Google, Microsoft to compete for government software contract

Google can now bid for a $59 million U.S. Interior Department cloud e-mail and productivity contract, according to a department decision filed Wednesday.

Google had sued the Interior Department last October over its decision to consider only Microsoft's Business Productivity Online Suite for a contract to provide email and collaboration technology to the department's 88,000 employees.

In January, Judge Susan Braden ordered the department to hold off awarding the contract while she reviewed the case. She later saidthat there was "justifiable basis" for her to find violations of procurement laws.

Now the department has reopened the bidding process, kicking Google's legal challenge to the curb and opening up the contract to both Microsoft's Office 365 cloud productivity services and Google Apps for Government.

Microsoft and Google are battling it out for key government and business contracts, particularly as Microsoft expands its cloud-based email and collaboration services in the public sector.

The government's previous request for information required support for Microsoft's BPOS, but, according to Wednesday's filing, the research used by the Interior Department "is now stale in light of new developments in technology and entrants into the market."

The Department of the Interior said it's now updating its market research and prepping to reopen the bidding process for its cloud email and collaboration services.

"We're pleased with the outcome of our discussions with the Department of Interior, and look forward to the opportunity to compete for its business and save taxpayers money," said Google in a statement.

Microsoft also issued a statement about the matter: "We are pleased the case has been dismissed, and that the Department of Interior can proceed to obtain the secure email system it needs. We are fully prepared to continue competing for the Department's business and are confident that we offer the best cloud solutions and value."

Google's enterprise Gmail service was recently deemed a viable alternative to Microsoft Exchange Online and other cloud-based email services, according to research firm Gartner.

Microsoft and Google have taken public jabs as they fight for cloud e-mail clients, with Google saying Microsoft services are unreliableand Microsoft touting its privacy policy over Google's.