The NHS is on the brink of signing a new three-year corporate licensing agreement with Microsoft to provide desktop applications for the entire NHS.

A National Programme for IT (NPfIT) spokesperson told E-Health Insider: "The National Programme for IT can confirm it has reached an agreement with Microsoft for the provision of desk-top licences, which is subject to Treasury approval. 

The announcement follows the news last week, as first reported by E-Health insider, that NPfIT had agreed a deal with Sun Microsystems for 5,000 Java Desktop Systems for “tactical" deployment.

The spokesperson didn’t indicate when the final agreement would be signed, but said: “An announcement will be made in due course."  No value for the deal was announced.

A new corporate licensing deal with Microsoft would extend Microsoft’s domination of NHS desktops and personal productivity software, through its Windows XP operating system and Office suite, for at least another three years. 

In October 2001 the NHS became one of Microsoft’s top five customers globally after it signed a three year corporate licensing agreement with Microsoft, in a deal the Government said would save the NHS up to £50 million.

It is by no means clear, however, that all the predicted savings were achieved.  In November 2003 the Audit Commission criticised the IT asset management of the NHS Information Authority (NHSIA), which had signed the deal with Microsoft and was responsible for managing it.

Commenting on the second year of the deal, for which the NHSIA paid £45m, the Audit Commission report said: “We were concerned that the authority was unable to demonstratethat the NHS had got 400,000 licences".

An aspect of the corporate licensing deal that was not widely publicised at the time of signing was that under the deal NHS staff could get the latest Microsoft operating system and desktop software, worth hundreds of pounds a time if store bought, free for home use.

The new deal with Microsoft has been under discussion since the beginning of 2004.  In February Richard Granger travelled to Seattle to meet with Steve Ballmer, Microsoft’s chief executive, as part of the negotiations.

In March Granger then predicted that the deal would cut the cost of Microsoft licences for the NHS by up to 50% and said that negotiations were underway with the software giant to produce a tailored, stripped down version of its Office software for the NHS.  This was denied by Microsoft UK.

The NHS deal is separate from Microsoft’s three-year memorandum of understanding with the OGC, which oversees government procurement.