Microsoft (NASDAQ:MSFT) has entered into a sweeping agreement with the U.S. General Services Administration (GSA) aimed at accelerating the adoption of artificial intelligence, cloud, and productivity tools across federal agencies.
As part of the deal, Microsoft will provide Microsoft 365 Copilot at no additional cost for up to a year to millions of current Microsoft G5 users in government. The initiative is designed to give agencies secure and compliant AI tools to streamline operations and reinforce cybersecurity.
The GSA said the agreement is expected to save taxpayers around $3 billion in its first year under the agency’s OneGov strategy. Officials also stressed that the partnership supports the rollout of America’s AI Action Plan by bringing large-scale AI capabilities directly into government workflows.
The federal-only version of Microsoft 365 and Copilot will allow agencies to automate repetitive processes, analyze data more effectively, and handle citizen requests or case management without per-agent fees. The arrangement also features major Azure cloud discounts and the removal of data egress charges, helping agencies modernize their IT infrastructure and collaborate more effectively.
In addition, Dynamics 365 applications will be available to improve citizen services and supply chain management, while security tools such as Microsoft Entra ID and Sentinel will deliver stronger identity protection and threat detection.
Agencies have until September 2026 to opt into the program, with discounted pricing locked in for as long as 36 months. The services already comply with FedRAMP authorizations, covering more than 400 key security requirements under NIST 800-53.
Microsoft is also contributing $20 million in support services, including free cost-optimization workshops, to help agencies implement the technology. Over a three-year period, the company estimates the full package of offerings could generate more than $6 billion in total value for the federal government.
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