Introduction
Many of the services that departments provide to the public depend heavily on computer software (Figure 1). Almost all of the software used by departments is produced commercially by companies who sell their products subject to conditions for its use, which are set out in an accompanying licence. Departments are responsible for determining their own software requirements and purchasing what they need. In 2001-02, departments spent around £610 million on software, £100 million of which was spent on over one million licences.
Figure 1: Software is vital for delivering services to the public
Source: National Audit Office
The Office of Government Commerce (OGC) exists to promote value for money in central civil government procurement. To support departments in getting a better deal, OGC has reached Memoranda of Understanding with five software companies, Microsoft, Sun Microsystems, Lotus/IBM, Corel and Oracle. The purpose of the Memoranda is to enable all parts of the public sector including departments, agencies and local authorities to take advantage of negotiated prices for software offered by suppliers. When setting up the Memoranda, OGC estimated the public sector would save around £100 million over the three years from March 2002 through a combination of direct price reductions, productivity improvements and efficiency gains.
Based on a Report[1] by the Comptroller and Auditor General, we took evidence from OGC on 29 October on three main issues: negotiating the Memoranda, realising the maximum benefit from the Memoranda, and dominant suppliers and new sources of supply.
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