HP Loses $36 Million Contract To Move VA to Office 365

The Department of Veterans Affairs (VA) has canceled a contract it awarded to Hewlett-Packard (HP) last year that would have moved VA employees to Microsoft's Office 365 for Government product.

The termination of the contract was first reported on Tuesday by

The contract, which was awarded to HP in November 2012, had a term of five years and was worth $36 million. Under the terms of the contract, HP would have eventually overseen the transition of 600,000 VA employees to Office 365 for Government, Microsoft's cloud-based productivity suite for public-sector agencies.

"Under the agreement, HP will lead and manage the implementation of Office 365 to enhance reliability, security, privacy and compliance as well as create geographically diverse disaster recovery," Microsoft's said at the time. "The VA will use Office 365 for Government, which features a separate community cloud, for email, shared calendars, instant messaging, and web- and videoconferencing."

According to FCW's report, only test accounts were transitioned to Office 365 since the contract was awarded, and even those accounts were later deleted by the VA. No active user accounts made the move.

The VA terminated HP's contract "for the convenience of the government," FCW quotes a VA spokesperson as saying.

"A contract terminated out of convenience means the cancellation was not the contractor's fault and was driven by changes in VA's requirements, the spokesperson clarified. As such, the now-dead deal will cost VA about $150,000 for services performed, plus what could be a sizeable termination settlement," FCW explained in its report.

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Gladys Rama is the senior site producer for, and