Pentagon awards Oracle $7B agreement for consolidated software tools, licenses
The Defense Department announced a multibillion-dollar deal with Oracle on Thursday that will consolidate all of the company’s software, services and licenses used across the Pentagon under a single contract vehicle.
The Enterprise Software Agreement (ESA) is worth nearly $7 billion and aims to optimize how the department, Coast Guard and Intelligence Community purchase software licenses from Oracle. The contract was negotiated by the Department of the Navy and includes a five-year base period as well as a five-year option period, according to the Pentagon.
Rather than provide new funding to Oracle, the ESA combines multiple contracts for the company’s software and services into a single contract vehicle. According to the Pentagon, the structure will not only streamline how organizations purchase IT capabilities but also save the DOD millions of dollars.
“By fundamentally improving how we procure on-premises Oracle capabilities, we are driving at least $441 million in taxpayer savings while rapidly and effectively serving our warfighters,” Kirsten Davies, DOD chief information officer, said in a statement. “This nearly $7 billion agreement with Oracle strengthens our digital ecosystem, supporting our warfighters with secure, scalable technology to dominate current and future missions.”
The ESA will also support quicker delivery of software capabilities to warfighters by removing procurement stovepipes historically used across the department, according to Barry Tanner, who is performing the duties of Navy CIO.
“Reducing fragmented procurement and advancing enterprise standardization will strengthen interoperability, reduce cybersecurity risk, and help us focus resources on resilient capabilities that can scale, integrate, and endure in contested conditions,” Tanner said in a statement.
The new deal is the second agreement for consolidated IT contracts made in recent months. The department awarded Dell Federal Systems a $9.7 billion Core Enterprise Technology Agreement in May, establishing a unified contract vehicle for Microsoft Services — including Microsoft 365, cloud subscriptions and on-premises licensing.
The Oracle agreement is the latest DOD effort to rein in spending on software services and licenses under the Trump administration. Since taking office, Secretary of Defense Pete Hegseth has spearheaded multiple efforts to cut duplicative and non-essential contracts for the Pentagon’s IT enterprise.
A memo issued in 2025 called for the department to make a plan for how it will negotiate “most favorable rates on software and cloud services, so the DoD pays no more for IT services than any other enterprise in America.”
Hegseth also directed the CIO to complete an audit of the Pentagon’s software licensing “to ensure we are only paying for the licenses we actually use, the features we actually need, at the most favorable rates,” per the memo.
