GSA, Oracle sign major deal offering 75% discount on licenses

The US General Services Administration (GSA) Monday announced the signing of a OneGov deal with Oracle that provides federal government agencies with a deep discount on the company’s enterprise software applications, as well as its Oracle Cloud Infrastructure, until November 30 of this year.

The agreement will provide federal agencies with a 75% discount on Oracle’s license-based Oracle Technology Programs, including database, integration, security, and analytics, “substantial base discounts” on Oracle Cloud Infrastructure (OCI) services for government customers, as well as access to migration services to assist in modernizing workloads on legacy Oracle services to move them onto OCI.

Other perks in the contract include pricing parity with commercial offerings, as well as elimination of data egress fees for moving existing workloads from Oracle Government Clouds to another cloud service provider’s FedRAMP Moderate, High or DOD IL 4, 5 Cloud, and a discount of $0.33 for every dollar spent on eligible Oracle Cloud to put toward Oracle technology or tech support.

The discounts in the OneGov agreement are possible because the pricing is based on the entire government’s volume rather than the lower discounts previously available through separate agreements with individual agencies or on a transactional basis, the GSA explained in its announcement.

Long overdue

Shane Griffin, IT sourcing and commercial advisory practice manager at UpperEdge, said he was not surprised by the announcement, adding, “OCI has been a major growth engine for Oracle, and this deal with the US government shows just how aggressively they’re pushing to expand in cloud infrastructure. Federal agencies are finally moving more workloads to the cloud, and that opens the door for providers like Oracle to win long-term market share.”

He pointed out, “while enterprises may worry that deep discounts to the US government mean they’ll be overcharged, this should instead be seen as proof [that Oracle will] discount OCI deeply when it supports their growth strategy. With the right negotiation playbook, private-sector clients can achieve comparable results. And if nothing else, a lower cost to government is a direct benefit to taxpayers.”

Scott Bickley, advisory fellow at Info-Tech Research Group, described the announcement as a development that is “long overdue. It should be no surprise that, collectively, the US government is either the largest or close to the largest customer of most of the software mega-vendors, which include Oracle. For decades, GSA pricelists have demonstrated discount levels for agencies barely below the retail price in many cases.”

He said, “a flat 75% discount on perpetual license software is a good start; however, it is hard to compare to the private sector, where discounts can go much higher than this baseline. The positive impact of this may be more symbolic, however, as the rate of traditional license purchases has declined precipitously, as workloads continue to migrate to the cloud.”

“Oracle does provide a discount structure for its OCI cloud services based on levels of spend; however, it is not clear if the GSA agreement improves upon these programmatic levels or simply codifies them through November,” Bickley added. “While there is no mention of Oracle Java, one has to wonder if government-wide discounts were applied here as well, and if so, by agency or in taking all of the US federal government as a whole.”

Oracle, he said, “seems to be paving the way for these government-wide agreements, and that is a blockbuster development. I’d expect the other large software vendors to follow suit as well. These types of agreements result in real cost savings for the US taxpayer while streamlining the technology acquisition process — a true win-win.”

A new strategy for procurement

The deal aligns with OneGov’s overall goals, according to Lawrence Hale, acting assistant commissioner of the Office of Information Technology Category (ITC) in GSA’s Federal Acquisition Service (FAS).

“The new strategy sets a governmentwide direction for how we acquire and manage information technology — starting with commercial software. It reflects a broader shift in how we think about IT: not as a set of individual purchases, but as an interconnected system that powers everything from citizen services to national security,” he wrote in a blog announcing OneGov’s April 30 launch,

The idea behind this strategy, he wrote, is a simple one: “the federal government should act as a single, coordinated enterprise when it comes to buying. That means reducing duplication, leveraging shared standards and driving greater value for taxpayers.”