Microsoft wins $21.9 billion contract with U.S. Army to supply augmented reality headsets

By Stephen Nellis and Paresh Dave

(Reuters) -Microsoft Corp on Wednesday said it has won a deal to sell the U.S. Army augmented reality headsets based on its HoloLens product and backed by Azure cloud computing services.

The contract could be worth up to $21.88 billion over 10 years, a Microsoft spokesman told Reuters.

Over the past two years, Microsoft has worked with the Army to on the prototyping phase of what is called the Integrated Visual Augmentation System, or IVAS. The company said Wednesday that the Army had moved into the production phase of the project.

In a blog post, Microsoft Technical Fellow Alex Kipman said the headsets are designed to deliver "enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios."

The headsets will be manufactured in the United States, a Microsoft spokesman told Reuters.

Microsoft was also in line to win the $10 billion JEDI cloud computing contract with the Pentagon, but the contract remains in dispute in a lawsuit filed by Amazon.com Inc. Pentagon officials told U.S. lawmakers in February that the Defense Department may jettison the contract if the dispute lingers in the courts.

After Microsoft announced a $480 million contract in 2018 to supply prototypes to the Army, at least 94 workers petitioned the company to cancel the deal and stop developing "any and all weapons technologies," Reuters reported at the time.

On Wednesday, the workers' group said on Twitter https://twitter.com/MsWorkers4/status/1377487512050921474, "We would much rather Microsoft used today to stand up for Transgender people everywhere on Transgender Day of Visibility, instead of building weapons of war."

(Reporting by Stephen Nellis and Paresh Dave in San Francisco; Editing by Leslie Adler and Alistair Bell)