DOD saves $100M a year with new Microsoft licensing deal

The Department of Defense says it will save more than $100 million per year over the course of a three-year joint enterprise licensing agreement it has signed with Microsoft.

The Army, Air Force and Defense Information Systems Agency banded together to exact a good high-volume deal from Microsoft based on the 2 million users who will be supported by the contract, according to a DOD press release.

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The contract is worth $617 million, DOD says. The Air Force estimates a cost avoidance of $50 million per year with the contract, and the Army says it will save $70 million per year. DISA says the overall savings will total more than 10% over the life of the agreement.

In addition to the large number of users, the DOD departments agreed to a single set of terms that covers all their individual needs, which cut the negotiating time with Microsoft. "No one comes close to our scale," says David L. DeVries, DOD deputy chief information officer, "so when we talk about something that produces a standardized way of buying, installing and maintaining [enterprise software], that's a huge deal."

DeVries says standardization and predictability are important to reduce and control costs and to better share information securely.

In an email response to questions, a Microsoft spokesperson says this new contract rolls existing and separate agreements into one. "The Joint Enterprise Licensing Agreement (JELA) consolidates existing Enterprise Licensing Agreements (ELAs) for the Army, Air Force, and DISA into one single ELA that helps to deliver cost savings, standardization, and interoperability benefits across all three agencies," the spokesperson says.

Microsoft says in a press release that the contract covers support for data center consolidation, collaboration, cybersecurity, mobility, cloud computing and big data.

Microsoft says it and DOD are working together to make Windows 8 compliant with Army Golden Master and Air Force Standard Desktop Configuration but haven't achieved that yet.

DOD says the package covers nearly 75% of DOD personnel, and it includes custom security provisions, but doesn't detail what they are.

Windows 8 has been promoted by Microsoft as one of its important mobility products, and the DOD says mobility is one of its main interests.

"[The agreement] recognizes the shift to mobility," says Navy Rear Adm. David G. Simpson, DISA's vice director and senior procurement executive. "Microsoft is committed to making sure that the technology within the agreement has a mobile-first focus, and we expect to begin to take advantage of Microsoft's mobile offerings as part of our enterprise mobility ecosystem."

Officials say the contract allows DOD to use Office 2013, SharePoint 2013 and Windows 8 -- the latest versions of these products. Office 2013, which is not officially released yet, includes enhanced security and content management tools, DOD says.

The DOD will use this deal as a model for future ventures agreements with a variety of vendors to develop products that meet security standards and provide as much flexibility and capability as possible, DeVries says.

Tim Greene covers Microsoft for Network World and writes the Mostly Microsoft blog. Reach him at and follow him on Twitter @Tim_Greene.

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