Microsoft agrees price reduction with Brazilian government

The government is reviewing the prices of individual suppliers and moving towards centralized purchasing; trade body warns of threat to smaller vendors and anti-competitive practices.

Microsoft and data visualization firm Qlik had to reduce prices for products supplied to the Brazilian government as part of initiatives aimed at rationalizing public sector IT spend.

Under the agreement with the Ministry of Economy, a reduction of 22.71% will be applicable to prices for 2,000 products including Office 365 and analytics offerings in public tenders going forward across central, state and municipal government bodies.

"This agreement is the result of Microsoft's commitment to pave the way for the digital transformation of the government, enabling the hiring of technology products and services that are key to innovation, efficiency and agility, and to the delivery of better citizen services," said Tânia Cosentino, president at Microsoft Brazil.

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The reductions follow ongoing negotiations of the Brazilian government with all its technology suppliers. The aim is to secure a reduction of 20% in technology spend by 2022.

Other suppliers also had to agree to discounts include Qlik. The supplier negotiated a 10.87% discount for 22 products such as Qlik Sense, which is being used in the Ministry of Health's Covid-19 analytics dashboard.

Unilaterally, the government has also decided on a 22.49% price reduction to 11 products and services supplied by Adobe to public sector clients.

In addition to the individual reviews of agreements with suppliers, the Brazilian government is also looking to centralize purchases of technology products and services as part of broader efforts to reduce public sector spending with technology.

The sector hit back at the move towards centralization and process renegotiations, which are having a big impact on smaller suppliers. In a letter sent to president Jair Bolsonaro, the Federation of Associations of Brazilian Information Technology Companies (Assespro) warned that the proposed model can lead to anti-competitive pricing by larger competitors and present a barrier to entry for smaller companies.

The trade body, which represents more than 2,500 technology companies, argued in the letter that public sector procurement is "an inducer of the process of economic growth and generation of jobs and income" and that the concentrated purchasing approach reduces the government's ability to get access to a broad range of solutions.