The Israeli government has signed a $1.2bn deal with Amazon Web Services (AWS) and Google to launch regional data centres in Israel and provide cloud services to the public sector and military.

The deal is part of Israel’s Project Nimbus, which will see all of Israel’s government and other public organisations transfer their data and services into cloud infrastructure provided by the two tech giants.

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AWS and Google won the tender process last month but officially signed the contract in the last few days, The Times of Israel reported on Monday.

Israel’s government will begin the move to the cloud in two months, officials told the newspaper. Six data centres are expected to be built in Israel as part of the project. However, it will take an estimated two years for them to be completed. Until then Israel will use cloud services based on data centres located in Holland, Frankfurt and Ireland.

The two behemoths beat fellow tech leaders Microsoft, Oracle and IBM for one of Israel’s largest IT projects. The contract is yet another win for market leader AWS but a notable victory for Google Cloud, which has a smaller part of the market and remains lossmaking. According to GlobalData forecasts, data centre revenues will reach $948bn in 2030, giving a large market of opportunities to stakeholders.

The initial contract between the government and two cloud providers will last seven years, with the option to extend it for a total of 23 years.

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Consultancy firm KPMG won the tender for the second phase of the Nimbus project to create a government cloud migration policy. A third tender is out to select dozens of small and medium-sized local suppliers to assist with integration and migration. Tender for the final part of the project is still being formulated but will find vendors for controlling and optimising cloud activity.

Last year Microsoft announced it would add a data centre region in Israel that is separate from the Nimbus project, expected to open at the beginning of 2022. Oracle is on course to open its own data centre located in a 14,000 sq m underground bunker in Jerusalem this year.