The Department of War announced Thursday that it has awarded Oracle a software contract worth nearly $7 billion, aimed at reducing costs and modernizing technology across the military.

According to Oracle, the agreement carries a base value of $3.31 billion over its first five years. If the government exercises an additional five-year option, the total value could reach $6.99 billion.

The department said the contract is projected to save taxpayers at least $441 million by consolidating fragmented Oracle software purchases and licenses under a single department-wide framework. Government audits have long flagged redundant software licensing across federal agencies as a source of wasted spending, making consolidated procurement vehicles an increasingly common tool for reining in costs. Negotiated by the U.S. Navy, the deal represents the department's "first-ever" direct contract with Oracle covering on-premises software use.

"By fundamentally improving how we procure on-premises Oracle capabilities, we are driving at least $441 million in taxpayer savings while rapidly and effectively serving our warfighters," said Department of War Chief Information Officer Kirsten Davies in a statement. "This nearly $7 billion agreement with Oracle strengthens our digital ecosystem, supporting our warfighters with secure, scalable technology to dominate current and future missions."

The agreement will support the Department of War, the Coast Guard, and the intelligence community. Under the indefinite-delivery, indefinite-quantity contract, Department of War organizations will be able to "purchase Oracle commercial offerings, including on-premises software and support, software-as-a-service (SaaS) applications and professional services through task and delivery orders tailored to specific mission and operational requirements," according to Oracle.

Pricing, deliverables, and performance criteria will be "defined at the order level," Oracle said.

"For the Department of War, the challenge is not just finding the right technology, it's doing so quickly, compliantly and at scale without getting bogged down by complex procurement processes," said Kim Lynch, executive vice president of government, defense, and intelligence at Oracle, in a statement.

Oracle has supplied technology to the department since the 1990s, a period during which its database products became deeply embedded across federal defense and intelligence operations. The company said military organizations will begin transitioning to the new contract framework this summer.

"For the Department of the Navy, this agreement supports faster delivery of secure, scalable software from the shore enterprise to the tactical edge for our Navy and Marine Corps teams," said Barry Tanner, who is performing the duties of the Navy's chief information officer.

The Oracle agreement comes as the Department of War ramps up its adoption of AI and other advanced technologies. In January, the department unveiled an Artificial Intelligence Acceleration Strategy intended to speed military AI deployment, reduce bureaucratic barriers, and "establish the United States as the world's undisputed AI-enabled fighting force."

In February, the Department of War told FOX Business it would partner with OpenAI to integrate ChatGPT into GenAI.mil, a platform for military service members.

FOX Business' Louis Casiano contributed to this report.