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Govʼt mulls cutting out middleman in software procurements

Hungaryʼs government could table a bill in September that would allow the state to procure software and software licenses directly from suppliers, as well as to set margins, daily newspaper Magyar Nemzet reported on Wednesday.

The government says its aim is to prevent multinational software makers from taking unfair advantage of their market positions and channeling state orders through their own preferred business partners, according to information obtained by the pro-government Magyar Nemzet. 

The fixed margins would extend to retail products as well, which industry insiders told the paper could also result in a marked fall in the price of retail software.

As reported in July, Microsoft Hungary recently agreed with the U.S. Department of Justice to pay more than USD 8.7 million in criminal penalties to resolve a bribery case that involved inflated margins for state orders that were pocketed by middlemen.

Microsoft Hungary admitted that a senior executive and other employees of the unit participated in a scheme to inflate margins in the Microsoft sales channel in connection with the sale of Microsoft software licenses to Hungarian government agencies, beginning by at least 2013 and continuing until at least 2015.

Magyar Nemzet said the government has also not ruled out the option of seeking open-source software solutions, noting that the opportunity to use such software primarily presents itself in the healthcare and education sectors.

The paper noted that such a move would not only mean savings for taxpayers in the tens of billions of forints, but would boost market competition through the use of neutral technology and improve the competitiveness of Hungarian firms in the field of IT solutions.