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The Defense Department is defending its plan to use a single-award contract for an upcoming cloud computing competition that’s expected to be worth billions of dollars, saying the agreement will encompass just a fraction of the military’s actual cloud requirements.
Deputy Defense Secretary Patrick Shanahan said DoD hopes to eventually award multiple contracts to different companies to move its IT systems to the cloud. That may come as a welcome revelation to industry, which has protested for months about the way the Pentagon plans to award its Joint Enterprise Defense Infrastructure Cloud Program (JEDI).
“When people say, ‘Oh, it’s a winner-take-all,’ it’s really something that’s less than 20 percent,” Shanahan told reporters Tuesday. “People say, ‘Why would you pick something that’s less than 20 percent?’ Well, if I do two percent, there’s no real scale. If you do between 10 percent and 20 percent, you start to get some scale.”
Shanahan said scale is important because it tests if the department can transition to the cloud in a cost-effective way and retire its legacy systems.
“This is our pathfinder. The pathfinder isn’t to demonstrate if clouds work. We know clouds work,” Shanahan said. “What you’ll see is we’re not going to allow people to move to the cloud unless they can demonstrate they can retire the environments they’ve been in, and our intent is to be able to understand how we can distribute, access and then take cost out.”
Shanahan said there will not be a sole-source cloud provider. In his previous role as a corporate executive, his firm took precautions to ensure that it had multiple suppliers for the goods in its supply chain, he said.
The information technology industry has expressed repeated and ongoing concerns about DoD’s previous descriptions of its potential uses for the cloud contract, worrying that DoD’s single-award approach could favor a single vendor during the multi-year process of transitioning legacy systems to the new JEDI cloud environment.
“No major commercial enterprise in the world would risk a single cloud solution, and neither should the Pentagon,” said Sam Gordy, the general manager for IBM’s federal government operations. “IBM will continue to urge that America’s defense cloud be multi-layered, robust, and consistent with the best practice used by every major cloud user in the world.”
Shanahan largely dismissed those concerns in his discussion with reporters. He said the JEDI procurement is based on the presumption that the cloud computing market will remain dynamic for years to come.
“The business model for the cloud operators is going to evolve. The interoperability of the systems is going to evolve. All the things people say won’t happen early on. I can tell you it will happen,” Shanahan said.
He pointed to the example of aerospace industry designing an aircraft on computers in the early 1990s. People said it couldn’t be done, but eventually the computers were able to work together and industry practices were able to catch up.
DoD is hoping to do the same thing with JEDI: build something smaller, and then connect the pieces for something bigger.
Last week, DoD released a second draft request for proposals for JEDI. The final solicitation is expected in May.
A package released with the draft included responses from vendors questioning the winner-take-all approach.
“The objective of achieving commercial parity seems contrary to the duration and single award aspects of this contract,” wrote one of the vendors, all of whose identities were made anonymous. “The single-award removes competition, which was the very impetus that drove the current cloud market. Also, the potential duration for this vehicle is 10 years, nearly equal to the age of the cloud market. This duration fails to recognize how fast this market is changing … the structure of this vehicle locks DoD into one vendor for the next decade.”
In reply to most questions raising objections to the one-contract approach, the department said simply, “Your comment has been noted.”
Several other vendors pointed out that federal law explicitly requires the government to award its ID/IQ contracts to multiple vendors if at all possible. And when it doesn’t, the Federal Acquisition Regulation requires it to document its decision to opt for single-award.
“What is DoD’s rationale for a single award given that DoD anticipates multiple providers can meet the requirements in this RFP, and the department’s stated desires to innovate and leverage commercial companies?” another company asked. “A 10-year, single award contract does not seem to encourage the experimental, risk-taking culture and environment of innovation called out in [Deputy Defense Secretary Patrick] Shanahan’s memo.”
The department’s response: “This rationale is not going to be published at this time.”