Single Source Contract May Rise to $10+ Billion
On 10 April the US Department of Defense (DoD) announced that an internal investigation has determined there is no evidence of conflict of interest in the procurement process for the Joint Enterprise Defense Infrastructure (JEDI) contract – potentially worth $10 billion or more. At the same time, the Department announced that two contenders for the single source contract remain – Microsoft and Amazon Web Services (AWS). The investigation had been conducted as a result of a lawsuit filed by Oracle, alleging conflicts of interest. Although the investigation, as noted above, has failed to find evidence of such conflict, MON understands that possible ethical violations by former staffers have been referred to the DoD Inspector-General.
The JEDI cloud procurement programme, launched a decade ago, was scheduled to be resolved this month, but delays caused by the lawsuit and the ensuing investigation – quite apart from a host of historical interruptions, stalls and delays – mean it will likely be July, or even later, before a decision is made on the next stage of the process. Oracle, IBM and Google have dropped out of the competition, the first two complaining the contract gave AWS unfair advantages. The value of the contract explains part of the adversarial atmosphere – although there are doubts that the contract as awarded will rise to the $10 billion level or last ten years before being replaced by some more advanced solution. But there is more at stake here than simply the JEDI contract. Thinking among government contractors is that developing JEDI may well give the winner a competitive advantage in other major government contracts for the future: leveraging the fact that “our solution defends the nation” would be a powerful argument.
The balance of probability, however, indicates that DoD may be making the right decisions here. The two finalists selected are the largest solution providers (by far) in the cloud infrastructure field – Amazon with fully a third of the market and Microsoft in second place with perhaps 15% – and both have skills and toolsets that the users will find valuable. The department has also robustly defended its decision to take the single source procurement route – and, after all, the reason such an option exists under the Federal Acquisition Regulations is that there are significant advantages to the approach in certain circumstances. The tough part is going to be making the right decision and defending it swiftly and effectively so that the implementation of modern, efficient infrastructure across America’s armed forces is not further delayed for little sensible reason.
