The Army has awarded IBM a long-awaited contract to run a pilot program that officials hope will pave the way toward a future in which the service relies much more heavily on the commercial IT industry to run cloud-based computing centers on its behalf, including for high classifications up to and including secret-level data.

IBM won the work as a task order under the Army’s Private Cloud II indefinite delivery/indefinite quantity contract. The $62 million award includes one base year and four option years, during which the company will build, then own and operate a data center on Army property at Redstone Arsenal, near Huntsville, Alabama.

The project, known as the Army Private Cloud Enterprise, represents the first time the Army has contracted with a private company to run a large-scale data center inside the gates of a military installation.

Officials did not respond to repeated requests for documents that would detail the full scope of the work. But in a statement, a spokesman for Army Contracting Command said the new data center would initially be used as a migration point for systems and applications that are currently hosted at government-run data centers at Redstone itself. Barring any major unforeseen challenges, other systems from across the Army would move into the same facility over the next five years.

“Lessons learned from this pilot will provide critical information needed to mature application migration and cloud management processes and procedures,” the Army said in the statement. “This award represents the first step in actualizing the Army cloud computing strategy.”

Lt. Gen. Robert Ferrell, the Army’s chief information officer, told reporters last week that Redstone was an ideal location to prove out the concept of a private cloud on a military installation.

“There are 24 data centers there, 11 of which belong to the Army, and the goal is to move those apps into this new environment,” he said. “Not everything is going to move to the cloud, but we believe this is going to enhance mission command, create a common user experience, reduce our IT and operations costs and reduce our fiscal footprint.”

And significantly, the Army plans to certify the private cloud at the highest security levels available under DoD’s cloud security requirements guide: levels 5 and 6, which incorporate the necessary security controls to handle secret-level data.

On the whole, the military has migrated very few classified and sensitive applications into commercially-run cloud environments, partially because the costs involved in complying with DoD’s strictures for physical and logical security at that level tend to cancel out the promised savings of cloud computing. The Army believes it can mitigate at least some of those costs by letting a company operate a cloud infrastructure inside the gates of a military installation.

In pre-solicitation documents, the Army also told competing vendors that they would need to implement continuity of operations, disaster recovery and data backup services, develop procedures to bill various Army customers for on-demand cloud provisioning, offer services to transition systems and applications out of legacy data centers, and help with “organizational change management.”

The Army sees the cloud pilot as a key element of its strategy to consolidate and close its inventory of underutilized and inefficient government-owned data centers. Depending on how those are counted, the Army operates anywhere between 200 and 1,200, and under guidance from the Office of Management and Budget, it must close at least 350 of them over the next two years.

“Our goal is to reduce that number down to ten data centers by 2025,” Ferrell said,” We’ve identified four locations in the continental U.S.: Fort Bragg, Fort Carson, Redstone, and Fort Knox. We’re also planning six overseas, but we haven’t identified those locations as of yet.”

To accelerate the closures of its legacy data centers, the Army CIO’s office prepared a directive to be signed by the Secretary of the Army, designating exactly which centers must be closed by the local commands that operate them along with specific timeframes for the closures to actually take place.

Officials originally expected the draft directive to receive the secretary’s  imprimatur by June of this year, but it has yet to be signed.

“It’s in the editor’s phase,” Ferrell  said. “It should be coming out very shortly. We’ve gotten some feedback that indicates it should be going up to final approval.”

A final approval would allow the Army to take a fairly ruthless approach to rationalizing applications across the service and migrating those that remain into a relative handful of government-run data centers or commercial cloud offerings. A new Migration Implementation Review Council (MIRC) made up of general officers and senior executives would keep watch over the entire process.

“The MIRC will track all of the tasks in the directive, the implementation schedules and timelines, and make sure we don’t regress from that,” Atilla Bognar, the Army’s data center consolidation chief, told a conference in August. “Ultimately, the council reports to the Senior Resource Group, which reports to the secretary of the Army. So there’s some serious governance here to make sure we don’t deviate.”

Whether by coincidence or by design, Army IT officials’ decision to make Redstone a focal point for the data center pilot dovetails with ongoing work by local commanders in Huntsville to make as much productive use of the real estate there as possible and capitalize on the security advantages of placing government assets inside their gates.

Those efforts include moving Army offices that are operating from off-base leased offices back onto the arsenal grounds, and encouraging other federal agencies in the area to relocate from rented office space.

Katherine Hammack, the assistant secretary of the Army for installations, energy and environment, said that’s one of the cost saving approaches the Army is taking to its facility footprint in lieu of congressional permission for another round of base closures.

“Redstone is working methodically through a catalog all of the leases they have off-base, and they’re doing a great job of figuring out when those leases expire, what space they have available on the installation. They’re using restoration and modernization funds to refit buildings that other Army activities have moved out of so that they can bring people back on base,” she said. “Not every federal agency wants to work in a secure environment, but there are those that do. The FBI moved onto the installation because it gives them more space and some range capability that they didn’t have before. There’s ongoing work with the General Services Administration to identify those kinds of opportunities, and also to make sure that those agencies are invoiced properly so that we’re not adding costs to the Army when we bring a new tenant on.”

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