Surprise announcement promises to ramp up controversy around project
The Department of Defense’s (DoD) decision to award its $10 billion cloud computing contract to Microsoft Azure promises to add more controversy to an already controversial selection process that has been infused with politics, the courts, and debate about the wisdom of going with a single cloud provider in an increasingly multicloud world.
The Lowdown: Azure and Amazon Web Services (AWS) were the top two contenders for the Pentagon’s lucrative 10-year Joint Enterprise Defense Infrastructure (JEDI) cloud contract after IBM and Oracle were dropped earlier this year, a move that sparked an unsuccessful court challenge.
The Details: The JEDI project essentially entails migrating the Pentagon and its infrastructure and data to the cloud. The goal is to create a cloud environment where various defense agencies can store and share data and where the Pentagon can leverage modern technologies such as artificial intelligence (AI). All of this will be run and managed by Azure.
According to the DoD, Microsoft is responsible for providing a secure, enterprise-level Infrastructure-as-a-Service (IaaS) and Platform-as-a-Service (PaaS) environment to support the Pentagon’s war mission and business operations. The plan is to have the work completed by Oct. 24, 2029.
The Impact: The awarding of the contract this month cements the public cloud market as a two-horse race between AWS and Azure. AWS, a first-mover in the space, has been the dominant player, which, according to Synergy Research Group, had a 33% share of the market in the second quarter. Azure was second with 16%, followed by Google Cloud at 8% and then by other vendors like IBM, Oracle, and Salesforce.
Microsoft, however, had been seeing gains against AWS in recent quarters, including among enterprises, and the $10 billion JEDI contract was a significant win for the company. The prevailing belief in the industry until the DoD announced its decision was that the contract was AWS’ to lose.
Background: The JEDI contract has been a source of contention since the project was announced last year. Oracle and IBM both complained that the contract was written to favor AWS, and Oracle went to court after it and IBM were dropped by the DoD from consideration earlier this year. A court eventually tossed Oracle’s lawsuit. Google Cloud officials didn’t bother competing for the contract, saying a year ago that it didn’t fit with its own efforts around AI and other technologies.
At the same time, Google and others questioned the decision to go with a single cloud provider rather than opening portions of the contract to multiple contenders. Had that been the case, Google said it would have submitted bids for parts of it. Relying on just one cloud provider goes against the rising trend of organizations using multiple providers to address everything from operational efficiency and regulatory compliance to leveraging the best capabilities from each provider and protecting against problems with one provider.
Politics also found its way into the process. GOP senators like Ron Johnson from Wisconsin and Marco Rubio from Florida questioned the DoD’s moves, with Rubio suggesting the Pentagon consider multiple providers. President Trump, long a vocal critic of Amazon founder and CEO – and Washington Post owner – Jeff Bezos, said this summer that he wanted his administration to look into the contract process. In addition, according to reports, a former aide to ex-Defense Secretary Jim Mattis wrote in a new book that Trump pressured Mattis in the summer of 2018 to “screw Amazon” out of the JEDI contract.
Sen. Marc Warner, D-VA, in August called for a fair and competitive process for the JEDI contract and criticized Trump for allegedly using the power of his office to harm a media company that he disagrees with.
The Buzz: “The acquisition process was conducted in accordance with applicable laws and regulations,” the DoD said in a statement. “The process cleared review by the GAO and Court of Federal Claims. At the outset, the competition included four different offerors. All offerors were treated fairly and evaluated consistently with the solicitation’s stated evaluation criteria. Prior to the award, the department conferred with the DOD Inspector General, which informed the decision to proceed.”
“For over 40 years, Microsoft has delivered innovative, proven, and secure technologies to the U.S. Department of Defense (DoD). We brought our best efforts to the rigorous JEDI evaluation process and appreciate that DoD has chosen Microsoft,” said Toni Townes-Whitley, president of U.S. regulated industries at Microsoft. “We are proud that we are an integral partner in DoD’s overall mission cloud strategy. As was articulated throughout the JEDI procurement, the DoD has a singular objective – to deploy the most innovative and secure commercially available technology to satisfy the urgent and critical needs of today’s warfighters. We look forward to expanding our longstanding partnership with DoD and support our men and women in uniform at home, abroad, and at the tactical edge with our latest unique and differentiated Azure cloud capabilities.”
“We’re surprised about this conclusion,” AWS officials said in a statement. “AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion. We remain deeply committed to continuing to innovate for the new digital battlefield where security, efficiency, resiliency, and scalability of resources can be the difference between success and failure.”