Microsoft pulls in no-bid defense contract worth almost $1 billion

Microsoft has reeled in a $927 million no-bid contract to provide technical support services to a technology unit of the U.S. Department of Defense.

Under the deal, announced Tuesday, the Redmond company will provide the Defense Information Systems Agency with support from its software developers and product teams. Department officials had approached Microsoft about the deal, which was carried out without competitive bidding.

The deal comes as the Pentagon’s in-house information technology department exhausts the cash available in a prior support agreement the agency originally signed in 2013. That contract, which provided for $412million in support services, had its cap raised to $575 million in 2015.

Under the new deal, the agency will have access to “highly-trained Microsoft Blue Badge Cardholder support.” That’s likely a reference to work conducted by Microsoft employees, who carry blue badges.

For most customers, by contrast, Microsoft outsources the support and installation of its software to a network of partner companies or orange-badged contractors under Microsoft supervision.

The initial announcement about the deal, and a news release on the previous arrangement, included references to granting the Defense Department access to Microsoft products’ source code. But a DISA spokeswoman said Wednesday that the language was incorrect and the contract does not include access to Microsoft’s source code.

The U.S. government is among the participants in a Microsoft program in which the company invites government officials to inspect its source code at company facilities, in settings designed to guard against unauthorized disclosure or industrial espionage.

The new support contract comes as the Pentagon works to complete a massive migration of military service computers to Microsoft’s Windows 10 operating system.