Chris Fechner, chief executive of the Digital Transformation Agency, said the agreement would help ensure continuity and resilience across government systems.

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

The new contract introduces stable pricing, improved discounts, and capped price increases over its term, providing greater cost predictability as global technology prices remain volatile. It also includes enhanced legal provisions covering governance, security, reporting, and data protection.

The arrangement is also designed to accelerate the adoption of artificial intelligence and other emerging technologies, ensuring agencies can modernise services and infrastructure as part of the government’s broader digital transformation agenda.

The agreement builds on the success of the government’s existing single-seller arrangements, which allow the public sector to negotiate as a single customer with major technology suppliers. A recent review found that those agreements delivered $1.6 billion in discounts between 2019 and 2024, while also strengthening legal protections and supporting more than 10,000 Australian jobs through supplier investment.

According to the review, centralised procurement improved pricing, contractual terms, and risk management, particularly as technology environments grow more complex and cloud-dependent.

Fechner said the new Microsoft agreement extended those benefits while positioning agencies for future innovation.

“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,” Fechner said.

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