Australian govt signs new five-year agreement with Microsoft

The Digital Transformation Agency (DTA) has secured a new five-year Volume Sourcing Agreement with Microsoft, on behalf of the Australian Government, aiming to provide cost certainty through stable pricing, improved discounts and capped price increases for essential ICT products and online services used across the Australian Government.

The agreement also includes a standardised contracting framework that introduces better commercial outcomes for government, with stable pricing and capped increases over the five‑year term helping to minimise the Australian Public Service’s (APS) exposure to global price fluctuations.

The arrangement includes enhanced legal provisions that improve governance, reporting, security, liability and regulations for the handling and use of government data, as well as aiming to accelerate the APS’ capability to adopt AI and other technologies.

Through an enhanced Governance Framework, Microsoft and the government will work together on "forward-looking technology strategies, innovation, skilling and procurement optimisation" in support of the Commonwealth’s digital transformation agenda.    

Microsoft is also recommitting to the Security of Critical Infrastructure legislation, Cloud Hosting Certification Framework, Protective Security Policy Framework and the Australian Signals Directorate’s Information Security Manual, underpinned by the company's commitment to the Independent Registered Assessors Program.

Microsoft is also making available a $1.55 million training fund to develop a targeted program for the APS to deliver tailored skills training, including for ethical AI use.  

The recent review of the Australian Government’s Single Seller Arrangements found they continue to deliver "strong value" through volume pricing, achieving $1.6 billion in discounts between 2019 and 2024. The review also reported that Single Seller Arrangements had made broader economic contributions:

The Microsoft arrangement builds directly on these findings, modernising the framework to ensure agencies can continue to access critical Microsoft products and services under terms that support both operational needs and the government’s broader digital transformation agenda.

Chris Fechner, CEO of the DTA, said the new arrangement will strengthen the Government’s ability to operate critical ICT infrastructure in the future.

“We are partnering closely with agencies to deliver a smooth and coordinated transition to the new arrangement,” he said.

“The recent review of our Single Seller Arrangements confirmed their value in delivering stronger protections, better terms and significant cost savings for the Australian Government.

“Building on these strengths, the Microsoft VSA6 will deliver benefits for all agencies, particularly smaller entities, while supporting the government’s digital transformation agenda.” 

The five-year agreement will commence on 1 July 2026.