Navy, Marine Corps consolidate Microsoft purchases

The Department of the Navy has signed a deal with the Microsoft that would consolidate nearly 30 different licensing arrangements with the world's largest softw...

Effective immediately, there’s only one way to buy most Microsoft products in the Navy and Marine Corps.

The Navy Department has signed a $700 million deal with the software giant through 2015 that will sweep dozens of separate licensing schemes for everything from desktop software to management services and unified communications under a single departmentwide agreement, officials said.

The agreement is the first of approximately 15 that the Navy wants to strike with its largest software vendors, hoping to get better prices if it can approach companies as a unified whole in order to achieve more favorable volume discounts. Terry Halvorsen, the Department of the Navy’s chief information officer told Federal News Radio in a March interview that the restructured software purchases are expected to save $100 million over the next five years.

Terry Halvorsen, CIO, Navy
Under a departmentwide policy memo issued in February by Halvorsen, Gladys Commons, the Navy comptroller, and Sean Stackley, the Navy’s acquisition chief, all Navy components must use the enterprise agreements whenever they cover a product or service they’re seeking to buy, including when they’re being procured with government purchase cards. While exceptions can be made for contingency operations and other urgent situations, waivers will be issued “sparingly.”

The Marine Corps laid the foundation for the license consolidation through an earlier enterprise program and now serves as the lead integrator for the departmentwide license consolidation effort, but until now the Navy side of the department still had at least 28 separate licensing arrangements with Microsoft between its various commands, said Tim Solms, the general manager for the company’s DoD business.

“They spent quite a bit of time looking at this, and I think they found some innovative ways to gain efficiencies and keep their existing contracts in place and develop a migration strategy to this new agreement,” he said in an interview.

Solms said that while the agreement covers purchases of operating systems and desktop productivity software like Windows and Office, it wasn’t the focus of the Navy’s restructuring.

“When you look at collaboration, interoperability, tracking, maintenance, being able to see how they’re using virtualization, those are the areas they really wanted to emphasize,” he said. “When you talk about desktop, yep, that’s ubiquitous across DoD and they certainly took advantage of that, but they continued to move in broader directions.”

While the Navy and Marine Corps’ cost-saving projections are predicated mostly on being able to leverage the entirety of the department’s IT budget — $7.6 billion in fiscal 2012 — in order to drive better business deals with industry, department officials also believe taking a consolidated approach to licensing will let them do a better job of overseeing, allocating and using the licenses they already own.

“I want to make sure they’re maximizing the usage of what they’ve already paid for,” he said. “All too many times, we hear from the customers, ‘Wow, I didn’t even know I owned that.’ That’s back on us in industry,” Solms said. “We need to make sure it’s easy for everybody to know what they have, how to access it, how to implement it and how to take advantage of the investments they’ve made.”

This story is part of Federal News Radio’s daily DoD Report. For more defense news, click here.


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