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The U.S. Army has awarded nearly $250 million to a group of contractors to consolidate data centers and provision on-demand IT services and storage via a private cloud.

Companies included in the firm-fixed-price contract to create the Army Private Cloud (APC2) are Lockheed Martin, IBM, HP Enterprise Services, General Dynamics, Northrop Grumman, MicroTech and Criterion Systems, according to the Department of Defense (DOD).

The Army will use the contract to acquire cloud-computing services to consolidate data centers from more than 200 to fewer than 20 by establishing a private cloud, according to the original RFI for the contract, which was obtained by Informationweek Friday.

The Army also will use the cloud to provide on-demand provisioning for storage and systems, according to a source from one of the subcontractors on the project.

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The Army will acquire cloud computing services via the contract in two suites. The first will help the military cut costs by using fixed-facility private-cloud capability, according to the RFI. The second will acquire "mobile, containerized data centers" to meet capacity needs on demand when the Army urgently or temporarily needs it.

General Dynamics, IBM, HP, Northrup Grumman, and Lockheed Martin will provide services for the first suite, while General Dynamics, Microtech, Criterion and HP will deliver services for the second, the source said.

"These two suites will use Army private-cloud services instead of the traditional approach of acquiring equipment and separately paying for consulting services to operate the environment," according to the RFI. "Virtualization technology has reached a point where the Army can achieve significant saving by virtualizing computing operating environments to meet the Army’s needs."

Like other federal agencies and departments, the military has been working to move in-house IT infrastructure to the cloud where possible to cut costs. Some agencies have been using commercial clouds provided by companies such as Microsoft and Google to do so, while others have opted for a hybrid commercial/private solution.

For agencies such as the DOD that have particular security concerns, private clouds are the option of choice. In addition to the APC2 project, the Army also is working with the Defense Information Systems Agency to migrate its in-house email to a private cloud hosted by the DISA.

How 10 federal agencies are tapping the power of cloud computing--without compromising security. Also in the new, all-digital InformationWeek Government supplement: To judge the success of the OMB's IT reform efforts, we need concrete numbers on cost savings and returns. Download our Cloud In Action issue of InformationWeek Government now. (Free registration required.)