Microsoft wins £500m NHS contract

Update: The NHS has awarded a nine-year software contract to Microsoft, a week after the OGC sang the praises of open-source alternatives

Microsoft has won a nine-year contract, worth an estimated £500m, to put its software on 900,000 National Health Service computers, the Department of Health announced today.

The contract, which provides a saving of a £330m on the NHS' current deal with Microsoft, involves Microsoft providing its operating system, desktop products and bespoke software to the NHS. The deal allows the NHS to use up to 900,000 licences, compared to its current allowance of 500,000. Microsoft has also agreed to carry out £40m of research and development to provide guidelines and toolkits that will allow independent software vendors to deliver an NHS-specific user interface.

The nine-year contract, which includes breakpoints at three-year intervals, does not preclude the future use of open-source software, according to the Department of Health. "The option to use open-source software in the future remains and continues to be evaluated," stated the DoH.

Neil Jordan, the head of healthcare at Microsoft UK, told ZDNet UK on Wednesday that it is pleased with the announcement and is not concerned about the future risk of being replaced by open-source software.

"It's a great day for Microsoft to see an entity as large as the NHS putting its trust in Microsoft," said Jordan. "We're happy for them to continue to evaluate open-source software."

Jordan was unwilling to disclose the exact value of the deal, but stated that £500m was in the right order.

The Microsoft deal is part of the programme to upgrade the NHS' IT systems, a project that was originally estimated to cost £6bn.

The contract flies in the face of the report released last week by the Office of Government Commerce (OGC), the government's procurement watchdog, which described Linux as a viable desktop alternative for the majority of government users. A spokesman from the OGC was unable to comment in time for this article.

James Governor, an analyst from Red Monk, told ZDNet UK on Wednesday that the deal comes at a good time for Microsoft, given the OGC's recent statement.

"This is a feather in the cap at a very good time for Microsoft -- a week after the OGC report," said Governor. "It shows people that Microsoft is still the mainstream choice -- and is still the default in infrastructure."

Governor said the £500m being given to Microsoft is a large proportion of the total cost of the project. An open-source solution might not involve such steep fees.

"That's half a billion in licensing costs. I'll leave that up to the taxpayer to decide whether that's worth it," said Governor.

Eddie Bleasdale, the director of open-source consultancy firm netproject, told ZDNet UK that he was not surprised by the news as NHS infrastructure is based on Microsoft technology and it would not make business sense to change it.

"The NHS is a very large organisation and have an IT infrastructure that is currently based on Microsoft software," said Bleasdale. "Even with the best will in the world you can't rip it out and change it. I think it could well be a sensible business decision."

Bleasdale also said he considered the length of the contract restrictive.

"A nine-year contract does seem a bit long," said Bleasdale. "A lot of things could happen in the next nine years, which could affect the choice of software. The lack of lock-in with Linux is absolutely essential -- Linux is free, as in freedom."

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