The PEO-EIS manages a variety of contracting programs for the Army, totaling nearly $3 billion in purchases in fiscal year 2013, according to program executive officer Douglas Wiltsie.
The Microsoft services will be available to "any Department of Defense service, agency and mission partner without additional competitive process," said Curt Kolcun, Microsoft VP for U.S. Public Sector, in a blog post.
"The 50,000 seats are on Microsoft's Government Community Cloud," Kolcun told InformationWeek in a briefing call. The arrangement isolates government accounts in the cloud to address federal security requirements.
[ For more on Office 365, see Microsoft: Free Office 365 For Students. ]
The contract was awarded to Microsoft partner Dell, which delivers the service; Microsoft doesn't sell directly to government.
The agreement is the latest in a series of moves by the Defense Department to adopt commercial products and cloud services, and in a string of recent victories for Microsoft.
The Army, working with the Defense Information Systems Agency, recently completed the migration of 1.4 million users to the Defense Enterprise Email (DEE) system. That system, which uses Microsoft's enterprise email platform, including Active Directory, now provides users with secure, global access to their email accounts.
"The single authoritative identity management capability enabled by DEE provides the ability to take advantage of Office 365 and other enterprise services," Kolcun said in his blog.
Microsoft announced last month that Lync 2013 had been certified to operate on DoD's information networks for employees to use voice, video, instant messaging and presence applications.
Microsoft also in recent weeks received provisional authority to operate its Windows Azure and cloud infrastructure for federal agencies, from a joint Federal Risk and Authorization Management Program (FedRAMP) board.
Kolcun said there are currently more than a million federal, state and local government employees using Office 365, including the FAA, the U.S. Department of Agriculture and the National Institute of Standards and Technology. New York recently joined the states of California and Texas in signing up for Office 365, with more than 120,000 employees across New York's executive agencies scheduled to make the move by the end of the year. The move to a standardized platform is expected to save approximately $3 million in annual license, hardware, maintenance, energy and personnel costs.