The Digital Transformation Agency (DTA) is in negotiations with Microsoft regarding the upcoming iteration of its volume sourcing agreement (VSA), with a particular emphasis on incorporating Copilot for Microsoft 365 (M365) into the deal. The current VSA, which encompasses 180,000 licenses for Microsoft Office and other Microsoft services utilized by the federal government, is set to expire in mid-2025.
Chris Fechner, CEO of the DTA, addressed a Senate inquiry into artificial intelligence late last week, revealing that the existing agreement, established in mid-2019, predates the emergence of Copilot and generative AI technologies in their current forms.
The government recently concluded a six-month trial of Copilot for M365, which involved approximately 7,400 employees and ended on June 30. This trial was conducted under the current VSA, with Copilot being classified as an “additional product.”
Fechner disclosed that Microsoft had extended an introductory offer for the trial, providing a 15 percent discount off the standard rate of $44.90 per user per month. The final price paid by the government was not specified.
Due to the late start of some agencies’ trials, Microsoft extended the discount period beyond the initial end date. Fechner noted, “We received an extension on pricing capability for agencies that needed more time to evaluate Copilot thoroughly.”
The DTA is currently leading a formal evaluation of Copilot’s impact on productivity, with results expected by the end of September. This assessment will guide future decisions on the adoption of Copilot and potential alternatives.
Fechner emphasized that discussions with Microsoft are ongoing as the DTA prepares for the next VSA. “We are exploring what the inclusion of new products like Copilot will mean for future licensing arrangements,” he said.
He also highlighted that Copilot is not the only significant issue under consideration. The negotiations also involve potential changes to the contract, such as the unbundling of some products currently offered together.
Related topics:
What Exactly Does Microsoft Do?