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FinancePentagon signs 10-year software contract with Oracle worth up to $7 billion
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The Pentagon announced a 10-year contract with Oracle worth up to $7 billion to supply on-premises software to the U.S. Department of Defense, intelligence community, and Coast Guard. The deal includes perpetual and subscription-based licenses, maintenance, and consulting. Oracle's stock rose about 3% in extended trading following the announcement. The DoD's CIO stated the contract saves at least $441 million for taxpayers by improving procurement of Oracle capabilities. The article also notes Oracle co-founder Larry Ellison's political ties to President Donald Trump, including a $45 million campaign donation and involvement in the Stargate AI data center project. Despite the contract win, Oracle shares are down 38% in 2026 due to investor concerns that AI could hurt software incumbents and the company's rising debt from AI data center buildouts.
Source report
Overview
The Pentagon on Thursday announced a 10-year contract with Oracle valued at nearly $7 billion, marking a significant win for the software company amid a challenging year for its stock. Oracle shares rose approximately 3% in extended trading following the announcement.
Contract Details
- Oracle will supply on-premises software to the U.S. Department of Defense over a 10-year period.
- The contract covers software use in on-premises data centers for branches of the military, the U.S. intelligence community, and the Coast Guard.
- A five-year base period includes perpetual and subscription-based software licenses, maintenance, and consulting.
- The Central Intelligence Agency was Oracle's first customer.
Cost Savings
Kirsten Davies, the Department of Defense's chief information officer, stated that the agency is saving at least $441 million for taxpayers "by fundamentally improving how we procure on-premises Oracle capabilities."
Broader Context
Political and Industry Ties
Oracle co-founder Larry Ellison has long been a supporter of President Donald Trump, reportedly contributing $45 million to a nonprofit backing Trump's 2024 presidential campaign. Ellison was among the first guests to appear at the White House during Trump's second term, where he announced plans for Stargate AI data centers in the U.S.
Trump also supported Oracle taking a stake in TikTok's U.S. business. In May, the Defense Department announced agreements with Oracle and other tech companies regarding AI deployments in classified networks.
Financial Performance
Despite the contract win, Oracle shares are down 38% this year, as investors have grown concerned that AI could hurt growth prospects for software incumbents. The company is also accumulating tens of billions of dollars in debt to build out AI data centers.
In June, Oracle reported that quarterly software revenue declined 2% from a year earlier, though its database software remains widely used inside large companies. Cloud revenue climbed 47% as the company rushes to supply AI computing power to OpenAI and other clients.
Related Developments
Earlier this week, Defense Secretary Pete Hegseth estimated that the Iran war, which began in February, has cost the U.S. $37.5 billion.
WATCH: Oracle reportedly facing cost overruns
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Source
US Top News and AnalysisWestern
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Oracle signs 10-year software contract with Pentagon worth up to $7 billion