Microsoft signed a 5-year product agreement for the British Government, as the Labour government deepens ties with this giant technology group whose UK CEO has been appointed to head an influential new industry body.
Microsoft and Crown Commercial Service (the UK’s largest public procurement organization) have signed a memorandum allowing public sector organisations to access Microsoft’s AI-powered product and service portfolio.
Clare Barclay’s appointment as the chairwoman of the new Industrial Strategy Advisory Council by the government, announced this month, triggered the agreement. Experts warned that the move could cause concern over perceived conflict of interest, given Microsoft’s position as a strategic supplier to the government.
The industrial strategy will be a major part of Labour’s plans to grow its economy. It will focus on digital and technology, as well as eight other key growth sectors. The council will develop advice in partnership with businesses, trade unions, and other stakeholders.
Microsoft is part of a network of crown representatives that act as a focal-point for supplying the public sectors. This group includes Oracle, IBM and other key strategic suppliers. Microsoft’s Crown Representative is Jay Chinnadorai who also sits on the board for TechUK.
According to a report by Tussell last year, Microsoft has won 383 contracts with the state since 2018.
Peter Smith, an expert in procurement, former government advisor and author, stated: “This illustrates the dilemma that governments face when dealing with their key suppliers. They want to have strong, collaborative relationships and they also need people who can contribute in roles like the one Barclay took. This can lead to accusations of perceived conflict of interest.
Smith said: “Clearly the public sector will purchase from Microsoft. This agreement is in itself understandable.” A more complicated situation could arise, for example, if there were a dispute between Microsoft and Barclay. In that case, the government would be in a difficult position due to Barclay’s involvement.
The Crown Commercial Service is an executive agency within the Cabinet Office. Public sector organisations are able to access savings through their preferred procurement route on Microsoft 365 and the Azure cloud platform. They can also purchase Microsoft 365 Copilot which integrates generative AI in Microsoft’s suite productivity apps.
This will allow for the automation of repetitive tasks, content generation and enhanced collaboration. It will also improve public services.
Microsoft plans to offer events, workshops, and certifications for government users, which, according to the company, will “drive adoption of new digital capabilities and skills”.
Microsoft typically issues memoranda of understanding every three years. They allow public sector employees to receive discounts on Microsoft products.
The announcement coincides with a Monday address by Satya Ndella, Microsoft’s group chief executive and Barclay (54), as part of Microsoft’s “AI Tour”.
Microsoft cited a recent study by Public First, an independent consultancy, that found accelerating the adoption digital technologies would add £550 billion (£550 million) to Britain’s Gross Domestic Product by 2035.
She said that the Industrial Strategy Advisory Council would “play a key role in shaping and delivering future growth” when she announced Barclay as its new leader.
Crown Commercial Service spokeswoman said: “This Memorandum of Understanding will allow public-sector organizations to receive discounts on Microsoft services and products regardless of size, saving taxpayers money.” Each organisation will have to decide what they need.
Transparency International UK’s chief executive, Daniel Bruce, stated: “While the renewed commitment by Microsoft to competitive pricing is welcomed, open contracting continues to be the best way to ensure taxpayers get value for their money.”
Barclay was a non executive director of the CBI (the business lobby group) when the CBI was embroiled last year in a scandal of workplace misconduct. CBI welcomed her appointment, saying she “brings a wealth knowledge and experience”.
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