FACIL, a free software advocacy group based in Quebec, recently filed a lawsuit against the provincial government (via Michael Geist) for favoring proprietary software without considering the free and open source alternatives. This story got plenty of attention a few weeks ago, but it’s important to break down the details to understand what’s really happening here.

The government is required by law to place contracts over $25,000 for tender, yet FACIL cites over $25 million worth of contracts between February and June 2008 alone in which no bids were solicited. The government is not being sued for buying proprietary software, as some headlines suggest (via Slashdot), but for failing to adequately evaluate the other options.

The lawsuit highlights a larger problem the procurement process has dealing with software. In the procurement process, the government publishes specifications for what it wants, companies submit bids and an open and transparent method is used to determine the best offer. This is mandatory except in a few special cases, like when only one supplier can meet the requirement. So, if the government publishes specs for Microsoft Office, rather than “office productivity software” then only one supplier can meet the requirement. It would be like seeking bids on a Ford Taurus. It’s obvious which company is going to win.

This process may work well for tangible goods, but it’s awkward for software because governments tend to use the process to acquire licenses, rather than “software.” Everyone is automatically licensed to use free software, so the process isn’t even needed here — and since only the copyright holder (or someone they’ve authorized) can sell a proprietary software license, the whole process isn’t even legally required. The important decision isn’t where to obtain a license, but which software to use in the first place. In other words, the process has a huge loophole. As long as the gov’t defines what it needs as “Microsoft Office” rather than “office productivity software,” no competitive bid is necessary, and the law isn’t broken. The copyright loophole for proprietary software basically turns the procurement process into an announcement system.

So, the real problem isn’t that the gov’t broke the rules, but that the rules are set up with this huge loophole due to the nature of software.

The process should really be adapted so that it can evaluate both proprietary and free options in the open and transparent setting it’s supposed to facilitate. The government should solicit bids for office productivity software rather than for Microsoft Office specifically — and the process itself should be more open so that the “bid” isn’t limited to just one offering. The answer is more complex though, since one contract has implications for another throughout the software stack (open standards can help) and the financial incentives for participants need to be reconsidered (not all companies sell software), but finding a solution is imperative for the government to truly act within the spirit of the law. That’s what the lawsuit is really about.

[Read the comments on Techdirt.]