Microsoft Strikes Major Federal AI Deal With Free Copilot for US Agencies

Details

• Microsoft and the US General Services Administration (GSA) have entered a wide-ranging agreement, granting free Microsoft 365 Copilot access for up to 12 months to millions of government G5 users, and offering sizable discounts on Azure, Dynamics 365, and security tools.
• This initiative centers on Microsoft, the GSA, and federal agencies participating under the OneGov unified pricing model, with a focus on agencies requiring advanced security and utilizing the G5 licensing tier.
• Federal agencies may opt in to these services until September 2026, benefiting from up to 36 months of lowered cloud modernization costs, AI agent access without per-agent fees, and security features using Microsoft Entra ID and Sentinel.
• The agreement follows Microsoft’s January 2025 Government Microsoft Acquisition Strategy announcement and aligns with the former administration’s AI Action Plan, occurring as GSA inks similar partnerships with OpenAI, Anthropic, Google, and AWS.
• Microsoft will also provide $20 million in additional support and optimization workshops, with all solutions meeting FedRAMP High and exceeding 400 NIST 800-53 security controls.

Impact

This deal bolsters Microsoft’s standing against rivals such as AWS, which has pledged major federal cloud savings, as agencies modernize digital services. By offering no-cost AI tools and cloud discounts, Microsoft accelerates federal AI adoption and is poised to reshape the delivery of public services, projecting $6 billion in value over the next three years.