DWP doubles value of Microsoft licensing arrangement with £250m deal

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The Department for Work and Pensions has more than doubled the value of its licensing arrangement for core Microsoft products with the award a new five-year deal worth £250m.

Recently published commercial documents reveal that, at the start of this month, the DWP entered into a contract with IT reseller Softcat. The deal represents a new Microsoft enterprise agreement, and covers the provision of a range of the vendor’s products and services.

The procurement notice said: “[This] contract [will] provide a licensing subscription service for Microsoft – or equivalent – products and incorporates a number of key product suites utilised by DWP, which includes O365, Windows and Server products… and software and telephony services.”

The new five-year arrangement replaces a three-year engagement – also fulfilled by Softcat – which ran from 2020 until March 2023. That deal was valued at £70.8m.

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This means the department’s annual spend on Microsoft products has more than doubled – from £23.6m to £50m.

The DWP indicated that the contract provided continuity for existing critical IT systems, while also offering the opportunity to derive greater value via the additional functionality provided for by the deal.

The text of the contract reveals that “opportunities to add value and optimise [the] licence estate” was a significant consideration in the procurement process, with an importance weighting of 10%. Softcat will be expected to support the DWP’s “asset management function, including upskilling and knowledge transfer, as well delivering “utilisation reporting and recommendations regarding optimisation, [and] periodic reviews on ways or working to ensure ongoing maximum value delivery”.

Also assigned 10% weighting in the award process was “contract mobilisation services”, including the provision of “transition and support on licensing requirement” in preparing for the implementation of the agreement.

A weighting of 5% was attached to “contract exit services” and, at both the start and conclusion of the deal, Softcat will be expected to provide a “clear and concise timescale of the activities to be completed ”by the department and the IT firm.

An image of a DWP sign outside

Account management considerations were also assigned 5% weighting. This element covers “team structure, capabilities, and qualifications including mandatory vendor specific accreditations”, as well proposals for how the provider will “manage the tri-party relationship” between Microsoft , Softcat, and the DWP.

As is now mandatory for public procurement exercises, the demonstration of social value was weighted at 10% in the bidding process; the contract indicates that this incorporated efforts on the part of the supplier to tackle economic inequality and climate change, as well as promoting equal opportunity.

Sam Trendall

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