Oracle Pentagon contract reaches nearly $7 billion for software licenses

Oracle has signed a nearly $7 billion Oracle Pentagon contract to provide software and related services across branches of the U.S. military, the Coast Guard and the intelligence community over 10 years. The agreement is material for Oracle because it adds a large, long-duration government software commitment at a time when investors are questioning how traditional enterprise software revenue holds up against AI-driven shifts in buying.

The Defense Department said the deal includes a five-year base period and covers perpetual licenses, subscription software licenses, maintenance and consulting. The department did not disclose the specific Oracle products covered, annual spending targets or how much of the contract value is fixed versus optional over the full term.

What is included in the Oracle Pentagon contract?

The agreement gives eligible Pentagon-linked agencies access to Oracle software and services for on-premises needs, along with maintenance and consulting. It includes both perpetual and subscription-based licensing, which means the department is not moving entirely to a recurring subscription model for this procurement.

Kirsten Davies, the Defense Department’s chief information officer, said the contract is expected to save taxpayers at least $441 million by changing how the department buys on-premises Oracle capabilities. That savings figure is the department’s estimate, and the announcement did not provide the baseline contract costs used to calculate it.

The award follows a broader effort by the Trump administration and Defense Secretary Pete Hegseth to reduce Pentagon technology spending. Since taking office last year, Hegseth has described moves to cut duplicate contracts and software agreements deemed non-essential for Defense Department IT systems. A 2025 memo directed the department to develop a plan for negotiating better pricing on cloud and on-premises software so it would not pay more than other U.S. enterprises.

Investors treated the contract as positive news. Oracle shares rose more than 3% after the award became public, according to the report. The move comes after pressure on the stock this year tied to concerns that AI could weaken demand for incumbent software vendors.

Oracle is also spending heavily to position itself as an AI infrastructure provider. The company is taking on tens of billions of dollars in debt as it builds a larger global data center network. In its most recent earnings report last month, Oracle said software revenue fell 2% year over year, while cloud revenue grew 47% on demand for compute capacity from AI customers.

The Pentagon deal reinforces Oracle’s long-running government business. The Central Intelligence Agency was Oracle’s first customer: in 1977, Larry Ellison, Bob Miner and Ed Oates received a $50,000 contract to build a relational database management system for the CIA under the codename “Oracle,” which later became the company’s name.

Ellison, now Oracle’s chief technology officer and executive chairman, has also maintained visible ties to President Donald Trump. He was among the early White House visitors after Trump began his second term and used that appearance to discuss Oracle’s role in the $500 billion Stargate initiative to build AI data centers in the U.S. Trump also supported Oracle’s push to secure a 15% stake in TikTok’s U.S. business.

This story draws on original reporting from SiliconANGLE.