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Microsoft wins $21 billion Army contract for augmented reality headsets

An 82nd Airborne Division Soldier uses the Integrated Visual Augmentation System (IVAS) during a training exercise in October 2020.

BRIDGETT SITER/U.S. ARMY

By AARON GREGG | The Washington Post | Published: March 31, 2021

The U.S. Army has awarded Microsoft a contract worth up to $21 billion for augmented reality headsets that are supposed to help soldiers map the battlefield, select targets and stay aware of possible threats by overlaying intelligence information directly onto their field of vision.

The Integrated Visual Augmentation System, known as IVAS, is part of a broader set of investments meant to make military intelligence data more useful to deployed soldiers, who must quickly make decisions in far-flung battlefields based on the limited information available to them. Many of these so-called "tactical edge" devices build on recent advancements in cloud computing that were developed in the commercial business world.

"The program delivers enhanced situational awareness, enabling information sharing and decision-making in a variety of scenarios," Alex Kipman, an augmented reality technologist, wrote in a blog post provided by a Microsoft representative.

The program could ultimately be worth much less than $21 billion, depending on how many of the headsets and related technology the military eventually orders. It is subject to two five-year increments, meaning the Army could cut the program short if it is unhappy with the product.

Even so, the IVAS award opens up a sizable new line of business for the Redmond, Wash.-based computing giant, which is among several large West Coast tech companies looking to expand their business with the military. In 2019, Microsoft beat its rival Amazon to win the contract for the Defense Department's central cloud computing system, known as JEDI. The JEDI award has been tied up in bid protest litigation ever since.

Microsoft has been working to develop IVAS for years under an increasingly common contract mechanism called Other Transaction Authority. These types of contracts allow military agencies to develop and test new technology through a collaborative prototyping process.

The contract award issued Wednesday allows the military to rapidly scale up that prototype for mass production without seeking competing offers. Such arrangements are increasingly favored by military agencies looking to develop and field new technology quickly. They also bypass many of the regulations that typically apply to large government purchases and are less vulnerable to bid protests.