Navy, Microsoft Sign $700 Million Agreement

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The U.S. Navy has signed a three-year enterprise license agreement with Microsoft that is worth up to $700 million.

The deal, which applies to both the Navy and the Marines, consolidates previous Microsoft licenses into one enterprise agreement covering desktop and server software. In announcing the agreement, the Navy's office of the CIO did not specify which Microsoft software products are covered.

In February, Navy CIO Terry Halvorsen issued a memo, jointly signed by other Navy officials, making it mandatory for all departments to procure their software through enterprise license agreements. Other vendors mentioned as opportunities for such agreements included Cisco, EMC, Hewlett-Packard, IBM, and Oracle.

Enterprise license agreements (ELAs) "will be grounded in a strong governance framework involving the financial, acquisition, and IT management communities," the Navy CIO's office said in a statement accompanying its policy directive, in February. The statement said ELAs would be developed for a range of software and hardware products, and related services.

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It's the latest in a series of steps by Halvorsen aimed at improving the efficiency of the Navy's IT operations. Last August, Halvorsen outlined plans to cut the military branch's IT spending by 25% over five years through data center consolidation and other efforts.

The agreement with Microsoft will help to "optimize cost savings" by maximizing the Navy's purchasing power, though the service did not estimate the projected savings.

"Microsoft has worked with the Department of the Navy to secure a first-ever department-wide Enterprise Software License Agreement, which will cover Microsoft licenses and software assurance," Tim Solms, general manager of Microsoft's DOD business, said in a written statement. "This new contract, which will be implemented by long-time Microsoft partner Softchoice Corporation, will serve as the single Microsoft agreement across all three Navy networks and the [Marine Corps Enterprise Network], providing a framework to help manage upcoming transitions including [the Navy/Marine Corps Intranet and Continuity of Services Contract to NMCI/CoSC to the Next Generation Enterprise Network]," said Solms.

"The Navy has, through policy, committed to leveraging a single vehicle for all Microsoft products and over time consolidating over 23 existing Microsoft enterprise agreements across the Navy to a single, centralized Department of Navy Enterprise License Agreement. The agreement will cover Microsoft licenses and software assurance for the Navy's 569,000 desktops," Solms said.

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