Microsoft offers UK government new discount licensing deal

Microsoft is set to win a major victory in its battle against Linux by agreeing a new framework deal for software licences across UK government departments.

The software giant has an existing 'memorandum of understanding' (MoU) with central government procurement watchdog the Office of Government Commerce (OGC) which expires next year.

As part of a mooted new three-year deal, Microsoft will offer a software and support package at volume discount rates across the UK's public sector.

A spokesman for the OGC would only confirm to silicon.com that talks to renew the deal have been going on but that the details are in "commercial confidence".

It is expected, however, that the MoU will be on improved terms for the government because of increased competition from open source. Last year former OGC chief Sir Peter Gershon admitted to MPs that up to £50m of potential savings could be lost because of delays in the NHS and Inland Revenue signing up to the new terms.

The MoU works by pooling public sector volume licensing purchases to trigger bigger levels of discount.

The news follows London's Newham council's revelation this week that it chose Microsoft over open source because Gates and co offered savings of £3.2m over five years. It was the result of an independent examination by Capgemini after Newham had threatened to switch to Linux unless it got a better deal from Microsoft.