FAA Chooses Office 365: Microsoft One-Ups Google In Battle For Government Cloud Market

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In early 2011, former U.S. Chief Information Officer Vivek Kundra and team helped institute a “Cloud First” policy, which aimed to speed up the government’s internal adoption of cloud computing and services. Since then, many government agencies have begun moving their collaboration and productivity applications to the cloud. Today, the Federal Aviation Administration (FAA) became the latest to transition, awarding Computer Sciences Corp a contract worth as much as $91 million to implement its cloud productivity solution based on Microsoft Office 365, which includes messaging, calendaring, IMs and webconferencing.

According to Microsoft’s statement, 60,000 FAA employees and 20,000 employees at the Department of Transportation will be migrating to Office 365. The contract, which is for one year service with an option for an additional six years, is somewhat of a big, symbolic win for Microsoft in its ongoing efforts to win control of the government cloud market.

But Microsoft has to ward off plenty of competition in enterprise cloud services, namely Google, which won a big government contract with the Department of The Interior last month to implement its cloud services.

Microsoft and Google have been locked in an ongoing struggle that goes back several years. Google filed a lawsuit in 2010 as part of a solicitation of the Department of the Interior’s business, which required that vendors be compliant with Microsoft’s online suite.

Google claimed that the requirement was an unfair competitive advantage, and a back-and-forth began between the two companies over whether or not Google was authorized to sell to the government or not. The war over FISMA compliance came to a close last month, when Google was finally awarded the contract.

As Sharon Fisher of CMS Wire pointed out last year, it’s no wonder that Google and Microsoft are ready to do battle over this market. The U.S. government is a potential goldmine for IT vendors, “with a total IT budget of some $78.5 billion” — and that was just for 2011.

The adoption of Google Apps at the enterprise level has been increasing fast, and with Apple and others eating into the revenues it sees for software licensing, it clearly wants to make a big push to make up the difference in cloud services.

The FAA’s decision to opt for Office 365 (though implemented by CSC) is a big win, but clearly this back-and-forth is just getting started, and they’re not the only two players eying the market. Not to over-dramatize or anything.

The FAA follows the U.S. Department of Agriculture and the Broadcasting Board of Governors, and the governments of California, Nebraska and Minnesota in moving to the cloud.

For more, see Microsoft’s announcement here.