Defence's VMware contract climbs to $178m

Defence has renewed its access to VMware under a three-year, $178 million deal that appears to represent a more than doubling in spending with the virtualisation vendor.

The $178 million deal, executed on December 13 last year and published days before Christmas, runs until December 2028.

The department had about $82 million in licence and services contracts with VMware that expired in mid-December, the largest being a three-year deal worth $52 million, according to an analysis of contract notices by iTnews.

A Defence spokesperson confirmed to iTnews that the new VMware deal consolidated a number of “previous arrangements” which are represented as separate contract notices in AusTender.

“For the next three years, Defence’s requirements will be covered under the new VMware contract, which provides access to subscription licences and a broader range of products and services,” the spokesperson said.

“This contract also consolidates previous arrangements that included new perpetual licences, ongoing and extended technical support, updates, and maintenance for VMware products already deployed across the Defence environment.”

The increasing costs of VMware licensing have been closely watched since the vendor was snapped up by Broadcom in 2023.

That has seen customers weigh up staying or exiting VMware for a different hypervisor technology.

Within that context, a larger VMware bill at a department the size of Defence is not surprising or unexpected.

Defence indicated in response to questions from iTnews that it had “streamlined and optimised its VMware software requirements to ensure value for money, following changes to VMware’s licensing model.”

It’s understood that there are additional subscription services bundled into the new deal that now become available to the department, should it wish to take them up.