not lots of competitors in the market, what is the point?”

The DH has not provided further comment.

The move to end the Microsoft NHS agreement is counter to efforts by the new administration to reduce costs in central government by aggregating demand and signing deal for greater volume using collaborative buying power.

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