Photo Credit: Ranbar via Wikimedia
Microoft Israel in Hertzliah Pituach

The Accountant General’s Office’s dept. of government procurement in the Treasury has informed high-tech giant Microsoft of the cessation of negotiations to renew its main contract with government ministries for desktop, software and server services starting in 2019, according to a statement issued by the Treasury Tuesday morning. The overall contract is valued at $28 million annually.

The current key agreement with Microsoft regulates the acquisition of the Office desktop software, the Windows OS, and Microsoft software for servers. The deal was signed six years ago for three years, with an option for another three years.


Negotiations with Microsoft were halted in light of the direction Microsoft taking, which does not match the needs of the Israeli government. Microsoft wants to change the licensing system and the content, raising the cost of the same services an additional tens of millions of shekels a year. However, the Treasury would be happy to renew the contract by the end of 2018 should Microsoft change its position.

Today, the licensing model for Microsoft’s content is in the form of ownership, but the company wants to change the licensing model to rentals, revoking the government ministries’ licenses for which the government has already paid hundreds of millions of shekels.

The government should be able to continue using these purchased licenses even without a renewed contract with Microsoft.

In addition, Microsoft wants to switch government data to the cloud, as opposed to the current service on the premises, which is a local installation with the servers in the government’s hands. Treasury’s concern is that moving to the cloud would expose to hacking vital classified information from the Defense, Foreign, and Homeland Security ministries.