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When the Government of Australia’s second largest state Victoria signed an $80 million, four-year contract with Microsoft in May 2002, advocates of open source software and other critics cried foul. Today that contract has just about expired, the Victorian Government has a new CIO, the NSW Government has opened its doors to Linux and the question arises as to how much longer  Victoria can justify committing to long-term Microsoft lock-ins without considering alternatives.

Extending the lock-in by another two years plus there is also the Microsoft Enterprise Agreement. This is a three-year contract struck on 30 June 2005 which enables subscribing Victorian Government agencies the option of buying Microsoft software, upgrades and maintenance at a discounted rate. Thus, the Victorian Government stands in stark contrast to its NSW counterpart, which has opened the way for its agencies to consider open source alternatives, instead encouraging them to stick closely to Microsoft.

An interesting thing about the Victorian Government situation is the almost strange confluence of events. As the original $80 million contract draws to a close, Microsoft is on the cusp of releasing a new operating system and a new version of Office. The Commonwealth Games, currently being staged in Melbourne, have provided Microsoft with a public platform to show off its technology and how chummy it has become with the Victorian Government. Meanwhile European governments, such as that of Norway, push forward with implementing open source solutions to the detriment of Microsoft and the NSW Government has named Novell as a preferred supplier of Linux solutions and support.

Another interesting thing about the Victorian Government contract with Microsoft is the numbers, which appear to be so cut and dried and divisible. The contract was publicly stated to be $80 million over four years, covering approximately 40,000 State-owned desktop computers. Primary school arithmetic is sufficient to figure out that this comes to $2000 per desktop, or $500 a year per desktop for the life of the contract. At the time of the deal, the Victorian Government claimed that its volume purchase with Microsoft had saved taxpayers $19 million on the retail value of the software.

However, critics of the deal at the time, such as the then Victorian Opposition IT spokesman, Victor Perton, pointed out that Telstra, a smaller Microsoft user than the Victorian Government, had forced Microsoft to send its CEO to Australia to negotiate. In contrast, the Victorian Government simply signed on the dotted line. In fact a source close to the deal tells us that Telstra paid just $20 million for its 40,000 desktop Microsoft contract, including Microsoft Exchange CALs (client access licenses), compared to the $80 million that the Victorian Government paid for the same size deal. Worse still, the Vic Government didn't even get Exchange thrown in because it has a separate $15 million contract with IBM for Lotus Notes. Our source says, Telstra played the open source card, which forced Microsoft to the negotiating table.

The Federal Opposition IT spokeswoman at the time, Senator Kate Lundy, also added her voice to the fray, saying that Microsoft had succeeded in locking agencies in Australian governments, such as the Victorian Government, into innovation straitjackets. Senator Lundy said that Microsoft had put a lot of effort into tying governments down to long term deals.....more