WASHINGTON — Dell Technologies has secured a five-year contract worth up to $9.7 billion to provide Microsoft software and cloud services across the U.S. military, intelligence community and Coast Guard.
The agreement was awarded to Dell Federal Systems under the Pentagon’s Core Enterprise Technology Agreement, known as CETA. Officials said the deal will consolidate Microsoft 365, advanced cloud subscriptions and on-premises software licensing into a single procurement framework across the Department of War and related agencies.
Pentagon Chief Information Officer Kirsten Davies said the agreement would modernise digital infrastructure, support secure data sharing and help the military expand its use of artificial intelligence and analytics. She said the department expects to save about $422 million annually by reducing duplicated contracts and streamlining software purchases.
The contract does not represent entirely new spending. Instead, officials said it brings existing and future Microsoft software requirements under one enterprise-wide vehicle, making it easier for defence agencies to manage licences and reduce what officials described as software “sprawl.”
The deal comes as Dell benefits from surging demand for AI servers and data-centre infrastructure. Reuters reported that Dell raised its annual revenue and profit forecasts after strong growth in AI-optimised servers powered by Nvidia chips. The company also lifted its full-year AI server revenue forecast to $60 billion.
Dell shares jumped after the company reported stronger-than-expected results and disclosed the Pentagon contract, underscoring investor confidence that the company has become a major beneficiary of the artificial intelligence infrastructure boom.
The award has also attracted political scrutiny. The Washington Post reported that ethics watchdogs raised concerns because President Donald Trump had recently purchased Dell shares and publicly praised the company before the contract was announced.
Dell has not been accused of wrongdoing in connection with the award, and Pentagon officials said the agreement followed a competitive evaluation process. Supporters of the contract say it will strengthen military communications and cut costs, while critics are likely to press for more transparency because of the size of the deal and the political context surrounding it.
For Dell, the contract strengthens its position as a major supplier of government technology services. For the Pentagon, it is part of a broader push to modernise digital systems, improve cloud access and prepare military networks for more data-driven and AI-enabled operations.
