DTA reveals cost of new govt-wide Microsoft cloud deal with Data#3

The federal government’s recently renewed Microsoft volume sourcing arrangement will be worth $97 million over the next three years.

The new agreement, which represents the fourth iteration of the whole-of-government deal, was inked in July to accelerate cloud adoption across government.

While the existing volume sourcing arrangement (VSA) had allowed agencies to procure Office 365 and Azure, both the Minister for Government Services Stuart Robert and Microsoft indicated the latest version contained more favourable terms and pricing.

Microsoft said the new VSA would make “Microsoft 365 available to all federal government agencies on a cost-effective basis”.

It was also expected that the agreement would lead to “less than two percent of the Commonwealth ... remain[ing] on legacy on-premise desktop licenses”.

But the value of the deal with the government’s exclusive supplier of Microsoft licencing, Data#3, wasn't revealed at the time of the announcement.

Now the Digital Transformation Agency has published two contracts relating to the deal, with a combined value of $97.4 million over the next three years.

The larger of the two relates to the common cloud commitment (CCC) enrolment component of the VSA, which is worth $97.2 million between August 2019 and June 2022.

According to the terms of the arrangement, the CCC enrolment includes the most commonly-used Microsoft products like Office and Windows.

The other contract, valued at $1.2 million over the same period, covers “residual core desktop licences” likely for the remaining two percent of agencies with on-premises desktop licences.

While these contracts could grow in value over the next three years, the initial published value is significantly lower than in years gone by.

Data#3's previous VSA contract with the government was initially worth $70 million between February 2018 and June 2019, though it did increase to $90 million during the life of the deal.

However, even at $90 million for 16 months, this figure is well below the value of the VSA between July 2013 and June 2016, which was worth $281 million.

Federal government VSA contract values, compiled by iTnews (Source: AusTender)

Data#3 has managed the federal government’s VSA arrangement since the co-ordinated procurement was first introduced in 2008.

The deal was handed back to the reseller in March 2018, as part of the creation of the government’s software services and licencing panel.