On Saturday 13 October 2001 05:47, Mark Evans wrote:

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On Friday 12 October 2001 11:23, you wrote:

When is an old contract not a new contract? So if I go to any of my clients that I have supplied previously they don't need to tender because I just keep the contract open? I don't think that would stand up with the National Audit Office in supply of schools. We tender for every round of funding no matter whether or not the school uses our kit. When was the contract initiated and at what time was it ever tested for value for money? I would quite like to test that one in court.

My exerience, from the other side so to speak, is that whilst auditors are very fussy about *hardware* (and also services) requiring written justification for choosing one supplier over another. When it comes to software little to no justification is required.

I think that is because on an individual school basis the sums of money are smaller and there is confusion because eg Windows comes with the machine and auditors no zilch about technology. (Incidentally the £70m does not count the cost of stuff that is bought with a macine ie the Operating system and in some cases if machines come bundled with say office, they are paying twice. On the NHS website the argument is about compatibility and transfer of information which really is a nonsense in this day and age. You have to ask yourself why it is so vital to upgrade say Word 97 in a hospital admin office in any case. Given the state of the NHS I would have thought that was a pretty low priority) The point is that in the past alternatives like Star Office and Linux were not available and so the mindset is that there isn't an alternative. When we get to sums like £70m there clearly are possibilities - even writing the stuff from scratch! All this needs to be challenged regularly enough to get back into the habit of checking value for money. E-mail the NAO and point out what it says in their own guidance eg don't pay just anything for compatibility. For this to be effective, largish numbers of people need to point out where the rules have clearly been broken and we really need one or two big organisations like Sun to take legal action where their interests are compromised. Eventually the custom and practice of just assuming there is only one solution will be eroded and proper competition will start to come back. Then MS can take their chance with everyone else.

One time when I tried to get a straight answer on if we should even be considering buying something where there was only one supplier or if there were special procedures for such a situation I was met with disinterest.

It depends on how you say it. Start gently and without threat, never become at all heated, but point out their own criteria, and ask them how these have been applied? If they are still disinterested ask for their name and department and say you will check this with their boss and that you suspect that what has been done might be illegal so the local papers will be interested in value for money issues. Run through what you have. "Mr Smith. an official of XXXX accountants when auditing the accounts declared that they would not be investigating the payment of X thousand pounds for a product that was bought without checking value for money despite the fact that the rules clearly stating that all purchases over Y thousand pounts require a tender and that tenders should not tilt the provision in the favour of any particular supplier". Note say nothing about MS. The argument is far more powerful if its a generic case that breaks the rules everyone else has to use.

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The issue is really first and foremost about competition and monopolies, not the evils of MS. History shows that any organisation that is given monopoly

But it does mean that you need to go over any contract with them very carefully, since they are known experts at exploiting loopholes to their favour.

So fight fire with fire. Use the NAO office criteria and the school governors rules on tendering or whatever. The Civil Servants only understand paper so that is what you have to hit them with. Technological arguments are doomed to failure before they start.

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power ends up abusing it. Whatever the contracts, there is deemed to be a single point of supply in this case. Therefore there is a monopoly and in all other cases monopolies are regulated or specific action is taken to

In which case they need to be very tighly regulated, otherwise chaos results.

We all know that, but the question is how to achieve it? On the one hand burying heads in sand and hoping it will go away won't work but neither will arguments based on technical superiority or emotional attacks on MS as an organisation. In the USA its the application of existing laws that have prevailed. I believe that this will also be the best approach here. Use the press too. "NHS in dodgy £70m deal" makes a better headline than MIcrosoft get cut costs to NHS by £50m which is what the NHS press release says. E-mail any stories you can in the style of the appropriate paper but play down the MS connection and play up apparent fraud, breaking the rules etc by the *purchaser*. The Sun and Daily Mirror both invite E-mail stories and we all know what types of stories they prefer to print.

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inject competition. So the Government should either appoint a regulator who then has the power to determine a fair profit margin based on comparisions with other products, development costs etc or put the same funding into say Open Source development to provide viable competition. I know in education, even a fraction of this money would enable full support of the NC with Open

Full support in a sustainable way regardless of what might happen to the curiculum in future. (Let alone that the software would be in *English*, or Welsh, or Cornish or whatever other native UK language you care to choose. Rather than children first having to understand American...)

Again, think of the audience. These issues might be of particular importance to you or some specific groups. Don't get bogged down in the detail. Convey a clear and unambiguous message about competition, costs and the law on monopolies. There is already the test case evidence in the USA which is only the start so "leverage" it (how I hate that word :-) ). Make that the consistent thrust of every complaint and the message will get across. Look at the politicians and how they do it. Simple concepts and buzz words. Social Inclusion, stakeholders, etc Keep it simple and don't get bogged down in the detail, it dilutes the message.

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Source and in the longer term billions would be saved. This is nothing to do

Any money which was spent would tend to stay in the EU most likely even in the UK, even in the local area of the school. Adgenda 21 anyone?

Quite, which is the main reason any small business that actively promotes MS is a turkey voting for Christmas. As a specific example, I have saved an organisation £14K on MS licenses which I would make nothing on. Of that 14K, a significant proportion is being spent on my products and services. Its simply good business. regards, -- IanL

On Friday 12 October 2001 20:04, Ian Lynch wrote:

Just had another thought on that one. Since MS have completely revised the way they sell their software to a subscription basis, this must be a new contract because the basis of the supply is completely different from that of the original ones The previous contracts would also have been a mixture of different sets of terms and conditions with a variety of organisations eg NHS Trusts, GP fund holders etc. Some of these might even have completely changed their legal status since they last bought their software. A single contract with the NHS as a whole must be seen as a new contract especially when there are some new products involved. The NHS also claim that this saves £50m. On

There is a way of doing things known as "quoting for a Rolls Royce" which is you choose who you want to win the contract then make sure that every other possible quote is higher.

what basis did they arrive at that figure? If they are assuming that every user would upgrade everything in the next 3 years (the MS method) it is highly dubious. What reason would there be to upgrade Office 97 in a small doctors surgery? Have they the capacity to upgrade all their hardware? Does

Does that include paying the people who would actually be doing the upgrades?

the NHS upgrade all its other technologies every 3 years whether it needs to

It's questionable that this is a "technology upgrade" anyway, the likes of wordprocessors and spreadsheets appear to have actually reached a point of "maturity" around a decade ago.

or not? Does it let the supplier of kidney machines force them to upgrade to the latest technology every 3 years? In terms of patient care I would have

Almost certainly not, since before any machine is going to end up hooked up to even a healthy person doctors tend to require that it won't do more harm than good.

thought that would be a far more reasonable priority. Let's not let the NHS Senior Management get away with incompetent negotiations and then portraying them as some wonderful money saving deal.

I have had a reply from the OFT. Ironically enough, the reply came as an attached MS Word document. For interested parties, here is an edited-down version of the reply: "As you may already know, the Director General of Fair Trading (the Director) has responsibility for enforcing competition policy in the UK. The principal piece of competition legislation available to him is the Competition Act 1998 (the Act). The Chapter I prohibition prohibits agreements between undertakings that may affect trade within the United Kingdom (UK) and have as their object or effect the prevention, restriction or distortion of competition within the UK. The Chapter II prohibition prohibits conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market if it may affect trade within the UK. The Act gives the Director powers to investigate if there are reasonable grounds for suspecting that an undertaking is infringing either of the prohibitions and powers to impose fines up to a maximum of 10% of turnover. ... As regards the Act, the Act applies to agreements between undertakings (Chapter I) or the conduct of undertakings (Chapter II). Pursuant to section 60 of the Act, the definition of an undertaking depends on the case law of the European Court of Justice. In Höfner & Elser1, the European Court of Justice said: 'in the context of competition law,...the concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed'. As such, the NHS could be an undertaking when it is engaging in economic activity but will probably not be acting as an undertaking when it is exercising its 'public interest-type' functions. The NHS will not, therefore, be an undertaking for the purposes of the Chapter I and II prohibitions to the extent that they are purchasing services for the purpose of improving healthcare services for the benefit of society in general using monies raised by taxation. To summarise, while Microsoft Limited is undoubtedly and undertaking for the purposes of the Act, the NHS is unlikely to be an undertaking. As such, there is not agreement between undertakings for the purposes of the Chapter I prohibition. Further, as the NHS is not an undertaking there can be no breach of the Chapter II prohibition by the NHS." In other words, the OFT's excuse for not investigating is based on legal word games rather than a substantive argument. I sent a reply debating these points, concluding with: "I contend that the NHS is engaging in an economic activity when it makes a purchasing decision. Consequent to this, I contend that the NHS is an undertaking as defined in Höfner & Elser. As you say, there is no debate on the status of Microsoft Limited; it is clearly an undertaking. I also contend that one effect of this purchasing decision is the distortion of competition within the UK (as the action has significantly raised the barrier to competitors attempting to sell to the NHS, which is a large economic entity). Therefore, I contend that there are reasonable grounds for suspecting that one or both of the NHS and Microsoft Limited is/are infringing the Chapter I prohibition, and thus the Act gives the Director powers to investigate." Full texts are available on request. Michael

Michael, Howabout sending this along to slashdot. The notion that a large government department with a budget of millions is *NOT* an undertaking would cause a lot of useful comment in those circles. Slashdot is closely followed by a lot of journalists as well. You never know who might pick up on this remarkable story. Nigel On Wednesday 14 November 2001 12:14, Michael Brown wrote:

I have had a reply from the OFT. Ironically enough, the reply came as an attached MS Word document. For interested parties, here is an edited-down version of the reply:

"As you may already know, the Director General of Fair Trading (the Director) has responsibility for enforcing competition policy in the UK. The principal piece of competition legislation available to him is the Competition Act 1998 (the Act). The Chapter I prohibition prohibits agreements between undertakings that may affect trade within the United Kingdom (UK) and have as their object or effect the prevention, restriction or distortion of competition within the UK. The Chapter II prohibition prohibits conduct on the part of one or more undertakings which amounts to the abuse of a dominant position in a market if it may affect trade within the UK. The Act gives the Director powers to investigate if there are reasonable grounds for suspecting that an undertaking is infringing either of the prohibitions and powers to impose fines up to a maximum of 10% of turnover.

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As regards the Act, the Act applies to agreements between undertakings (Chapter I) or the conduct of undertakings (Chapter II). Pursuant to section 60 of the Act, the definition of an undertaking depends on the case law of the European Court of Justice.

In Höfner & Elser1, the European Court of Justice said: 'in the context of competition law,...the concept of an undertaking encompasses every entity engaged in an economic activity, regardless of the legal status of the entity and the way in which it is financed'. As such, the NHS could be an undertaking when it is engaging in economic activity but will probably not be acting as an undertaking when it is exercising its 'public interest-type' functions. The NHS will not, therefore, be an undertaking for the purposes of the Chapter I and II prohibitions to the extent that they are purchasing services for the purpose of improving healthcare services for the benefit of society in general using monies raised by taxation. To summarise, while Microsoft Limited is undoubtedly and undertaking for the purposes of the Act, the NHS is unlikely to be an undertaking. As such, there is not agreement between undertakings for the purposes of the Chapter I prohibition. Further, as the NHS is not an undertaking there can be no breach of the Chapter II prohibition by the NHS."

In other words, the OFT's excuse for not investigating is based on legal word games rather than a substantive argument. I sent a reply debating these points, concluding with:

"I contend that the NHS is engaging in an economic activity when it makes a purchasing decision. Consequent to this, I contend that the NHS is an undertaking as defined in Höfner & Elser. As you say, there is no debate on the status of Microsoft Limited; it is clearly an undertaking. I also contend that one effect of this purchasing decision is the distortion of competition within the UK (as the action has significantly raised the barrier to competitors attempting to sell to the NHS, which is a large economic entity). Therefore, I contend that there are reasonable grounds for suspecting that one or both of the NHS and Microsoft Limited is/are infringing the Chapter I prohibition, and thus the Act gives the Director powers to investigate."

Full texts are available on request.

Michael

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People following this thread might be interested to read a page on the DTI's web site that states: an "undertaking" means any entity which is engaged in economic activities. It does not have to be profit-making so long as the activity carried out is one which in principle has commercial competitors. Charities, universities, research institutions and voluntary entities may be caught within the meaning of "undertaking" if they carry out economic activities. The concept of "undertaking" embraces public sector as well as private sector entities. Now, the NHS "in principle" has commercial competitors in the form of private health-care providers, doesn't it? This would lend credence to an argument that the NHS *is* an undertaking, full stop. I have e-mailed the DTI asking for clarification of the above paragraph. Michael

Michael

"As you may already know, the Director General of Fair Trading (the Director) has responsibility for enforcing competition policy in the UK. The principal piece of competition legislation available to him is the Competition Act 1998 (the Act). The Chapter I

The document that you received is pretty much a complete version of the same document that I received in the post by snail mail this morning. It came from someone called Darren Eade. My own opinion ... which is probably wrong .... is that either MS or the NHS have taken a long look at the rules and legal stuff before throwing away the millions of pounds worth of taxpayers money. I think someone should get on a soap box and start to shout about the simple fact that money that should have been used for patient care and training of new nurses and doctors has been squandered on the kind of project that will not help all that many NHS patients now or at any time in the future. Thanks -- Richard