Open Source Society appeals to Auditor-General

Auditor-General asked to scrutinise government use of Microsoft

The New Zealand Open Source Society is calling on Auditor-General to scrutinise government procurement of Microsoft software after the collapse of negotiations for a new three-year all-of-government software licensing deal.

Don Christie, NZOSS president, is asking for the reviews on the grounds that agencies are negotiating with a single supplier "in a situation where ordinary market disciplines do not operate", he says in a letter to Auditor-General Kevin Brady.


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He says agencies are unable to establish Microsoft products and services represent value for money and are failing to properly consider alternatives that meet their needs.

Christie, who also runs Wellington open source services company Catalyst IT, further argues that agencies are putting public administration at risk through reliance on a single overseas software manufacturer.

Christie says Microsoft has long held a dominant position in this marketplace, and is able therefore to command a premium price for its products.

"Microsoft's latest financial returns show that worldwide their Office Suite product returned net earnings of US $1.7 billion on sales of US$4.5 billion, while the operating systems they manufacture returned net earnings of US$2.1 billion on sales of US $3.1 billion," he writes.

"Such margins would not be possible where ordinary market disciplines obtained."

Microsoft New Zealand managing director Kevin Ackhurst says, however, that agencies have always had the opportunity to opt in or opt out of the government deals and some choose to opt out.

"Don runs a company called Catalyst and wants to ensure it's successful. I wonder whether this is about that or about open source software," Ackhurst says.

Christie, in response, says it's "stating the bleeding bovious" that he runs a local open source technology company. He says if Microsoft addressed the message, rather than shooting the messenger, there might be a reasonable outcome to the debate.

The open source model is a perfect free market, he says. There are no barriers to entry and no barriers to Microsoft entering it and making its products available as open source.

Ackhurst says he is not sure where Christie is coming from as agencies have always had choice. The Electoral Commission, which Christie references in his letter and frequently cites elsewhere, is one that has chosen open source software, he says.

He says Christie's recent statements about how Microsoft's SharePoint forces users to deploy Microsoft databases and office software are incorrect. He says Microsoft takes interoperability seriously. SharePoint supports many other databases and documents held in SharePoint can be opened by non-Microsoft office suites, he says.

Ackhurst says he knows Microsoft didn't come from a history of interoperability, but that has changed. Christie's quotes represent the way Microsoft products worked in the 1990s, he says.

Christie cites a Computerworld NZ story saying only $3 million a year was saved through

the centrally negotiated G2006 agreement.

"As taxpayers, we are not privy to the total value of the procurement, which is held to be commercial in confidence, but even conservative estimates suggest hundreds of millions of dollars are spent every three years under these agreements."

He says arguments that there are no alternatives are no longer tenable.

"If an agency such as the Electoral Enrolment Centre can carry out its vital public function since 2003 without reliance on these products, there are many New Zealand public sector agencies of a similar size and function that can too.

Christie writes the practice of negotiating with a single supplier in this way "has a significant corrosive effect on the independence and impartiality of the public service". He says if agencies believe they have no alternative but to strike the best deal they can with Microsoft, then they have "allowed themselves to be captured by that supplier".

He argues such procurement also constricts the ICT sector in New Zealand, preventing the emergence of a viable market in which "capable but currently excluded businesses both big and small can participate equally to support public sector business needs".

"We believe that agencies should fairly and contestably request tenders from suppliers of comparable products and services, and be seen to be doing so through the GETS (Government Electronic Tenders) service.

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