Oracle has secured a Pentagon software agreement worth up to nearly $7 billion over 10 years, consolidating on-premises software procurement across the US military, intelligence community and Coast Guard in the latest effort to reduce government technology costs.
According to Reuters, the Enterprise Software Agreement was negotiated by the Department of the Navy and replaces fragmented software licensing with a single contract covering Oracle’s on-premises software. The agreement comprises a five-year base period with an option to extend for a further five years, and is expected to generate at least $441 million in taxpayer savings over its lifetime.
Kirsten Davies, the Pentagon’s chief information officer, said: “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.” Barry Tanner, performing the duties of the Department of the Navy chief information officer, said the agreement would support “faster delivery of secure, scalable software” while reducing fragmented procurement and strengthening interoperability and cyber security.
The Oracle contract follows a similar enterprise software consolidation agreement signed with Microsoft in May. That five-year deal, valued at $9.69 billion, combined Microsoft and other software licences used across the military services, intelligence community and Coast Guard as part of Davies’ wider programme to eliminate duplicative software spending through department-wide purchasing.
The Pentagon agreement represents a significant commercial win for Oracle at a time when the company’s shares have struggled. The stock rose about 3 per cent in extended trading following the announcement, although it remains down 38 per cent this year as investors have questioned whether rapid advances in artificial intelligence could weaken the growth prospects of established enterprise software providers.
Oracle is investing heavily in AI infrastructure, taking on tens of billions of dollars in debt to expand its data centre capacity for customers including OpenAI. The company reported in June that quarterly software revenue fell 2 per cent year on year, while cloud revenue increased 47 per cent as demand for AI computing services accelerated.
Oracle founder Larry Ellison has maintained a close relationship with US President Donald Trump and appeared at the White House earlier this year to announce the Stargate AI data centre initiative. The Pentagon has previously announced AI deployment agreements involving Oracle and other technology companies for classified networks.
