Fed gov faces major M365 licensing change

The federal government will no longer be treated as a single Microsoft 365 customer from July, with agencies needing their own enterprise enrolments but still paying whole-of-government prices, iTnews can reveal.

The change is occurring as part of the sixth volume sourcing agreement (VSA) with Microsoft that the Digital Transformation Agency (DTA) signed in February.

VSA6, as it’s known, runs for five years and comes into effect in July.

Under VSA versions one through three, the federal government was treated by Microsoft as a "single customer" for online services including M365, meaning licences were pooled. 

From VSA4, and continuing into the expiring VSA5, it’s understood that the pooled licensing model was retained under an arrangement known as quick start floating seats or QSFS.

“Under both arrangements, the Australian government was treated as a single customer, with licence usage aggregated across agencies,” DTA digital investment advice and sourcing division deputy CEO Simon Quarrell told iTnews.

“This meant that increases in licence usage by some agencies could be offset by decreases in others.”

VSA6, however, discontinues this arrangement, meaning that instead of drawing licences from a shared government-wide pool, federal agencies will now need to reserve the number of licences they need directly with Data#3 under their own separate Microsoft enterprise enrolments.

Data#3 is the long-term sole supplier appointed under the government’s Microsoft licensing solution provider panel.

As this will require some changes, the government has set up an $8.25 million “QSFS mobilisation service” that will fund Data#3 to assist agencies with the administrative and technical transition to agency specific, reservations-based licensing.

Quarrell said that “while the new reservations system is not the same pooled arrangement, it delivers similar whole-of-government outcomes to the previous model.”

That is, while the DTA is being relieved of its role in managing licence allocations, it still says VSA6 will deliver “better commercial outcomes for government”, including “stable pricing and capped increases over the five‑year term [to] minimise the APS’s [Australian Public Service’s] exposure to global price fluctuations.”