451 CAOS Theory 
A blog for the enterprise open source community
How not to negotiate a software contract
Matthew Aslett, July 10, 2008 @ 6:53 am ETThis is somewhat off-topic and also a personal bug-bear of mine but I hope you will forgive me as it does relate to open source and, in particular, the puzzling problem of source’s inability to make headway in UK schools.
The Inquirer is reporting that Becta, the UK government agency responsible for technology in the education system, has declined a Freedom of Information request for details of the memorandum of understanding (MoU) that gives schools discounted pricing for Microsoft software.
The grounds for its refusal are as follows:
.
I’m not going to comment on the legal reasons given but the subject of Becta’s negotiating position is worth considering. As Glyn Moody eloquently points out in his call for Becta’s abolition, Becta’s position could hardly be any weaker.
“Has it ever occurred to them that if they started negotiating from a position of dignity and strength, rather than abject, supine servitude, they might just possibly do their job a teensy-weensy bit better?” he asks.
It is worth repeating some of the history to understand how Glyn has come to this conclusion. Here’s the facts:
.
The phrase, as Glyn puts it, is “snatch[ing] defeat from the jaws of victory.” The problem is that despite Becta’s apparently strong hand, the signing of a new MOU was in reality never in doubt. That’s not exactly a strong negotiating position.
I am sure the MOU delivers good discounts for UK schools but the question is whether those discounts would be greater were the signing of a new MOU not all-but guaranteed. Additionally, as The Open Sourcerer asks, as UK tax payers, are we not entitled to know what those discounts are and how much is being spent?
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Categories: Software
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Thanks for the link Matt.
I have just written to my MP (Jeremy Hunt) on this subject. The Tories have been quite positive on OSS for some time now, so this should really be brought to their attention.
It is absolutely disgraceful that a public body would enter into confidential agreements for something so benign as education. Perhaps if it was a military contract of some sort where national security could be at risk, then it would make sense. But what we teach our kids? It stinks.
Anyway - enough ranting for today - I do want to write something about how totally inconsequential and insignificant the debarcle surrounding OOXML is making the ISO and their stupid file format, but that’s for another day.
Alan
I’m astonished by the level of nearly quasi-religious fervour that this issue has provoked.
What do we actually think happened here? Was BECTA was enslaved by the evil Microsoft “for the pleasure of having them corrupt young children’s minds”? in Glyn Moody’s words.
More likely, I think is that that BECTA behaved entirely pragmatically and rationally.
I suspect that BECTA threatened Microsoft with the entire school switching to open source unless Microsoft offered licenses at a price which created a lower TCO than open source could offer. That probably equates to a stupidly low license price. Microsoft had to acquiesce.
As Glyn points out “Microsoft is scared witless by the prospect of open source getting a foothold in schools, and would agree to any deal rather than let the UK education system discover the power and value of free software. ”
That’s right. So BECTA used its incredibly strong bargaining position to drive Microsoft’s price to rock bottom and at the same time giving children experience using the software that they are most likely to encounter in business.
Microsoft’s only stipulation? “For goodness sake don’t tell anyone the price.
So that’s my hypothetical, contrarian scenario. Who is damaged? The schools? No, they get MS software at a price lower than they would be able to command locally. The children? No. Really. Public accountability? Perhaps, but as a taxpayer I’m satisfied that Microsoft’s standard pricing got beaten to a bloody pulp.
That’s exactlyhow to negotiate a software contract.
So that leaves the open source movement. Yes, it may have been damaged, but not as much as it is likely to be damaged by the spital-flecked invective that this deal has provoked.
The issue is that this isn’t a contract awarded based on a competitive tender but an MOU that is guaranteed given Microsoft’s monopoly in the desktop OS/apps markets.
Yes the result is cheaper licenses for UK schools but Becta’s own research has shown that those licenses pose significant risk of lock-in and are so complex that many schools end up paying more than they need to. They also mean that schools have to pay Microsoft a fee for hardware that doesn’t even run (or in some cases is not capable of running) Microsoft software.
It is these licensing problems that led Becta to refer Microsoft to the OFT and the competition commission and if the problems were serious enough for it to do that then I would argue it should not be entering into any agreement with Microsoft until those issues are resolved. And yet Becta has to enter into an agreement with Microsoft to justify its own existence. The signing of a deal with Microsoft was never in doubt. And all the time Microsoft’s monopoly in UK schools is strengthened even further.
It wouldn’t be so bad if Becta also signed similar deals with Red Hat or Novell or Sun, or if Linux were available via Becta’s software licensing framework and there was at least a threat of true competition. It doesn’t and it isn’t, despite Becta’s own research indicating that open source has the potential to reduce costs for schools.
Becta has talked the talk on open source but until schools have the opportunity to get similar access to open source subscriptions there cannot be a level playing field. Whether one believes open source to be the right solution or not it is common sense that by encouraging competition Becta would actually strengthen its bargaining position further.
Hang on, according to BECTA at least, the MOU in no way requires schools to buy any MS licenses. Schools can carry on their merry way installing Ubuntu and Open Office and not paying MS a penny. But if they do buy MS software the MOU kicks in.
(See final paragraph: here)
Are you suggesting that this is rubbish and actually the MOU requires schools to by a MS license for every machine they own?
Becta’s report stated:
“1.22 Microsoft’s subscription licensing agreements are all or nothing: in other words, if a school wants to cover any of its ICT estate using a subscription agreement, it must cover all its ‘eligible PCs’. Microsoft has set the definition of an eligible PC as any computer with a specification of a PII processor or higher (the PII was launched in 1997). The eligible PC definition also includes Apple Macintosh computers (G3 or higher). This approach results in over-licensing, double licensing and other anomalies.
1.23 One such anomaly occurs because schools tend to retain computer systems longer than is typical in other market areas. This leads to a position whereby the total number of computers on which they must pay a subscription-based licence fee increases year on year. The ‘elderly’ nature of their ICT estate means that older PCs may not even be capable of running the new software. Under these arrangements, therefore, costs increase while the scope for using the new products across the entire estate decreases.
1.24 A further anomaly arises in that a school which uses a mix of Microsoft-based and Apple computers can find itself paying Microsoft a licence fee for software which cannot run on its Apple machines.”
It recommended that:
“Microsoft should ‘rebase’ the eligible PC definition in line with the specification necessary to run the most recent version of the relevant operating system. When educational institutions wish to license on the basis of computer numbers, they should have the freedom to select which computers they license.”
You’re going to start thinking I’m a paid lobbyist for Becta in a moment, but it seems to me that the chronology is:
1. Becta strikes cut-price MOU with MS
2. Becta issues report pointing out problems with MS licensing and enters talks with MS
3. MS says ‘go away’ and Becta refers MS to OFT.
4. While OFT mulls, Becta extends MOU for one year.
Anyway, I don’t know all the details, so I’m probably horribly wrong. It was just that prima face. I was surprised to see Becta getting such a thorough kicking, as opposed to merely a slap around the head.
I take the point that there may be a lot going on behind the scenes that we don’t see, but the *public* chronology is as I stated in the original post.
1. Becta strikes cut-price MOU with MS
2. Becta extends MOU for one year.
3. Becta issues report pointing out problems with MS licensing and enters talks with MS
4. MS says ‘go away’ and Becta refers MS to OFT.
5. OFT complaint is referred to EC.
6. A new 3-year MUO is signed.
As to whether of Becta’s complaints with regards to Microsoft’s licensing were dealt with between steps 3 and 6, that would appear to be confidential.
@Chris. It is a possible hypothesis that you offer. But merely that. We don’t know…
I do know quite a few chaps in BECTA and they DO NOT LIKE Microsoft in general, and feel that they have been shafted by them for too long. So I doubt that your scenario is even close to the truth. But alas due to incompetent public sector contract negotiations, we - the public and taxpayers - will not know what our money is buying us… That is the bit that stinks.
Al
One non sequiteur and one big assumption in there, I think
You appear argue that:
a. Becta chaps don’t like MS and therefore: b. it’s unlikely that Becta bargained hard.
I cannot possibly see how b follows from a.
You also say: “due to incompetent public sector contract negotiations, we - the public and taxpayers - will not know what our money is buying us”
Here you appear to be taking as axiomatic that the negotiations were incompetent to support the thesis that the negotiations were incompetent.
It’s just as possible that the negotiations were extremely competent, hence MS’s stipulation of an NDA.
You appear argue that:
a. Becta chaps don’t like MS and therefore: b. it’s unlikely that Becta bargained hard.
Well, not quite. I know that the chaps who are at BECTA now don’t like MS. When the original MOU was done there was different team in place…
Here you appear to be taking as axiomatic that the negotiations were incompetent to support the thesis that the negotiations were incompetent.
But there is no justification in my mind why a public contract for something as benign as software for schools should be confidential. As I have said elsewhere, if it was for some military or other “National Security” reason, then I could accept it. But for our schools… Come on. I want to know where my money is going and I haven’t seen a good reason why I shouldn’t know that.
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