Microsoft said on Thursday that the talks failed because neither party could agree on the number of contracts needed.
Microsoft said it was disappointed that the deal had fallen through, but that it was also working on other deals with different Dutch government agencies.
"We can confirm that the agreement is not on, but we continue to work with the Dutch government," said a Microsoft spokesperson.
Earlier this month, Dutch MPs said they were unhappy the government was considering the deal with Microsoft. The contract, if agreed, would have run for five years, but MPs said it contravened the government's policy on open source software.
The Dutch government is a coalition between three parties -- the Christian Democrats, the People's Party for Freedom and Democracy (VVD) and a small Democrat party (D66). MPs from D66, the Labour, Green and Socialist parties (PvdA, Groen Links and SP) reportedly questioned the ministers of defence, home affairs and justice about the potential deal.
Earlier this month, Microsoft's contract to supply Beijing's municipal government, rumoured to be worth US$3.6m, was cancelled. ZDNet UK readers have criticised Microsoft's winning of a Ã,£500m contract with the UK's National Health Service.
ZDNet UK's Ingrid Marson contributed to this report.
Wow!
You mean that the Dutch government now wants to seek bids from vendors other than Microsoft for the supply of software?
As in establishing a formal competitive environment? Like in almost every other industry?
Sheet!
What's the world coming to?
Wonder if our governments will do the same thing, rather than just bending over and taking it from Microsoft?