Pentagon Targets ‘License Sprawl’ With $9.69B Microsoft Contract

The War Department just consolidated its Microsoft licenses that were managed across disparate contracts into a single $9.69 billion contract awarded to Dell Federal Systems, CIO Kirsten Davies told reporters Wednesday.

The Microsoft Enterprise Software Agreement (ESA) II Core Enterprise Technology Agreement (CETA) is a five-year blanket purchase agreement that combines contracts, eliminates digital sprawl and streamlines software licenses for DOW employees.

“We’re consolidating existing agreements into one vehicle,” Davies said. “We’re putting it all together in one place in order to renegotiate at our size and scale, which drives more optimization and efficiency.”

The agreement will modernize the digital backbone across the Joint Force and provide unified access to secure communications, collaboration cloud and productivity via Microsoft 365 licenses, officials said.

Department of the Navy Acting CIO Barry Tanner criticized the historical practice of individual military branches and defense offices signing separate deals with technology providers, citing a tangled web of redundant software licensing.

“It provides a singular place to get the licenses we need to run our enterprise systems, our enterprise Microsoft technology,” Tanner told reporters, “[The BPA] eliminates a lot of redundancy and duplication across the department.”

Davies said the move enables warfighters, commanders and civilian personnel to collaborate seamlessly from the Pentagon to the tactical edge.

“This contract vehicle means, at the edge, they can also go and use the contract vehicle if they need some licenses there,” Davies told GovCIO Media & Research.

Davies said that the agreement is a preview of how DOW will approach scaled acquisition across the national security community, including the broader intelligence community and the Coast Guard.

Eliminating ‘License Bloat’

Tanner and Davies said that the disparate agreements throughout the military services and national security offices had historically led to “license sprawl,” where individual personnel sometimes obtained multiple active software seats depending on where and how they were deployed globally.

Davies said Wednesday that DOW will immediately yield massive fiscal dividends, saving the department an estimated $422 million annually. She said she expects savings to climb even higher as smaller, one-off legacy contracts expire over the five-year performance period and the department sweeps them into the primary vehicle.

“This enterprise approach is not just about capability, it’s also about delivering on the secretary’s promise to be responsible stewards of the American people’s resources and taxpayer money,” Davies said.

Davies noted that tracking technology assets across the sprawling bureaucracy has historically been a significant administrative burden, and the new agreement will make tracking much easier.

“With all of these disparate licensing agreements that were everywhere, we would have to do data calls to say, ‘Who has what licensing agreements and where are they, and how much are you spending?’” Davies said. “That’s really driving a lot more transparency and visibility.”

Streamlining Procurement and Enhancing Security

The DOW finalized the agreement after a competitive evaluation process with General Services Administration schedule pricing and overall value to the government, Tanner said. Dell Federal Systems will act as the core reseller for the licenses, he added, which will deliver Microsoft’s software-as-a-service (SaaS) capabilities through government-approved, high-impact cloud environments.

Tanner said DOW drew from lessons learned from consolidation efforts initiated by the Navy in 2021. Tanner noted that by removing administrative friction, the new contract speeds up delivery to the field. The department will begin rollout across DOW entities within the “next couple of weeks.”

“There will be one place you need to go for [software licenses], that place is fully staffed and ready to go. Turnaround time for these kinds of orders is measured in weeks, not months,” Tanner said.

He added that the agreement represents the culmination of a multi-year evolutionary shift toward simplified, enterprise-managed infrastructure.

“It allows us to bypass fragmented procurement cycles and directly arm our sailors and Marines with the resilient zero-trust cloud infrastructure required to fight and win in the digital battlespace,” Tanner said.

Driving the Enterprise Agenda

The Pentagon’s consolidation efforts fall in line with the Office of Management and Budget’s recent memo streamlining tech acquisition and licensing.

It also follows earlier efforts at the Pentagon that resulted in moving away from program executive officers (PEOs) in favor of portfolio acquisition executives (PAEs) who oversee capability portfolios rather than individual programs.

Davies added that comprehensive asset management is vital to meeting performance goals, spending transparency demanded by Congress and federal compliance mandates.

“We need to get to a clean audit at some point, including through the technology spend,” Davies said. “You’re going to see a lot of this drive out of my office. We’re looking to say, … ‘Does it make more sense for us from an optimization, an efficiency, a resiliency and a cost-accounting perspective?’”