One month after a federal court agreed to drop Google's lawsuit claiming that the Department of the Interior unfairly discriminated against the tech company in favor of Microsoft in a $59 million cloud email contract, the two companies will need to gear up for another fight, as Interior is back in shopping mode.

Google moved in September to dismiss its own case on the grounds that Interior would cancel its old cloud email acquisition and order up a new one, which Interior did by issuing a new request for information for cloud email last Friday. The lawsuit had arisen after Interior sought to award the 88,000-seat email deal to a Microsoft partner, and Google quickly filed suit, claiming the agency had failed to justify its decision to exclude Google from the process.

The suit was just a skirmish in a much larger war that's playing out as more companies and organizations look to cut costs and better leverage internal IT resources by moving their email systems to the cloud. While Microsoft dominates the on-premises email market over former stalwart IBM, the company faces new and aggressive competition in the cloud market from the likes of Google.

That battle is playing itself out in the government as well, with the Interior lawsuit being only the most public spat. Microsoft won a big contract from the Department of Agriculture, while Google has won business from Lawrence Berkeley National Lab, the General Services Administration, and the National Oceanic and Atmospheric Administration. Both companies have won numerous deals from both local and state governments.

While Interior's latest email acquisition doesn't specifically require a Microsoft service, it makes a point of saying that any service that it ends up buying must be compatible with its current software suite, which includes Microsoft Outlook and Active Directory. The acquisition also contains a stray reference to Microsoft Exchange Online, stating in its encryption requirements that search "results from the [email] archive are unencrypted when they return to Exchange Online."

Interior's new request for information seeks information on a number of cloud collaboration services aside from email, including calendaring, e-discovery, instant messaging, and desktop videoconferencing. The agency is looking for data storage and computing infrastructure dedicated only to the Department of the Interior and other federal government customers.

The cloud email acquisition will help the agency move from seven different implementations of Lotus Domino and Microsoft Exchange to a consolidated, single instance of a cloud email service to reduce migration costs and engineering risk, improve service levels, and allow for a more predictable cost model across the agency.

Our annual Federal Government IT Priorities Survey shows how agencies are managing the many mandates competing for their limited resources. Also in the new issue of InformationWeek Government: NASA veterans launch cloud startups, and U.S. Marshals Service completes tech revamp. Download the issue now. (Free registration required.)