The Beijing municipal government appears to be reconsidering its recent controversial software procurement decision. It became a target of criticism when it gave Microsoft the lion's share of a large software purchase order earlier this month.

Microsoft beat domestic software developers on November 17 when it won a 30-million-yuan (US$3.6 million) contract under which it would license the Beijing government to use all of its software products for three years.

Microsoft's deal immediately drew criticism within the industry. Government procurement is expected to favor domestic software developers.

A notice appeared on Sunday on the Beijing Government Procurement Office website stating that the city had canceled its purchase order for computer operating systems and office software suites in the name of the purchaser Beijing Information Work Office.

Sources close to the Beijing municipal government said it began reviewing the software procurement plan on Monday.

Although there has been no further official information about the cancellation, some analysts believe that domestic software companies may be given another chance to win the bid.

Anonymous government sources said the municipality is negotiating with Microsoft on the deal.

According to an article on its official website, the municipal government discovered during an inspection in the first half of this year that some departments could not provide proper licenses for the software they were using, most of which comprised Microsoft products. It decided to resolve the issue by purchasing a specific amount of Microsoft software.

But many domestic competitors and some government officials complained that Beijing failed to observe China's 2003 law on government procurement, which stipulates that when a local product is available it should receive preference over foreign products.

"Government procurement is one of the most powerful driving forces for us," said Qiu Bojun, chairman of Kingsoft Corp., in an article that appeared on www.sina.com Monday.

Since China forbids the use of pirated software in government departments and enterprises, government projects are the hottest areas of competition for operating systems, office applications, and information security. More than 40 percent of software purchases in China come from government procurement projects.

Microsoft has said for years that it seeks to work closely with government, industry and partners to boost the development of China's software industry.

Bill Gates, Microsoft co-founder and chairman, visited China last summer amid reports of official moves to weaken Windows dominance in China by developing a domestic alternative based on the Linux system.

(China Daily, China.org.cn November 30, 2004)