Google’s GSA victory is small money but significant

December 2, 2010, 5:48 PM UTC

U.S. General Services Administration is going Google.

Google has been stepping up efforts to get its Apps Enterprise Messaging, Docs and collaborative suite into government services.  While it has had success in state and local governments as well as state education, it has largely been left out of Federal agency contracts (Los Alamos National Labs going Google is the biggest exception I can think of).

Google (GOOG) has been busy addressing increased security requirements that government agencies require and now houses government accounts on seperate secure servers away from other business and education customers. This hasn’t been enough to get noticed in some instances, however. Google also sued the Department of the Interior for not adequately considering Google Apps.

Today, Google has its first big Federal Government win…

Google announced a $6.7 million contract with the US GSA today.  While the ‘big win’ isn’t monetarily significant to Google’s billions of dollars of quarterly advertising revenus, it is a huge psychological win.  Google was up against Cloud services from Microsoft (MSFT) among other competitors and those 15,000 seats will be a recurring revenue stream for Google.

GSA’s decision to switch to Google Apps resulted from a competitive request for proposal (RFP) process that took place over the past six months, during which the agency evaluated multiple proposals for replacing their existing on-premises email system. GSA selected Google partner Unisys as the prime contractor to migrate all employees in 17 locations around the world to an integrated, flexible and robust email and collaboration service in 2011.

Now that one big Federal Agency has gone Google, winning other contracts will be much easier.  As more agencies move to Cloud services from On-premise systems, Google now can show it can compete and win against the ingrained Microsoft Exchange platform.

The Google Apps productivity suite will be deployed to 15K GSA employees. The five-year agreement is expected to reduce the GSA’s email costs by 50%.