Google wins $34.9M U.S. contract for email, online tools


About 90,000 U.S. Department of Interior workers are about to become Googlers, as the government agency becomes the second major federal customer of Google's (Nasdaq: GOOG) email and collaboration tools.

The contract is worth $34.9 million over seven years and is a big win for Google, as it comes at the expense of Microsoft (Nasdaq: MSFT), which earlier was awarded a five-year deal worth $59.3 million. In 2010, Google challenged the decision in court, contending the bidding system favored Microsoft. It dropped its lawsuit when the agency agreed to revisit the deal.

The move to Google's cloud-based software, which includes Gmail and Google Docs, will allow the agency to transition from its current array of on-premise email systems. It also will modernize the way the agency does business, reducing tech expenses and the need for IT support staff, Interior Secretary Ken Salazar said. The agency said the move will save it up to $500 million by 2020.

In July, the U.S. General Services Administration and its 17,000 employees adopted Google Apps for Government. That allowed the GSA to eliminate its expensive data centers and gave users access to the network from any location.

The GSA was the first federal agency to complete the transition to the cloud-based app; the $6.7 million project was facilitated with the help of IT specialist Unisys Corp. (NYSE: UIS), which won the contract for deployment in 2010.

More than a dozen other agencies are also scheduled to convert to the Gmail-based platform from IBM's Lotus Notes software.

GSA, at the time, said the new solution would increase employee productivity, enabling employees to work remotely from any location at any time, while resulting in a 50 percent cost savings.

The projects are part of the government's effort to save $3 billion by closing about 40 percent of its data centers over the next five years. The federal market for cloud services is estimated to be worth over $20 billion.

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