By Rajwa Quasim
Pentagon announced Thursday a contract with Larry Ellison’s Oracle worth $7 billion over a decade. Initially, The agreement is for five years, which could extend for an additional five years.
Under the contract, Oracle will supply its on-premise software, which is directly installed on the server of Pentagon, U.S. Coast Guard and the U.S. intelligence community. According to the government, the five-year contract includes perpetual and subscription based software licenses, maintenance and consulting.
The deal is structured in two parts. The five-year base period worth $3.31 billion, with option to extend and if did, making total value up to $6.99 billion.
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This deal consolidates everything into one agreement, rather than different military branches negotiating separate contracts with Oracle. Kirsten Davies, the Department of Defense’s chief information officer, said in the release that the agency is saving at least $441 million for taxpayers “by fundamentally improving how we procure on-premises Oracle capabilities.”
The deal, known as the “Enterprise Software Agreement,” is negotiated by the Department of Navy.
The Oracle deal follows a similar agreement signed with Microsoft in May. Under the five-year, $9.69 billion contract, software licenses used across the military, intelligence agencies, and the Coast Guard were consolidated into a single agreement. Together, the Oracle and Microsoft deals are part of the Pentagon’s broader effort to cut costs by replacing duplicative software spending with unified, enterprise-wide agreements.
Oracle co-founder Larry Ellison has close ties with the Trump administration. Ellison, a long-time Trump supporter, also donated $45 million to a nonprofit backing Trump’s 2024 presidential campaign. He was also the first guest to visit the White House during Trump’s second term, where he announced “Stargate” AI data center project. Trump supported Oracle taking a stake in TikTok’s U.S. business, and in May, the Defense Department announced agreements with Oracle and other tech companies around AI deployments in classified networks.
READ: Oracle incentives spark debate over jobs and AI (April 21, 2026)
As soon as the pentagon contract news broke out, Oracle shares rose 3%. Oracle shares previously had fallen due to its plan on heavy spending for artificial intelligence. It had fallen roughly 38% so far this year and about 27% in just last month. The quarterly software revenue had declined 2% from a year earlier, while cloud revenue climbed 47%.
Earlier this week, Defense Secretary Pete Hegseth estimated that the Iran war, which began in February, had costed the U.S. $37.5 billion so far.