Oracle just landed a Pentagon software deal worth nearly $7 billion, and its stock rose about 3% in extended trading after the Thursday announcement. That's a rare bright spot for a stock CNBC says is down 38% this year.
The Enterprise Software Agreement runs an initial five years with a five-year option, and it consolidates all of the company's software, services, and licenses used across the department under a single contract vehicle. The Department of the Navy negotiated it, and coverage extends to the Coast Guard and the Intelligence Community. Per CNBC, the CIA was Oracle's first customer.
The deal doesn't hand Oracle new money. According to contract details, the base value is $3.31 billion, and the cumulative total can reach $6.99 billion only if all ten years are exercised. Pentagon CIO Kirsten Davies said the arrangement drives at least $441 million in taxpayer savings by improving how the department procures on-premises Oracle capabilities. The Pentagon plans to transition to the new agreement later this summer.
DefenseScoop reports this is the second consolidated IT contract in recent months. In May, the department awarded Dell Federal Systems a $9.7 billion agreement covering Microsoft services, including Microsoft 365 and cloud subscriptions. Both fall under Defense Secretary Pete Hegseth's effort to cut duplicative software and license contracts. A 2025 memo directed the CIO to audit the Pentagon's software licensing so the department pays only for licenses it uses at the most favorable rates.
Kim Lynch, executive vice president of Oracle's Government Defense and Intelligence business, said the deal creates a more standardized path to Oracle cloud and AI technology for mission-critical scenarios.
The win arrives against a rough year. CNBC reports Oracle said in June that quarterly software revenue fell 2% from a year earlier, while cloud revenue climbed 47% as the company supplies AI computing power to OpenAI and other clients. Oracle is also taking on tens of billions of dollars in debt to build AI data centers.
