The contract could be worth up to $21.88 billion over ten years.
Over the past two years, Microsoft has worked with the Army on the prototyping phase of the Integrated Visual Augmentation System or IVAS. The company that the Army had moved into the production phase of the project.
Writing in the company bog, Microsoft Technical Fellow Alex Kipman said the headsets delivered "enhanced situational awareness, enabling information sharing and decision-making "in a variety of scenarios".
The headsets will be manufactured in the United States, a Microsoft spokesman told Reuters.
Microsoft was in line to win the $10 billion JEDI cloud computing contract with the Pentagon, but the contract remains in dispute in a lawsuit filed by Amazon.
In February, Pentagon officials told US lawmakers that the Defense Department may jettison the contract if the dispute lingers in the courts.
After Microsoft announced a $480 million contract in 2018 to supply prototypes to the Army, at least 94 workers petitioned the company to cancel the deal and stop developing " all weapons technologies".
The workers' group said on Twitter: "We would much rather Microsoft used today to stand up for Transgender people everywhere on Transgender Day of Visibility, instead of building weapons of war."