Federal cloud and AI contracts are on the rise. This comes as agencies race to modernize legacy systems and improve citizen services. It’s against this backdrop that the Department of Veterans Affairs (VA) has expanded its relationship with Salesforce Inc. (NYSE:CRM).
On July 24, Salesforce announced that it has secured a 3-year agreement with the Department of Veterans Affairs carrying a total contract ceiling of $1.6 billion. This latest contract is focused on AI-powered workflow and service delivery, and it builds on a relationship spanning more than a decade that Salesforce has forged with the veterans agency.
Government Digital Modernization Is Creating New Growth Opportunities
The VA serves more than 17 million veterans and their families. Its network spans 170 medical centers and more than 1,100 outpatient clinics. The agency handled over 82 million direct-care appointments in 2025.
Similar to other federal agencies, the Veterans Affairs is investing in AI and cloud technologies to improve efficiency and reduce administrative workloads.
The agency has selected Salesforce’s Missionforce unit to provide a platform that will support patient triage, automate benefits verification, and streamline care scheduling. Additionally, the platform will enable staff to access information more quickly and bolster collaboration. The Veterans Agency aims to reduce appointment scheduling times from an average of 28 days to minutes once modernization is fully deployed.
The White House has requested a $75.7 billion in tech funding for civilian federal agencies for fiscal 2027. Veterans Affairs is the top beneficiary of the budget request allocation at $12.2 billion.
For Salesforce Inc. (NYSE:CRM), the latest award provides another high-profile validation of its Agentforce platform and public-sector strategy.
This agreement comes at an interesting time. Salesforce, Microsoft Corp. (NASDAQ:MSFT), Amazon.com Inc. (NASDAQ:AMZN), and other cloud service providers are aggressively pursuing government contracts amid the ongoing federal digital transformation.
How Salesforce Compares With Microsoft
Salesforce trades at a discount to Microsoft Corp. (NASDAQ:MSFT) on traditional valuation metrics. It currently trades at a forward price-to-earnings ratio of approximately 13x, compared with 23.5x for Microsoft. Salesforce also offers a higher dividend yield of 0.96%, versus 0.78% for Microsoft.
The two companies, however, occupy different positions in the government contracts market. Microsoft mostly provides cloud infrastructure and productivity software through Azure and Microsoft 365. Salesforce, on the other hand, specializes in customer relationship management, case management, workflow automation, and AI-powered citizen engagement.
