The U.S. General Services Administration (GSA) has signed a new agreement with Microsoft that could change how federal agencies buy and use technology. The deal, part of GSA’s OneGov strategy, is expected to save $3.1 billion in the first year alone.
One of the biggest perks is free access to Microsoft 365 Copilot for millions of government employees on G5 plans. Agencies will be able to use the AI tool at no cost for up to 12 months.
“This agreement helps us advance AI adoption across the federal government, a key priority of the Trump Administration,” said GSA Deputy Administrator Stephen Ehikian. He called on agencies to take advantage of the new offers to cut costs and modernize operations.
Josh Gruenbaum, Commissioner of the Federal Acquisition Service, called OneGov “a paradigm shift in federal procurement” and said the savings are possible because the government is now buying as one large customer.
Microsoft CEO Satya Nadella said the company has worked with the U.S. government for more than four decades. “With this new agreement, including a no-cost Microsoft 365 Copilot offer, we will help agencies improve citizen services, strengthen security, and save taxpayers more than $3 billion in the first year alone,” Nadella said.
Chris Barry, Microsoft’s U.S. Public Sector lead, added that the company is “committed to leading as the government’s essential partner” as agencies move deeper into the AI era.
The deal also includes steep discounts on Azure, Sentinel, Dynamics 365, and Entra ID Governance. Agencies won’t pay per-agent fees for new AI agent features, which can power citizen inquiries and case management systems. Microsoft also waived data egress fees, making it easier for agencies to share information securely across departments.
Security is a major selling point. Microsoft 365, Azure, and other services are already authorized at FedRAMP High, meeting more than 400 NIST security controls. Copilot has provisional approval from the Department of Defense and is expected to earn full FedRAMP High clearance soon.
Microsoft is also investing $20 million in support services and workshops to help agencies get the most from the deal. Those workshops will focus on cutting software duplication, boosting automation, and improving interoperability.
Agencies can opt in until September 2026, with discounted pricing available for up to three years. If the projections hold, the partnership could deliver more than $6 billion in total value over three years.
