DTA negotiates Copilot access in next Microsoft agreement

The Digital Transformation Agency is in discussions with Microsoft on the next version of its volume sourcing agreement, including the extent to which it will cover Copilot for M365 use.

CEO Chris Fechner told a senate inquiry into AI late last week that the current volume sourcing agreement (VSA), which covers 180,000 licences for Microsoft Office and access to other Microsoft products and services by the federal government, expires in mid-2025.

Its terms were agreed back in mid-2019, pre-dating the existence of Copilot and generative AI in its current form.

The government ran a six-month trial of Copilot for M365 that ended June 30 and involved about 7400 staff.

It was able to do that under the current VSA, where Copilot is considered an “additional product”.

“We had an offer from Microsoft to have an introductory trial with a discounted price for a small cohort to demonstrate [Copilot’s] proof of capability,” Fechner said.

He said the discount was for 15 percent off the “standard book price”; Microsoft quotes $44.90 per user per month on its website, though it’s not clear what the final price the government paid is.

Fechner said that as some agencies had started trialling Copilot late, Microsoft had extended the discount beyond June 30.

“We did receive from Microsoft an extension on pricing capability for agencies to continue to utilise the capability if they wanted to,” Fechner said.

“There were some participants in the trial that started late, who still felt that they needed more time to formally evaluate it.”

Fechner said the DTA is now leading a formal evaluation to measure the productivity boost from using Copilot, which may inform future decisions on the extent to which it is used in production.

“We will actually have that done by the end of September, and the intent is we will actually make that report available so that agencies can make their own decisions on how they may or may not wish to utilise Copilot, and what other alternatives they may want to seek to do the functions that Copilot does,” Fechner said.

As to how future usage is licensed, Fechner said that’s an ongoing discussion as the next VSA is negotiated.

“We are still discussing with Microsoft various changes to the volume sourcing agreement, and that volume sourcing agreement has a new iteration that is due in mid-2025, so we’re actually looking at what the inclusion of new products such as Copilot might mean to the subsequent licensing arrangements to the Commonwealth,” he said.

Fechner noted that Copilot inclusion isn’t necessarily the biggest issue being considered in the context of the next VSA.

“There are other material changes that are proposed in that contract as well, such as the splitting of some products into individual products that are currently bundled,” he said.