Microsoft and the Pentagon enter into a $9.69 billion deal

According to authorities, the Pentagon announced a five-year, $9.69 billion deal on Wednesday to combine business software licenses from Microsoft and other suppliers that were previously dispersed among the U.S. Coast Guard, the intelligence community, and the multiple military services under a single contract.

In addition to guaranteeing Microsoft an enterprise-level presence across all branches of the U.S. armed forces, the cost-cutting initiative aims to minimize duplicate spending that officials claimed had silently accrued over years as a result of fragmented and autonomous procurement processes.

Since multiple Pentagon software contracts expired at the same time, the agreement—known as the Core Enterprise Technology Agreement—involves no additional spending. The money comes from already-existing budgets that were used to buy cloud services and on-premises licenses, as well as Microsoft 365 subscriptions, which include email, Word, Excel, PowerPoint, and related applications. These purchases are now centralized to take advantage of the department’s entire purchasing power and cut expenses.