Sergey Nivens -

The $10bn question: Why is the US government’s JEDI cloud contract taking so long to award?

The announcement of who has won the US government’s controversial $10bn, decade-long cloud contract is nearly 12 months overdue. So what’s holding it up?

This article can also be found in the Premium Editorial Download: Computer Weekly: Who will win the world’s biggest cloud contract?

The long-overdue conclusion of the US Department of Defense’s (DoD) search for a single supplier to fulfil the terms of its controversial $10bn, decade-long cloud contract looks like it could be dragged out even longer.

The Pentagon has confirmed that the Joint Enterprise Defense Infrastructure (JEDI) contract, as it is known, is now under review at the request of recently appointed US defence secretary Mark Esper. Until that process is complete, no announcements about the winner will be made.

“Keeping his promise to the members of Congress and the American public, secretary Esper is looking at the JEDI programme,” said a statement put out by the Pentagon, home to the DoD headquarters. “No decision will be made on that programme until he has completed his examination.”

Exactly how comprehensive this examination will be is anyone’s guess, as the Pentagon statement offers no detail of the scope or length of Esper’s review, although he went on record soon after his appointment to confirm he would be taking a “hard look” at the programme. 

That, in turn, was in response to claims by president Donald Trump last month that he had received numerous complaints about the contract that he felt warranted investigation by the Pentagon.

At the time of writing, the final decision on the winner of the contract is nearly 12 months overdue. When the DoD first announced the contract in September 2017, interested parties were told the successful bidder would be announced by the following September, but legal disputes and supplier complaints have conspired to derail that timeline. 

So much so that when Chris Lynch, director of the DoD’s Defense Digital Services (DDS) division, who is credited with playing a critical role in the design and development of JEDI, announced plans to step down in April 2019, he made a point of stating in his exit email that the project was still on course to be delivered. 

And while it is fair to say that the winner of the deal has taken longer than expected to be revealed, the procurement process itself has continued to chug along, as the abovementioned legal fights and supplier gripes have played out around it.

Since April 2019, the US government department is known to have been in the final stages of deciding whether the contract should be awarded to Amazon Web Services (AWS) or Microsoft, having already ruled out Oracle and IBM. Google exited the race of its own accord some time ago in response to staff concerns about its technology being used to wage wars.  

What is at stake?

The size of the deal alone should give some indication as to why the great and the good of the cloud market have been angling for the JEDI contract, said John Dinsdale, chief analyst at US-based IT market watcher Synergy Research Group.

“Clearly, it would be a massive piece of business, but it is impossible for an outsider to know exactly what is in there – [in terms of the] precise scale, scope, timing, how much is guaranteed business versus a contractual framework,” he told Computer Weekly.

“The current worldwide [cloud] market run rate is rapidly approaching $100bn per year and is continuing to grow rapidly. It will double in three years, and if the contract is truly worth $10bn, that is clearly a very big number. However, it would presumably be spread over many years, which then puts it at only a very small share of the total market.”

Even so, whether it is Microsoft or Amazon that ends up being crowned the winner, having the DoD on its books as a reference customer would be a huge win.

“It would be a big feather in the cap for whichever company wins the business,” said Dinsdale. “It would be a great reference contract that it could point to in order to help win similar government/defence-type business elsewhere.”

Eyes on the cloud prize

Whoever does go on to secure the contract will be responsible for essentially providing the base layer for the DoD’s wider cloud ambitions for the next 10 years. 

And a 10-year commitment from a customer is not to be sniffed at either, even if it could be argued that the deal length is out of keeping with how other government entities are approaching cloud procurement these days.

A case in point is the UK government, which has championed the use of two-year contracts through the G-Cloud procurement framework on the basis that it will keep the public sector cloud market competitive, and ensure buyers are at the forefront of innovation.

Another contentious aspect of the deal is its single-supplier nature. This will see the winner called upon to provide a general-purpose cloud environment to host the department’s applications and systems, as part of an IT modernisation and streamlining programme.

That said, the contract will also be supplemented by cloud technologies from other suppliers in circumstances where the general-purpose cloud is unable to fulfil its specific requirements, as detailed in an 18-page strategy document published by the DoD in February 2019.

While the strategy document suggests there is scope to bring in other providers further down the line, Oracle, in particular, has repeatedly contested the need for JEDI to be a single-supplier contract. This has also led the software giant to call for the contract to be broken up, while claiming the procurement process has unfairly favoured AWS throughout.

The company mounted an abortive legal challenge to this effect, which resulted in a US federal court judge concluding in July 2019 that the procurement had not been subject to bias or any conflicts of interest.

Read more about the US government’s JEDI cloud contract

On this point, what is notable about Trump’s recent intervention on JEDI is how late in the day it has happened, given that the contract has been widely publicised since it was first announced, while the legal wrangles and protests it has generated mean it is unlikely to have gone unnoticed by the White House. 

Trump’s decision to speak out on JEDI came days after the federal court dismissed Oracle’s case, with Trump – who is known to have a fractious relationship with Amazon founder Jeff Bezos – remarking that he had never had “something with more people complaining”.

According to a report on US news site CNBC, the complainants he was referring to included IBM, Oracle and Microsoft. “Some of the greatest companies in the world are complaining about it,” said Trump.

Again, little is known about the precise nature of the complaints, although the crux of both IBM’s and Oracle’s previous complaints about the competition was that they feared it was unfairly weighted in Amazon’s favour. And the fact that AWS is not listed among the companies Trump claims to have received complaints from could be telling.

Even so, a look at the comparative market share of the objectors to AWS or even Microsoft being awarded the deal should leave onlookers in no doubt as to why those two have made it to the final round of the competition when the others have not, said Dinsdale.

“There are good reasons why Amazon and Microsoft are so far ahead of all other cloud providers in the market, so it should be no surprise that they tend to rise to the top when large IT organisations review their outsourcing options,” he added. 

Suppliers under fire

Aside from the accusations of favouritism and biased procurement procedures being followed during the competition to date, the suppliers vying for the contract have also come under fire for their involvement in the process.

That is certainly true of Microsoft, whose staff allegedly penned an open letter in October 2018 asking the software giant to drop out of the JEDI race because securing the deal would be at odds with Microsoft’s “empowering every person on the planet to achieve more” ethos.

Amazon, meanwhile, has been subject to activist action over its involvement, which is thought to have been the motivation behind the whistleblowing website Wikileaks publishing a list of the alleged locations of its datacentres around the same time.

That action was because, if Amazon’s bid is successful, its technology could play a role in harming others, in light of the reasons given by the DoD about what it plans to use the $10bn cloud environment for.   

“Successful implementation of the JEDI cloud will enhance lethality and strategic readiness… and enable the warfighter to quickly convert data to actionable information, which is recognised as critical by all of the combatant commands,” said Bradford Shwedo, director for command, control communications and computers/cyber and CIO at the US Air Force.

Shwedo’s remarks are taken from a declaration that he signed that form part of a cache of documents seen by Computer Weekly pertaining to the abovementioned Oracle legal action, in which he goes on to detail why the JEDI deal is so important to the safety and security of the US.  

As set out in his declaration, the DoD does not have the capability to analyse the surveillance data it accrues through its operations because it lacks the server capacity to store it all, and building the JEDI cloud would help to rectify that.

“We cannot expect success fighting tomorrow’s conflicts with yesterday’s technology,” wrote Shwedo. “Providing the department with rapid access to enterprise cloud, providing elastic computing power and storage is vital to national security.”

DoD should crack on

As far as Dinsdale is concerned, the procurement process has dragged on far too long, and the DoD should be allowed to crack on with announcing the winner, and, in turn, its digital transformation.

“This is a prime example of bad stuff happening when you mix politics, personalities and business,” he told Computer Weekly. “The JEDI contract ought to have been put to bed by now, so that people can focus on improving IT capabilities, rather than wasting time and money.”

Shwedo, meanwhile, said in his declaration that any further delays to JEDI risked putting the US armed forces at a competitive disadvantage in combat situations because of the current state of the technology they have to work with.

Whether or not that fact is lost on the Pentagon remains to be seen or if, indeed, it will have any bearing on the speed of its review of the deal.

“Delaying the implementation of the JEDI cloud will negatively impact our efforts to plan, fight and win in communications-compressed environments, and will negatively impact our efforts to improve force readiness and hamper our critical efforts in artificial intelligence,” said Shwedo. “Our adversaries are employing these technologies – our warfighters need this capability now.”

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