Navy issues BPA for Microsoft enterprise pact

The Navy late last month awarded an estimated $166 million enterprise license contract for Microsoft Corp.'s standard desktop software.

The blanket purchase agreement, signed with ASAP Software Express Inc., is for five years and covers the Navy, the Marine Corps and the Coast Guard. The purchase includes Microsoft Windows 95/98 or NT Workstation upgrades, Microsoft Office 97 Professional or Standard Edition, Microsoft BackOffice Client Access and Upgrade Advantage for all of those products.

The Microsoft licensing contract is the second of four the Navy has planned to consolidate existing licenses, said Ron Turner, Navy deputy chief information officer. The first contract, awarded at the beginning of this year, was for Novell Inc. licenses. Contracts for Lotus Development Corp. and Sun Microsystems Inc. licenses are in the works, he said.

"It's really to push it toward one set of contracts and get the best deal through volume contracts instead of going out and recompeting contracts," Turner said.

"It's one of the first contracts of its type in the federal arena where Microsoft and a federal customer have come to an agreement on an enterprise level," said Randy Lee, director of government sales for ASAP, Buffalo Grove, Ill.

With the contract, Microsoft adapted its standard enterprise license agreement to conform to the Navy's budget practices, including waiving the requirement of a standard annual payment across the enterprise.

The three-year bundle license can be purchased for a lump sum of $649.95 per desktop, in three annual payments of $207.67 or less or through deferred payment. The deal is almost half of what the licenses would cost if bought separately off the General Services Administration schedule, Lee said.

"It's a major concession on Microsoft's part," he said. "They recognized how the Navy is able to spend money...and developed a lump-sum payment option to help accommodate how the Navy may or may not be able to spend money over the next few years."

Under the agreement, several targets have been set to bring the costs down. If the Navy has bought a number of licenses by a certain time, the cost goes down, Lee said.

The Army's Communications-Electronics Command Acquisition Center put together a similar blanket purchase agreement in September 1997 with Government Technology Solutions Inc. The Army License for Software Upgrades allows all Army users to copy, upgrade and update an existing Microsoft operating system and desktop or server application.

"I think you're going to see more and more [enterprise license contracts]," said Eben Townes, senior vice president at Acquisition Solutions Inc. "It's where savings can be seen. It obviously fulfills the desire to standardize and brings economy to spending, instead of umpteen-thousand people buying them individually," he said. "It also brings some economies to training, everyone using the same software."

Management is also an issue when working with an organization as large as the Navy, Lee said.

"One of the difficulties for an agency in the federal government is to understand where all of their computers are and where all their licenses are," Lee said. "But because of how distributed they are, it's hard to track that."

In the contract, ASAP included its Internet Tracker system, which allows users to electronically track not only who purchased a license but also where the license was shipped. This is an important factor, according to Harry Zoberman, senior vice president for ASAP, especially because the system can be accessed from anywhere in the world through the Navy's Information Technology Electronic Commerce Direct World Wide Web site.

"It can't tell you what deck of a ship it is on, but it will definitely be able to narrow it down to a specific ship within a fleet," Lee said.

The contract also includes, at separate pricing, licenses and upgrades for Microsoft's BackOffice Server, Exchange Server, Windows NT Server (Standard and Enterprise editions), Site Server (Standard and Commerce editions) and its SQL Server (Standard and Enterprise editions).