Beyond OneGov’s First-Year Discounts: Planning for Sustained Federal AI Adoption

Microsoft’s OneGov Agreement provides agencies with a three-year runway for Copilot adoption while many other AI discounts return to full price after year one.

GSA’s innovative OneGov program has been a tremendous success because it allowed federal agencies to adopt AI tools at little or no initial cost. Since federal budget planning often begins 18 to 24 months before funds are available, many agencies had very limited dedicated AI funding when the OneGov discounts became available. OneGov effectively gave agencies an opportunity to evaluate enterprise AI solutions before committing long-term budget resources.

Federal Agency Budgeting for AI

I return to the AI budgeting issue based upon my decades of experience as a federal IT executive who had to create and adjust annual agency budgets. For those outside of federal government, agencies usually build budget requests long before funding is available. That means an agency that wanted to be able to pay for AI today likely needed to begin preparing that request back in FY 24, before the OneGov AI offers were known.

The One-Year AI Pricing Cliff

OneGov AI agreements for ChatGPT, Claude, and Gemini offered steep first-year discounts but revert to standard pricing after year one unless new deals are announced in the next few weeks. For agencies that gave broad access to these tools during that first year, the second-year funding requirement can arrive quickly and without a fully funded dedicated budget line already in place.

For a 20,000-person agency, even a modest per-user license cost can quickly translate into millions of dollars in annual expenditures that were never included in prior budget plans. With today’s mission-focused budgets, finding that level of new funding is not an easy task.

Ramifications of Cutting AI Users

If an agency cannot fund enterprise-wide AI adoption after introductory pricing expires, it may be forced to decide which employees keep AI and which do not. That is a difficult governance decision because the low-cost first year allowed many agencies to move straight to broad adoption without first determining which roles or uses should be prioritized.

This immediately creates a divide between the “haves” and the “have nots.” Two employees with the same position classification may now have different levels of productivity support, which can affect perceptions of fairness, performance, and advancement opportunities.

Federal Data Exposure/Loss   

When employees lose access to approved enterprise AI tools, some may turn to free external AI services to make up for the lost capability. This creates a Shadow AI organization outside the oversight and protections provided by the Data, Chief Information Security, and Privacy Offices.

Information entered into consumer-grade AI platforms may be retained, analyzed, or used in ways that fall outside agency governance, security, and privacy controls. The easiest way to reduce that risk is to provide approved enterprise AI tools, but that solution only works if the agency has sustainable funding.

Microsoft’s Three-Year OneGov Approach

Microsoft’s OneGov agreement takes a different approach by providing a three-year transition before full Copilot pricing takes effect. Agencies that sign before September 30, 2026, receive one year of free Copilot, followed by discounted pricing in years two (50%) and three (25%). Additional discounts on M365 G5 licenses further reduce the net cost of adoption and provide agencies with more time to incorporate AI funding into future budget cycles.

Bottom Line – Act Now!

The real challenge for agencies is not whether AI delivers value; it is how to pay for and sustain adoption once introductory pricing expires. As agencies evaluate their long-term AI strategy, they should consider not only first-year costs but also the budgetary impact of years two and beyond. Microsoft’s multi-year OneGov structure provides agencies with additional time to build sustainable funding plans while maintaining broad access to AI capabilities across the entire workforce.

Agencies should also review the other significant Microsoft OneGov discounts on M365 Step Ups, Entra Identity Management, Azure Cybersecurity, and Dynamics 365 as part of their broader modernization planning.

Planet Technologies has deployed hundreds of thousands of Copilot seats in the past year, helping federal agencies establish AI governance, support organizational change management, train end users, and drive impactful adoption. If your agency is purchasing Copilot through OneGov, now is the time to ensure that investment is implemented strategically, securely, and sustainably. Planet Technologies can help turn the OneGov opportunity into a long-term AI adoption strategy that supports the mission beyond year one.