Microsoft Wins Army Contract for Software

Microsoft Corp. won a $478-million, six-year contract to provide software to the U.S. Army, the biggest single order for the company’s programs.

The agreement covers 494,000 desktop computers, Microsoft spokesman Keith Hodson said. The Army will buy the software from a Microsoft reseller, Downingtown, Pa.-based Softmart Management Services Inc. Hodson didn’t know how the companies will divide the revenue.

The Defense Department has questioned the security of Redmond, Wash.-based Microsoft and rival products since the Sept. 11 terrorist attacks.

One of the department’s servers in March was attacked through a flaw in Microsoft’s Windows program. The contract shows the Army has determined that Microsoft’s security is sufficient, said Rob Enderle, an analyst at Forrester Research Inc.

“It looks like whatever that problem was, it wasn’t great enough to stop the sale, or it was fixed,” Enderle said.

Microsoft is trying to boost sales to federal, state and local governments that are spending to combat terrorism and improve security.

The company has lost some government contracts outside of the U.S. to the free Linux operating system, and it has been working to assure the Defense Department and other branches of the U.S. government that its programs are secure.

The Army also will buy licenses for 10,000 copies of Windows for servers that run computer networks, and software for 5,000 Microsoft Exchange e-mail servers, Hodson said.

Microsoft shares fell 8 cents to close at $25.70 on Nasdaq.