MS & French Min. of Defense : IT Tender Overview

Translation of French Ministry of Defense Global IT Tender Overview.

Background situation

During 2006, following a lobbying action by Microsoft, the French Department of Defense studies opportunities partnership with software vendors.

A ministerial task force presents its conclusions:

  • the multiplicity of actors and purchasing procedures does not allow to enjoy the best conditions ;
  • it is advantageous to globalize procurement of software products ;
  • among providers of the Department, three vendors stand out (22 million euros annually to Microsoft, 8 million annual Oracle, 5 million annual Business Objects) ;
  • the comparison between the conditions for acquiring the Ministry of Defence and those of large organizations comparable in size to encourage the implementation of global contracts with these vendors.

On June 1st 2007, Microsoft presents a comprehensive open bar contract offer. During June 2007, DGSIC creates a steering committee that meets six times between mid 2007 and mid 2008. Meanwhile, DIRISI negotiate with Microsoft the draft contract. The Steering Committee ask for a financial study as well as a analysis study of value.

In July 2007, the financial study concludes that the annual cost over three years by Microsoft product for the Department of Defense is 14 million per year - the game client (operating system and office suite) representating 92% of the total. Figures provided by Microsoft confirm the study.

In March 2008, the ministerial group in charge of analyzing the value has studied four scenarios:

  • decentralized acquisition of licenses ;
  • centralized procurement of licenses ;
  • framework open bar contract ;
  • framework office contract.

Given the high risks and the additional cost compared to the current situation, the study advises not contracting through a global contract unless limiting it to the office part (92% of expenses occurred). The global open bar contract scenario is not recommended because it increases the expenses of 3 million euros per year, maximizes the risks and has no proven return on investment (eg downsizing). The working group recommends that the scenario of centralized procurement of licenses.

In April 2008, the chairman of the board concludes that "it is appropriate to conclude a contract with Microsoft based on Microsoft's proposal provided that the department is organized to stay in a good position vis-à-vis Microsoft after it ends up. The total cost of the contract with the company Microsoft is forecast at 93.5 million euros before tax, including an option to purchase 25.5 million euros before tax at the end of the contract. "

The draft framework contract is meanwhile concluded and presented by the DIRISI to the State Commission on Government Procurement on May 6th, 2008 under No. 08-0179. The framework agreement and subsequent contracts are awarded to Microsoft Ireland (1).

The reporter expresses his doubts about the benefits they can expect from this draft framework agreement in return for dropping many of the principles relating to public procurement.

He also notes that in this period of questioning of the usefulness of public expenses, the justification of proposed expenses appear weak and does not take into consideration the important and recurring costs incurred by this framework agreement, which is the opposite of central concerns of the RGPP.

Meanwhile, the DIRISI is entrusted with a mission she must accomplish at best, and provide services the means to work effectively. In this context, the reporter was struck by the asymmetry of expertise and information between the service and its supplier, on the eve of a difficult negotiation.

The project is nonetheless accepted by the State Commission of Public Procurement.

In late July 2008, the tender commission under the chairmanship of the loop DIRISI closes the file after two sessions. The first meeting was not given a favorable opinion because there were many remaining questions. The second meeting came a week later and validates the draft framework contract. Nothing prevents anymore the notification of the contract scheduled for fall 2008.

(1) This arrangement allows Microsoft to outsource the payment of taxes. Microsoft plays on the fact that no competitor could prosecute him and especially not free software companies. The reporter notes: "Should we not, for example, mention Microsoft Ireland as a subcontractor, as they will be the recipient of the corresponding Royalite licensing of this framework contract and will carry some of its obligations if the administration attached to the contract the statement is stated ? "

Agreement draft

1. Scope of agreement :

"…. State services have decided to consolidate in a single operation the operational maintenance of their Microsoft platforms. This includes services and rental of software products with a purchase option from the holder, for a software mapping defined in advance.

The framework agreement is merely a method to supply Microsoft technologies on the basis of the minimum commitment of each of the subsequent contracts. In this context, coordinated services can not in any way avoid a competition for the selection of technical solutions regarding future projects … "

2. Products and services :

All Microsoft catalog's products are covered by the Framework Agreement, excepted games.

In addition, the contract provides work packages for maintenance and training. This may suggest that this contract is similar to an outsourcing of maintenance and training for the entire installed base of Microsoft at the Ministry of Defence, although concluded without competition.

3. Budget :

The Ministry of Defence has a fleet of 220 000 work stations. The contract covers an area of 170 000 work stations for a total of about 80 million Euros excluding VAT to which must be added a buying option for about 20 million Euros excluding VAT.

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