Oracle in £18m deal with Scottish government to supply tendering system

Published on Saturday 11 July 2009 15:02

ORACLE has landed a deal worth more than £18 million, one of the largest IT contracts ever signed by the Scottish Government, to provide a "single portal" procurement tendering system covering 80 public bodies.

The deal will help soften the blow of the global software manufacturer's failure to win fast-track approval from US antitrust regulators for its planned 4.57 billion ($7.4bn) takeover of Sun Microsystems.

Procurement Scotland, the public contracts body, has agreed to pay Oracle 18.7m for a four-year "unlimited use" proprietary software licence. Oracle will also provide support across its entire network, covering central government, health, universities, local authorities, fire and police.

A government spokesman confirmed the deal. He said: "This agreement will deliver around 5m savings."

The portal is now successfully bedded in and is an extension to the IT work already carried out by Oracle for government departments in recent years. The new streamlined online service promises to provide users with an easier route to landing contracts from any one of the numerous public bodies.

One firm, 360innovate, has used the new portal. Marketing coordinator Laura Davis reports the system is always "live" and gives a vital early warning of contracts up for grabs.

"You go on, set up your profile and say what type of contracts you are looking for. You are then sent an e-mail with all relevant documents matched to your profile and off you go," she said.

Oracle declined to put forward an official to talk specifically about the Scottish deal. A spokeswoman for Oracle said the deal represented one of a number of public sector contracts across the UK using its shared services expertise.

Despite Oracle's failure to get fast-track approval for its acquisition of Sun, observers claim the technology company is unlikely to face serious US antitrust objections.

Beau Buffier, an antitrust lawyer with law firm Shearman and Sterling, said: "Far from competing, the products of Sun are largely complementary with Oracle's products… its software is frequently installed on Sun servers."

Oracle is the world's number two maker of business software behind IBM, which it pipped at the post to land Sun shareholders a vote on the proposed takeover on July 16.

Both companies have a significant presence in Scotland but it remains unclear what such a merger would mean to respective Scottish operations. Oracle said that "until the deal closes" each company will continue to operate independently.

The US Department of Justice has asked both companies for information related to the licensing of Sun's Java software language, reported Oracle attorney Daniel Wall. He said the request related to a narrow technical matter and expected the deal to be approved and Oracle to complete the acquisition by August 31.

One other potential hurdle is that the takeover move is likely to be referred to European Union antitrust authorities and, if so, will be scrutinised later this month.

Oracle is reported to be planning to shed up to 1,000 jobs throughout its extensive European operations.

Of the company's planned takeover of Sun, Oracle's chief executive officer Larry Ellison said it "transforms the IT industry, combining best-in-class enterprise software and mission-critical computing systems."

One IT sector senior source said: "I suspect that global software market leader Microsoft and its arch rival Google will each have something to say about that bold claim."