EXCLUSIVE: Pentagon CIO reviewing Microsoft 365 licenses as part of DOGE-related cuts

The Department of Defense’s Office of the Chief Information Officer is considering reducing the number of Pentagon employees who have Microsoft 365 E5 licenses, as it works with the Trump administration to rein in federal spending.

The DOD currently maintains more than 2 million Microsoft 365 E5 licenses across two separate programs — the Defense Enterprise Office Solution (DEOS) and the Enterprise Software Initiative (DOD ESI). Through the established contracts, Pentagon components can purchase software licenses for commercial Microsoft products, including Office 365 applications and other collaboration tools.

But ongoing efforts spearheaded by the Department of Government Efficiency (DOGE) have prompted the Defense Department to review how many of those licenses it actually needs, Katie Arrington, who is performing the duties of Pentagon CIO, told DefenseScoop.

“Our Microsoft 365 contract [is a] very big contract here in the Department of Defense. Does every individual in the Department of Defense need an [E5] license? Absolutely not,” Arrington said June 6 in an exclusive interview.

With the department’s Deputy CIO for the Information Enterprise Bill Dunlap, Arrington has been working alongside her DOGE representative to review individual position descriptions and multi-level securities to determine what level of Microsoft 365 E5 license that person needs, she said. Other criteria being considered include user and mission requirements for office productivity software, as well as collaboration capabilities, a DOD CIO spokesperson told DefenseScoop.

CSRA, which is owned by General Dynamics IT, has served as the lead integrator for the DEOS contract since 2020, when the company received a 10-year blanket purchase agreement from the General Services Administration and Defense Department. The program allows Pentagon components to purchase individual licenses for cloud-based Microsoft 365 email and collaboration tools on a monthly basis.

Although the GDIT-led team, which also includes Dell Marketing and Minburn Technology Group, initially received the award in 2019, the department was forced to re-compete the contract following two bid protests by competitor Perspecta. The procurement battle resulted in the GSA and Pentagon giving the contract to GDIT at an estimated value of $4.4 billion — much lower than its originally projected $7.6 billion value.

The department can also purchase licenses for software products — including from Microsoft and other vendors, such as Oracle — using an Enterprise Software Agreement (ESA) contract vehicle, which is managed by the DOD ESI. Instead of buying individual licenses through DEOS, an ESA is used to purchase software via resellers in bulk and on an annual basis.

Arrington did not say how many Microsoft licenses are on the chopping block, but emphasized that the effort is geared toward “optimizing the licenses that we have.”

A reduction in E5 licenses would be yet another cut to the Pentagon’s IT enterprise prompted by the department’s work with DOGE. Along with reductions to its civilian workforce, the Defense Department has ordered several of its IT consulting contracts be cancelled and replaced by internally sourced services — an action also being taken by some of the military departments, as well as the DOD CIO.

“On an average day we would probably put out a contract for consulting on how to optimize or automate the RMF. We didn’t do that. We went internally. We did it ourselves, and we’re going to use our partners in the industry to help, because they would be the beneficiaries,” Arrington said, referring to her ongoing push to overhaul the Pentagon’s Risk Management Framework (RMF).

The office is also reviewing its contracts with systems integrators to ensure there are no duplicative efforts underway, as well as pushing for more use of commercial-off-the-shelf capabilities, she added.

Despite challenges that may come from DOGE-inspired cuts, Arrington said that she believes the work will help the Pentagon be on a “level playing field” moving forward.

“[The Defense Department] is as energized as I’ve ever seen it. But that doesn’t mean there’s no concern,” she said. “Change is hard, but it’s definitely needed.”