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The War Over Amazon And A Huge Pentagon Cloud Services Contract Is Just Heating Up

Next week, the Defense Department is expected to make a final request for proposals for a multibillion-dollar contract to move its data to the cloud. And Amazon is widely considered the front-runner.

The War Over Amazon And A Huge Pentagon Cloud Services Contract Is Just Heating Up
[Photo: Phototreat/iStock]

The ongoing debate over Amazon’s enormous reach and clout, which has roiled the worlds of business, technology, and even politics, is shifting to the Pentagon. Next week, the Defense Department is expected to make a final request for proposals for a multibillion-dollar contract to move its data to the cloud. And Amazon is widely considered the front-runner.  Normally a decision that’s business as usual for most companies, the size of this contract has put it in the spotlight—-and stirred up controversy.

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The project, called the Joint Enterprise Defense Infrastructure (or JEDI for short), is intended to upgrade or replace the online repositories that currently make communication difficult between different branches of the military such as the Air Force, Army, and Navy.

But last week House Republicans proposed an annual defense policy bill that could kill the proposal in its current form, because it blocks the Pentagon from spending half of the money currently designated for it until Defense Secretary Jim Mattis is able to offer Congress more information about it—especially to explain why it’s being awarded to just a single provider.

Specifically, Mattis is tasked with creating a report that includes “a description of the characteristics and considerations for accelerating the cloud architecture and services required for a global, resilient, and secure information environment to enable warfighting,” Bloomberg reports.

But the real issue that will put him in the hot seat is to explain how the Defense Department is promoting competition for the contract, a factor that’s raising a lot of concerns among lawmakers and industry players.

Why Are People Upset?

Given the contract’s size, awarding it to a single provider will give that company a significant advantage in the market. Amazon, which is already the market leader in the space, in part because the company already hosts some of the country’s most classified data, will only increase its clout. And the company’s cloud service, AWS, currently holds the cloud contracts for a number of government entities ranging from the CIA to the Smithsonian. That has other cloud companies worried.

Amazon currently owns 44.2% of the cloud market. Its next closest competitor is Microsoft’s Azure at 7.1%. Google holds just 2.3% of the space, according to 2016 revenue stats from Gartner.

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If it’s the sole winner of the Pentagon’s contract, then its piece of the pie stands to get a lot bigger. Smaller companies have lobbied to get the government to choose several providers rather than one, but it won’t budge on the decision.

“I never heard of something like a single cloud and I would challenge anyone to point at a significant commercial customer who has one cloud,” Oracle Chief Executive Sara Catz said to a group of journalists in mid-April.

Catz served on the executive committee of Trump’s transition team prior to the president taking office. She’s also part of the administration’s American Technology Council which is focused on modernizing government services, Investors reports. She think’s the Pentagon’s decision to choose one cloud provider makes “no sense” and she’s not alone.

The Pentagon has reportedly received over 1,000 comments on its plan to move to the cloud. Despite the fact that trade groups such as the IT Alliance for Public Sector and the Professional Services Council are encouraging the department to pursue a multi-cloud strategy where it would work with several cloud providers, the department has remained firm that there will be just one winner.

The contract is expected to be awarded in September. The initial award will be for two years, followed by options to renew for five years and then three years.

And this war could just be the beginning. Nextgov reports that Defense Department Deputy Secretary Patrick Shanahan told reporters in April that even though it will continue to pursue only one cloud provider for this project, JEDI represents less than 20% of the Defense Department’s cloud capacity and that the government plans to strengthen its relationship with multiple cloud provers in the future. That means that there could be even more battles going forward for that other 80%.

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About the author

Emily is a journalist based in San Francisco.

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