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Oracle secures $7B contract to supply the Pentagon with vital software and services - SiliconANGLE
Oracle secures $7B contract to supply the Pentagon with vital software and services - SiliconANGLE
siliconangle.com
Database giant Oracle Corp. has signed a new, multibillion-dollar deal with the Pentagon that will see it provide its software to branches of the U.S. military, Coast Guard and intelligence community over the next 10 years.
The deal, valued at almost $7 billion, includes a five-year base period for both perpetual and subscription-based software licenses, maintenance and consulting, Pentagon officials said.
Kirsten Davies, who serves as the Department of Defense’s chief information officer, said that her agency managed to negotiate a contract that will result in savings of at least $441 million for taxpayers by “fundamentally improving how we procure on-premises Oracle capabilities.”
Investors reacted positively to the deal. Oracle’s stock, which has come under pressure this year amid fears that artificial intelligence will disrupt traditional software vendors, gained more than 3% on news of the contract.
The deal stems from a push by the Trump administration to rein in DOD spending on software services and licenses. Since taking office last year, Defense Secretary Pete Hegseth has detailed multiple efforts to cut the agency’s technology spending by eliminating duplicate contracts and non-essential software agreements for the Pentagon’s information technology systems.
A 2025 memo called for the DOD to create a plan of action about how it will negotiate more favorable prices on cloud and on-premises software, so that it doesn’t pay any more than other American enterprises. However, while some may consider the savings made by the Pentagon to be a win, it’s a figure that pales in comparison with the estimated $37.5 billion the U.S. has spent on the Iran war since February.
Oracle has had a long history of serving the U.S. government. In fact, the Central Intelligence Agency was its first ever customer. Back in 1977, co-founders Larry Ellison (pictured), Bob Miner and Ed Oates were awarded a $50,000 contract to build the CIA a relational database management system under the codename “Oracle,” and that project ultimately inspired the name of the company they were to establish.
Ellison, who is now Oracle’s chief technology officer and executive chairman, is a longtime supporter of U.S. President Donald Trump, and reportedly contributed $45 million towards his 2024 presidential campaign via a donation to a nonprofit group. He was notably one of the first guests to visit the White House following the start of Trump’s second term, using the occasion to announce his company’s involvement in $500 billion Stargate initiative to build AI data centers in the U.S. Trump was also a supporter of Oracle’s push to secure a 15% stake in TikTok’s U.S. business.
Despite the strong government backing Oracle has received, its stock has taken a battering this year due to the rise of AI software. In addition, Oracle is also taking on tens of billions of dollars in debt as it races to become an AI infrastructure player by building out its network of global data centers.
In its most recent earnings report last month, Oracle revealed that its software revenue declined 2% from the previous year. However, its cloud revenue remains a bright spot, growing 47% thanks to strong demand for compute resources from its AI customers.
