For the cloud industry, the biggest announcements in a calendar year generally come around AWS re:Invent, but the JEDI contract steals the show this year.
Pentagon’s Joint Enterprise Defense Infrastructure (JEDI) contract has been darted with questions that may not put the Defense Department and the American government in a good light.
Department of Defense (DOD) announced enterprise general-purpose cloud contract award to Microsoft on 25 October 2019.
Why did DoD choose Microsoft when Amazon was seen as a clear winner since the announcement of this deal? Was the decision purely based on merit or was there a substantial amount of political lobbying involved? (as believed by a subset of cloud experts). How does this deal impact Microsoft on getting ahead in the cloud industry, especially in the Public Sector?
And the last but not the least, will Amazon respond fearlessly or will move on and look forward to other opportunities like this? considering there is a $100Bn opportunity ahead of both behemoth vendors.
These are some of the questions that have been taking a toll in the minds of all the people involved, impacted by, or connect to this deal.
Let’s see what really went down since the inception of this idea:
The United States of America always allots the largest pie of its budget to defense. In fact, the defense department has awarded $11 billion over the last two years for 10 different contracts. The department has been emphasizing on the fierce adoption of cloud, which made JEDI a high stature deal.
What JEDI actually means?
JEDI is a tailored acquisition for commercial cloud infrastructure and platform services at all classification levels. It will be widely available to any organization in DoD.
This report covers a series of events to paint a bigger picture and cover the chronological timeline of the JEDI contract starting from 2017 to the date of the announcement of the contract.
August 10-11 – It all started when Defense Secretary Jim Mattis made a two-day West Coast trip where he met submarine leaders at Naval Base Kitsap in Washington and the department’s tech innovation group, i.e., Defense Innovation Unit Experimental in California. The visit to the base camp followed by Amazon’s Seattle headquarters and Google’s Palo Alto campus.
(Images Source: commons.wikipedia.org)
September 13 – The idea of cloud admired by Jim Mattis led the former Defense Deputy Secretary Patrick Shanahan to issue a memo titled “Accelerating Cloud Adoption.” The memo announced the formation of Cloud Executive Steering Group (CESG) and laid out an initial plan on how DoD is going to procure the cloud vendors.
The CESG included the following officials appointed at the time of announcement:
For the photo above (from left to right): Ellen Lord, Dr. Will Rooper, Raj Shah, John Bergin and Chris Lynch. Joshua Marcuse is missing from the photo.
Patrick Shanahan wrote in the memo, “The effort is a Department priority. Speed and security are of the essence. I expect all the offices and personnel to provide all reasonable support necessary to make rapid enterprise-wide cloud adoption a reality.”
On October 30, DoD released RFI (Request for Information) with all the information for cloud giants as what DoD is looking for.
The RFI states, “DoD is seeking targeted industry input on how to best approach and structure the planned solicitation to acquire a modern enterprise cloud services solution that can support unclassified, secret, and top-secret information in CONUS and OCONUS environments.”
On November 6, DoD made a public release of the internal JEDI strategy document (Source: NextGov). The document mentioned the key dates as following:
- September 13, 2017: Memo released
- October 30, 2017: First Request for Information (RFI) released
- 2nd Quarter FY2018: Draft solicitation and industry day
- 4th Quarter FY2018: Estimated contract award
- 1st Quarter FY2019: Initiate first migrations
In the first quarter of 2019, the first migration was supposed to take place, but what happened. Follow the timeline until the end to find out.
On December 3 – Reagan National Defense Forum took place in California, which gathers leaders in the defense community to spark the most intriguing conversation to let know the world what is happening in defense.
The CESG head Ellen Lord attended the forum where she said, “We right now have a number of different clouds but we are no kidding right now writing the contracts to get everything moved to one cloud, to begin with, and then go from there.”
Her comments were broadly concerned with AI, machine learning, and the technological advancements that can help the U.S. military to be superior on the battlefield. The comment that sparked controversy was the “one cloud” remark, which sparked industry-wide concerns that maybe the department’s more than 500 different cloud projects could be discontinued.
According to a post by Bloomberg published on December 12, 2017, Lord has ordered senior officials not to make any further public comments about the Defense Department’s looming initiative to move its data into the cloud.
On December 8 – We saw the appointment of Essye B. Miller as a new Defense CIO. The defense department trying to build a founding committee of the biggest ever defense cloud project started to see the shifts in the leadership.
On January 3 – CESG member Will Roper was nominated for the post of highly acclaimed assistant secretary of the Air Force for acquisition, technology, and logistics.
On January 4 – Patrick Shanahan issued a memo entitled “Accelerating Cloud Adoption Update” to CESG, which saw the shuffle in the leadership of the first-ever committee responsible for carrying out the successful acquisition of cloud vendor for DoD. Notably, the memo also mentioned that the process of acquiring a cloud vendor will be a “full and open competition.”
The memo stated that the cloud adoption initiative would continue to occur in two phases.
Phase 1 – The acquisition: The Director of DDS will continue to lead phase one.
Phase 2 – The migration: Captain David McAllister of SCO will lead the effort to migrate DoD on the acquired commercial cloud solution.
Till this time, the department finds itself in a “fact-finding phase” and still not clear whether to go single cloud or multi-cloud.
On January 16, from nowhere Defense department posted a $7 million sole-source award to an unknown company Eagle Harbor Solutions to support the CESG.
In the press release, the company said, “EHS will support the Cloud Executive Steering Group (CESG) to devise and oversee the execution of a strategy to accelerate the adoption of cloud architectures and cloud services.”
On January 19, there comes another leadership shuffle with the appointment of then-Deputy Cheif Management Officer and CESG leader Jay Gibson as Defense Chief Management Officer.
On February 7 – Interoperability Clearinghouse filed a bid protest with Government Accountability Office (GAO) about the Eagle Harbor Solutions’ $7 million sole-source contract. The bid protest was pointing the department’s failure to conduct a responsibility determination of EHS’s capabilities and resources.
REAN Cloud (based out of Virginia) announced that it had received $950 million prototype “other transaction authority” (OTA) deal from U.S. Transportation Command for cloud migration services. The deal raised eyebrows due to two reasons:
- The involvement of approx a billion dollars and the use of lesser-known purchasing vehicles generally reserved for emerging technologies.
- REAN mentioned in the press release that it is a premier partner of Amazon Web Services (AWS), even though it does support migrations to other clouds.
On February 20 – Oracle filed a bid protest against REAN Cloud’s $950 million OTA. This time GOA had limited authority on OTAs, whether the agency which issued the deal followed their own rules and protocols or whether it was appropriate to use an OTA.
March 5 – According to NextGov, Pentagon spokesperson Col Robert Manning, in an off-camera press briefing, announced that REAN cloud’s nearly $1 billion deal would be limited to only $65 million and the services under the contract will be accessible to only USTRANSCOM.
On March 7 – A draft request for a proposal was released by the Defense department just after a JEDI industry day. The department confirmed that it plans to assign the contract as a single award by September 2018.
The announcement raised the questions on the logic behind issuing such an important and confidential project to a single company. The industry experts expected the government to practice a multi-cloud approach. The good news at that point in time was the deadline, i.e., September 2018.
On March 12 – GAO dismissed the bid protest against $7 million JEDI support contract to EHS. GAO stated that Interoperability Clearinghouse was not an “interested party” to challenge a sole-source award like this.
On March 22 – After all the shifts in the CESG leaderships and the bid protests, led Congress to focus on JEDI. This is the first incident of government intervention. Congress asked for swift explanations with a report on omnibus spending measures specific to the cloud computing plans.
When politics is involved, there is always a scope of controversies. How?
On April 3 – Trump tweeted and show it to the world that he is not a fan of Amazon and Jeff Bezos. The tweet puts Amazon already on the backfoot and the cloud giant with the second-largest share in the industry, Microsoft, clearly had the ball in their court.
I have stated my concerns with Amazon long before the Election. Unlike others, they pay little or no taxes to state & local governments, use our Postal System as their Delivery Boy (causing tremendous loss to the U.S.), and are putting many thousands of retailers out of business!
— Donald J. Trump (@realDonaldTrump) March 29, 2018
Fortune reported that Oracle CEO Safra Catz slammed the JEDI procurement and conveyed to Trump that the bidding process was biased towards Amazon.
On April 4 – In a daily press briefing, Sarah Huckabee Sanders, spokesperson for White House, said Trump is not involved in the Defense’s cloud procurement process. She added that the Defense Department should provide more details about “the competitive process.”
On April 6 – The department announced Dana Deasy to be appointed as Defense CIO, who joined the office in early May 2018. Dana is a former JP Morgan executive.
On April 12 – In the budget hearing before the House Armed Services Committee, Mattis defended the JEDI procurement as necessary to give a technological edge on enemies. Mattis kept emphasizing that the contract’s base period is only for two years, not 10, to avoid lock-in.
The rumors spread like fire that existing cloud contracts will be canceled once JEDI is awarded.
On April 13 – At a roundtable conference with reporters at the Pentagon, Ellen Lord said, “The department has multiple cloud contracts, and we will continue to have multiple cloud contracts.”
“We are working with a variety of companies. We want to leverage the entire industrial base. So there is ample opportunity for everyone to play throughout the department.” she added.
On April 16 – The defense department released the second draft of RFP after receiving more than 1,000 industry questions, many of which department answered with “your question is noted.” The department also stated that the final solicitation would be released in May.
On April 24 – Shanahan came defending again after Mattis, this time at a Defense Writers Group Breakfast. He mentioned that the cloud will only be 20 percent of the defense’s cloud business and part of the overall “multi-cloud strategy.”
We now know that the Defense Department had a clear intent pointing out towards a multi-cloud strategy.
He explained that the contract has a two year base period with an additional extension period option.
“So if it’s working, extend it. If it’s not working, here are the keys, thank you.” Shanahan said.
On April 30 – The IT Alliance for Public Sector, an industry group joined by approximately 80 tech firms, sent a letter to the House and Senate Armed Services Committees and other panels requesting to be more transparent and involvement of Congress into the JEDI procurement.
“Deployment of a single cloud conflicts with established best practices and industry trends in the commercial marketplace, as well as current law and regulation, which calls for the award of multiple task or delivery order contracts to the maximum extent practicable,” the letter stated.
May 23 – Dana Deasy’s remarks during testimonial left industry wondering if everyone can expect a possible revise in RFP by the defense department.
He testified in front of the House Oversight IT subcommittee about the Federal Information Technology Acquisition Reform Act, but the panel brought also asked him about JEDI.
He said, “It is my belief that that in a cloud world, there is no such thing as one solution that’s going to solve for all,” Deasy says. “You’re going to always have a need when you build anything where you’re going to have specific requirements they’re going to be best served by unique providers.”
May 31 – When everyone was expecting the Defense department to announce whether who bags the JEDI contract, they updated the Draft RFP mentioning the procurement will be delayed at least another week.
On the same day, GAO sustains Oracle’s protest of the REAN cloud suggesting whether it terminates the contract and recompete it through traditional means or issue the sole-source award justification.
June 25 – In the midst of all the controversies, there comes another shift in the CESG leadership. This was the third leadership change seen in less than a year.
Dana Deasy was announced to lead all the department cloud initiatives, which included JEDI and the CESG.
On July 26 – DOD released the final RFP and was looking forward to award the contract as soon as possible to meet the key dates mentioned in the strategy document made public in early 2018.
August 7 – Oracle was going fist to fist with DoD on the JEDI project. They filed a pre-award protest with GAO. The company was not content with the Pentagon’s decision to award JEDI to a single company is not justifiable.
Defense department later amended the JEDI RFP, and what Oracle did, they filed other protests in response to that.
Pentagon made cleared in their amended JEDI RFP that they will proceed with the procurement despite the protest.
On August 31 – The defense department extended the deadline for the relevant companies to respond to the JEDI RFP to October 9, 2018.
On Nov 14 – GAO’s decision concluded that the Defense Department’s decision to pursue a single-award approach to obtain these cloud services is consistent with applicable statutes.
GAO also mentioned that the single-award approach is in government’s best interest for various reasons including national security.
The change in leadership of the CESG and the bid protests were accompanied by Trump’s alleged involvement in the deal.
On 18 July – President Trump gave a public statement that he would facilitate investigation on the long-awaited military contract. The decision was concluded after Trump said he heard various complaints about an allegedly unfair procurement process.
The key aspect that needs to be addressed here is the unusual involvement of Congress. Usually, processes like these are handled by military officials trained to follow complicated procurement laws and regulations.
We already saw how outspoken President Trump is when it comes to Amazon and Jeff Bezos.
….In my opinion the Washington Post is nothing more than an expensive (the paper loses a fortune) lobbyist for Amazon. Is it used as protection against antitrust claims which many feel should be brought?
— Donald J. Trump (@realDonaldTrump) July 23, 2018
By now, the cards had started to lean towards Microsoft’s.
On August 13 – After Trump’s intervention, the Pentagon’s Inspector General stated that the JEDI contract will be watched closely and the office is working in the direction to dismiss the claims of potential ethics to award the contract while being biased towards Amazon.
Dwrena Allen, spokeswoman for the inspector general said, “We are reviewing the DoD’s handing of the JEDI cloud acquisition, including the development of requirements and the request for proposal process.
A multidisciplinary team is investigating concerns around JEDI referred to us by Members of Congress and through the DoD Hotline. In addition, we are investigating whether current or former DoD officials committed misconduct relating to the JEDI acquisition, such as whether any had any conflicts of interest related to their involvement in the acquisition process.”
On 25 October, DOD announced that Microsoft will be signing the papers for the long-awaited JEDI contract.
After so many allegations, the JEDI contract still remains in the controversy pit and the announcement just adds more speculations towards the controversy. According to the cloud industry’s brains, the decision might have been affected by the political influence, the personal likes and dislikes of the people in power and the opportunists who are trying to pull Amazon on the backfoot.
CMI is following this story and will keep you updated further about the actions happening around the JEDI contract.