The most common mistakes in public procurement for the purchase of software licenses

Software licenses are an essential need of every organization and their purchase usually takes place in the form of a one-time public procurement, dynamic purchasing system or mini-tenders within purchase framework contracts. However, few clients are aware that the software license is actually the RIGHT to use the software copy, which eventually does not wear out, is transferable and is mainly the subject of trade like any other, indefinite, right to use.

If you already use a solution from a specific manufacturer or there are other important reasons for choosing a specific required product (both must be justified in the tender documentation), it is necessary to prepare tender documentation in such a way, so that no restriction of free competition occur during the acquisition process.

Contact uy for guideline on public procurement of used software

Common mistakes in the tender documentation, which should be avoided:

1. Distinguishing new and used software licenses

Contracting authorities most often make mistakes in the specifications by creating their own types of licenses, such as new, unused, previously unused, refurbished, etc. Another approach is to exclude from the beginning the possibility of delivery of used/secondary/second-hand/resold licenses. However, neither of mentioned variants has any legal basis and the type of distribution of licenses is not relevant in terms of technical or legal requirements.

Given the nature of the license as a right to use the software copy, it is therefore completely pointless to divide the licenses into new or used ones, as the scope and content of the licensee's right is always the same, the license does not wear out any way.

2. Incorrect product name

The second most common mistake in public procurement process is to state the incorrect product name, resp. mixing the product name together with the identification of the circle of recipients, the distribution channel and/or the distribution program.

Neither the user eligibility (GOV, ACDMC, CHRTY or COM) nor the distribution channel/program (Select Plus, Open License, MPSA contract…) have any effect on the functionality of the selected products!

For decryption, it is important to know the terms and abbreviations that are given for the products:

3. Select the specific program in which the licenses should be delivered

The programs in which licenses are sold may vary depending on the manufacturer. However, Microsoft maintains that the program in which the license is provided has no effect on the functionality of the product and generally determines discount amount based on the user eligibility and number of licenses purchased. More information can be found here: Microsoft licensing agreements comparison for commercial and government.

4. Narrowing the specification by defining eligibility group

For all groups of recipients, there are only two factors that depend on defined eligibility group one of which does not apply in absolute terms (more favorable discount level). The second factor is the restriction in the event of resale - for example, licenses intended for the Government sector cannot be used upon resale by commercial organizations or organizations belonging to the Academy or Charity sectors. However, this transferability restriction does not apply to commercial licenses - these can be used by all types of users.

5. Delivery method requirements

Many contracting authorities require delivery through an account on the Microsoft License Management Portal (VLSC Portal). The VLSC account is an online registration tool that allows licensees in volume licensing programs to register individual licenses and associated information about them (activation keys, installation files and others) within this account. However, the entry of licenses in this portal/account does not represent a proof of the legitimate ownership of the license and is not a condition for the transfer of the license. The registration also has no effect on the function of the license, nor on its content and scope.

6. Inappropriate type of products

As part of the practice, we also met several times with the choice of products, which from a practical point of view did not make any sense for the client. Typically, purchasing large number of licenses that are intended for individuals or small businesses. These retail licenses are characterized by the fact that they cannot obtain higher volume discounts, there is a unique activation key for each license (it is not possible to activate or manage them in bulk) and they are often forged. In the case of their intended purchase from the free market (so-called secondary, used, etc.), it is almost a certain rule that it is not possible to trace the fulfillment of all requirements for legal transfer.