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Microsoft won a big victory with $8 billion DEOS Pentagon contract

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Microsoft has scored a big cloud victory, with the US Department of Defense and General Services Administration announcing that it will be putting Microsoft Office 365 into use under the terms of an $7.6 billion contract.

This 10-year deal, called the Defense Enterprise Office Solutions (DEOS) contract, will see the replacement of the Department of Defense’s legacy productivity software with more modern, cloud-based technology. This includes email, collaboration, file storage, messaging, video-calling, and the like, which will be used by over 3 million military personnel.

On Thursday, the U.S. General Services Administration and the Department of Defense announced that DEOS has been awarded to CSRA LLC, which is owned General Dynamics Information Technology, and its contractor teaming partners Dell Marketing L.P. and Minburn Technology Group LLC. These companies plan to build a solution using Microsoft’s products.

“DEOS will streamline our use of cloud email and collaborative tools while enhancing cybersecurity and information sharing based on standardized needs and market offerings,” Department of Defense Chief Information Officer Dana Deasy said in a statement.

Of note is that this is separate from the Joint Enterprise Defense Infrastructure (JEDI) contract — the contentious cloud deal that’s currently under review after President Donald Trump himself expressed concerns with the award process. Microsoft and Amazon are both bidding directly for JEDI, with Amazon the favorite to win.

That’s a key distinction from this DEOS contract: This deal was bid on by resellers, who will actually do the work of designing and implementing how the Department of Defense will use Microsoft Office 365. This means that Microsoft will get a sizable cut of the contract’s proceeds, but much of it will go to those partners.

Previously, analysts predicted that DEOS was all but guaranteed as a win for Microsoft — while competitors like Google have their own cloud productivity suites, Microsoft Office 365 was widely considered to be the only one that could meet the stringent security requirements mandated by the deal. The only mystery, then, was which resellers would win the deal.

Read more: As Amazon fights for a $10 billion Pentagon cloud deal, Microsoft is a ‘lock-in’ for an $8 billion government contract that nobody else can really win

In March, Microsoft announced new software designed for government use and with higher government security certifications.

Business Insider has reached out to Microsoft, GDIT, Dell, and Minburn Technology Group for comment.

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