Brazil expands government IT spending optimization model

Aiming for double-digit cost savings in Microsoft deals, the approach is adopted by the legislative branch

A procurement model intended to drive taxpayer savings on IT purchases is gathering momentum in the Brazilian government, as the legislative branch becomes the latest to adopt the approach.

By reducing spend and establishing a price ceiling in tendering processes, the model is expected to deliver savings of 23%, or 71.4 million reais (US$ 12,6 million) to the Brazilian government in Microsoft products alone within five years. The estimate relates to the amount paid in contracts with the company over the last five years, of 305 million reais (US$ 54 million).

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On Friday (26) the Ministry of Economy's Digital Government Service announced the spending optimization model has now been adopted by the House of Representatives in the National Congress, as well as the Supreme Federal Court and regional courts in the states of Minas Gerais and Goiás.

In place since late 2019, the purchasing model is utilized in all IT procurement across central government and encompasses similar agreements with IBM, VMware, Red Hat and Qlik. In addition to the new procurement approach, the Brazilian government is also centralizing purchases of technology products and services as part of broader efforts to reduce public sector spending with technology.

According to Digital Government secretary, Luis Felipe Monteiro, the renegotiated pricing and limits on what government bodies can spend on IT corrects an "imbalance": "Today, government ministries, foundations and public sector bodies that buy in smaller quantities get competitive prices, as do other government agencies that buy more", he said.

"The buyer is always the federal government, regardless of the agency and the technology supplier," Monteiro added. The Brazilian government's aim is to secure a reduction of 20% in all technology spend by 2022.