Microsoft and the United States General Services Administration (GSA) have recently agreed on a partnership, offering cloud services free of charge or with reduced costs to government departments. Included in this arrangement are AI-driven offerings such as Microsoft 365 Copilot, which will be made available for free usage up to 12 months.
Federal agencies will also qualify for discounted rates on various offerings from Microsoft, such as Microsoft 365, Azure Cloud Services, Dynamics 365, as well as cybersecurity and surveillance tools.
Under this contract, Microsoft is projected to achieve approximately $3 billion in cost reductions during the initial year. Over the course of three years, potential savings could escalate substantially due to available discounts.
The Government Services Administration (GSA) is a self-governing body within the U.S. administration. Its role involves managing federal real estate, as well as offering various contracting possibilities to other government departments.
The purpose of this agreement is to facilitate government agencies in integrating Artificial Intelligence (AI) technologies. Under this, Microsoft will provide its services across all levels of government.
Federal authorities can opt for a customized variant of the Microsoft 365 Copilot package, exclusively designed for government use. Notably, under this arrangement, there will be no charges related to AI agents on a per-agent basis.
In simpler terms,
Microsoft Azure is providing reduced prices for partnering agencies, and there will be no charges at all for data transfer outside of their data centers (which are usually subject to fees).
Discounted pricing will be available to federal agencies for up to 36 months.
What Microsoft and the US government have said
Several government employees and members of Microsoft’s staff commented on the agreement.
GSA Deputy Administrator Stephen Ehikian:
The General Services Administration (GSA) takes pride in collaborating with tech giants such as Microsoft, to accelerate the utilization of Artificial Intelligence within the federal administration. We strongly encourage our federal counterparts to make use of these partnerships, enabling federal employees with cutting-edge AI tools that improve efficiency, reduce costs, and elevate performance.
Federal Acquisition Service (FAS) Commissioner Josh Gruenbaum:
The General Services Administration (GSA) is hastening the adoption of AI within federal agencies and fulfilling the President’s AI Action Plan. OneGov, a significant shift in federal procurement, has resulted in substantial cost reductions by utilizing the combined buying power of all federal entities. We are grateful for Microsoft’s collaboration during this modernization process and its dedication to creating a harmonious digital environment across federal agencies.
Microsoft Chairman and CEO Satya Nadella:
Microsoft has collaborated with the U.S. Government for over four decades, aiming to serve American citizens. With our latest deal with the U.S. General Services Administration, we will provide a free Microsoft 365 Copilot offer to federal agencies. This collaboration aims to enhance citizen services, boost security, and save taxpayers over $3 billion in the first year through the use of AI and digital technology.
Nadella also took to X (formerly Twitter) to share the news:
Through this partnership, we’re equipping public officials with cutting-edge tools to perform their duties efficiently and securely. We’re combining the innovative technologies of Azure, Microsoft 365 Copilot, Dynamics 365, and our robust security platforms – all backed by top-tier security and compliance standards. Our goal is to enable agencies to upgrade their systems, enhance citizen services, and progress in their technology modernization initiatives.
Chris Barry, Corporate Vice President, US Public Sector Industries, Microsoft:
In the age of artificial intelligence revolutionizing government, Microsoft pledges to be a vital ally, working tirelessly to equip federal agencies with the essential tools they need, enabling them to effectively use AI for the greater public welfare.
Agencies affiliated with the federal government have until September 2026 to choose to participate in various offerings. This timeframe allows these agencies approximately a year to evaluate and decide on the appropriate tools they wish to adopt.
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2025-09-02 18:44