The Pentagon announced on Thursday that it awarded Oracle an almost $7 billion Enterprise Software Agreement to consolidate all of the tech giant’s on-premises products and services into one contract vehicle.
The five-year agreement, which includes an additional five-year option period, has an initial base value of $3.31 billion. The cumulative total can increase to $6.99 billion if all ten years of the deal are exercised.
Contract details released by the Pentagon said the agreement was negotiated by the Department of the Navy and “will enable customers to procure Oracle software licenses (perpetual and subscription), software maintenance and support renewals, software as a service, customer success services, and Oracle consulting services to support IT operations across the DOW Enterprise.”
The deal merges all of Oracle’s product and licensing services with the Pentagon into one contract, which the department said would ultimately result in significant cost savings.
“By fundamentally improving how we procure on-premises Oracle capabilities, we are driving at least $441 million in taxpayer savings while rapidly and effectively serving our warfighters,” Pentagon Chief Information Officer Kirsten Davies said in a statement. “This nearly $7 billion agreement with Oracle strengthens our digital ecosystem, supporting our warfighters with secure, scalable technology to dominate current and future missions.”
The announcement said the ESA covers the entire department, as well as the U.S. Coast Guard and the Intelligence Community. The department added that it plans to transition to the new agreement later this summer.
Kim Lynch, executive vice president of Oracle’s Government Defense and Intelligence business, said the deal mitigates any potential tech procurement challenges “by creating a more standardized and efficient path to Oracle cloud and AI technology tuned to support mission-critical scenarios.”
Thursday’s agreement comes after the Pentagon announced in May that it consolidated all of its Microsoft software licenses into a similar $9.7 billion deal with Dell Federal Systems.
