The company’s 2019 HoloLens 2 headset is a head-mounted display, designed for enterprise applications using technology previously developed for consumer-focused hardware.

The HoloLens 2 displays hologram-like images overlaid on the wearer’s real-world field of vision, aiming to provide useful information (such as instructions or communications) and improve efficiency for workers whose hands are occupied with physical tasks. The HoloLens can be controlled with gestures or voice commands.

The military contract will see Microsoft move into the production phase of technology based on the HoloLens 2 and backed by its Azure cloud computing services. The Pentagon described the technology as an “Integrated Visual Augmentation System” to boost soldiers’ awareness of their surroundings in order to spot targets and dangers.

According to the US Army, soldiers tested the gadgets last year at Fort Pickett, Virginia. It said the system could help troops gain an advantage “on battlefields that are increasingly urban, congested, dark, and unpredictable.” The US Army first started to trial prototype headsets through a $480m (£350m) contract in 2018, and concluded from this that the hardware could have applications for both training and combat.

In January, Congress passed a defence bill which would cut funding for the headset scheme; it is unclear how this contract stands in relation to this legislation.

In February, Microsoft president Brad Smith told the Senate’s Armed Services Committee that the headset could integrate features such as thermal night vision, facial recognition, and “real-time analytics” for use in combat. He also said that the HoloLens could help plan hostage recovery operations by generating a digital twin of the target building.

Microsoft told Reuters that the new contract is worth up to $21.88bn (£15.87bn) over the next decade, with a five-year base agreement that can be extended for another five years. Under the agreement, Microsoft will be able to mass-manufacture Hololens 2-like units for more than 120,000 soldiers in the Army Close Combat Force.

Microsoft also told Reuters that the headsets will be manufactured in the US.

Following the announcement of Microsoft’s initial HoloLens contract with the US Army, at least 94 employees petitioned company leadership to walk away from the deal and stop development of “any and all weapons technologies” that could turn real-world combat scenarios into video games.

The headsets deal is just one partnership between Microsoft and the Pentagon; last year Microsoft was confirmed as its partner in the JEDI cloud computing project worth $10bn ($7.3bn). This deal has been contested by Amazon, whose representatives have made claims of a flawed bidding process and filed a lawsuit over the contract.