Oracle has secured a Pentagon enterprise software agreement worth up to $6.99 billion. The contract could run for 10 years and covers software products, maintenance, consulting and related services.
The deal will combine separate Oracle software purchases across the US military into one procurement system. It covers the Pentagon, military branches, the US Coast Guard and members of the intelligence community.
The Department of the Navy negotiated the Enterprise Software Agreement on behalf of the wider Defense Department. The initial ordering period will run for five years and carries a base value of $3.31 billion. An additional five-year option could raise the total contract value to $6.99 billion.
Under the agreement, approved agencies and contractors can purchase Oracle commercial software and services through one contract. The arrangement mainly supports Oracle products operating inside government-owned data centers. It also covers perpetual licenses, subscription licenses, software maintenance and consulting services.
Previously, military branches and intelligence agencies managed many Oracle contracts separately. That process created different prices, standards and purchasing schedules across departments. The new framework gives the Pentagon a central method for ordering and managing those products.
Pentagon Chief Information Officer Kirsten Davies said the centralized approach should reduce repeated spending and improve access to Oracle systems. She 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.”
The Defense Department expects the agreement to provide clearer records of software use and spending. A common contract can also reduce the number of separate negotiations required across military services. Moreover, agencies can use the same purchasing terms rather than arranging individual agreements.
The Oracle contract follows another large software consolidation deal signed with Microsoft. In May, the Pentagon reached a five-year agreement valued at up to $9.69 billion. That contract also combined software licenses used across military branches, intelligence agencies and the Coast Guard.
Together, the Oracle and Microsoft agreements form part of the Pentagon’s effort to replace separate software contracts with department-wide arrangements. The agency aims to control costs while giving military units faster access to approved technology.
The contract gives Oracle a long-term route for selling database software and other enterprise products to US defense agencies. Oracle has worked with government customers for decades, and the Central Intelligence Agency was among its earliest clients.
However, the $6.99 billion figure represents the contract’s maximum possible value rather than guaranteed revenue. Agencies must place orders through the contract before Oracle records sales. The Pentagon must also exercise the five-year extension for the agreement to reach its full stated value.
Oracle shares gained about 2% to 3% in trading after the announcement. The contract arrived as investors continued to assess Oracle’s spending on artificial intelligence data centers and cloud infrastructure.
Meanwhile, Oracle has expanded its work with the Defense Department beyond traditional database software. In May, the company joined other technology providers in an agreement to deploy artificial intelligence tools on classified military networks. The latest contract focuses mainly on centralized access to Oracle’s commercial products and on-premises systems.
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