Defense Department To Award Cloud Services Contract To One Vendor Amongst Amazon, Oracle, IBM and Microsoft

Fears are rife that the opening of a winner-take-all competition by the Pentagon for cloud services will favor Amazon Web Services to the detriment of rivals such as Oracle, International Business Machines and Microsoft. Participating firms had been pushing for Pentagon to award the cloud services contract to multiple providers but the department has decided to use one company.

According to Defense Digital Service’s deputy director, Tim Van Name, Pentagon experiences lots of difficulties moving information especially to the battlefield. Thus having multiple cloud providers would only increase the complexity.

Multi-billion contract

The current technology needs of Pentagon is estimated to be four million devices serving 3.4 million users and it is anticipated that the contract will run into the billions though an estimate by the Defense Department hasn’t been produced yet. The base contract will last two years according to a draft RFP (request for proposals) that was issued Wednesday. There will also be a renewal option running for more than eight years. The final RFP is expected to be released in the next two months with the contract being awarded possibly in September.

Cloud services, which involve data storage and computing power being hosted in data center facilities that are located remotely and run by third parties as opposed to on-site, range from storing personnel files and powering email to running complex algorithms employed in decision-making. According to the Pentagon the shift to using cloud services is meant to strengthen the Defense Department’s use of various emerging technologies including Internet of Things, machine learning and artificial intelligence.

Coalition for Government Procurement

Amazon Web Services has previously won two other cloud contracts awarded by the government and is widely seen as the front-runner with regards to the Pentagon. Industry groups had been lobbying for the contract to be awarded to multiple companies and this would have improved the chances of firms such as IBM, Oracle, Google and Microsoft.

According to Coalition for Government Procurement president, Roger Waldron, by awarding the contract to one vendor the market will be closed to other providers for a decade or more. Coalition for Government Procurement represents defense contractors among them Microsoft, IBM and Oracle. While Microsoft is No. 2 in the cloud services market in the United States behind Amazon, IBM and Oracle’s share of the market is in the single digits.

“For Oracle and IBM, any government contract feels important. They’re entrenched government vendors. Shifts to the cloud and going off of their architecture is not a happy situation for them,” Gartner’s cloud analyst, Lydia Leong, said.

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