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In various public statements, the Defense Department has attempted to push back against criticism that its upcoming JEDI contract is a “winner take all” affair, including by arguing that the up-to-$10 billion deal will only satisfy about one-fifth of its cloud computing needs.
Although that’s true by one metric, by another, the assertion could drastically understate the importance of the impending award. Internally, the department is aiming to migrate up to 80 percent of its current IT systems to JEDI.
The project’s contracting officer told Government Accountability Office arbiters that a single-award approach, using one vendor for a large proportion of the department’s IT requirements, would provide better security since it would require “significantly fewer seams and connection points” between different systems.
Heather Babb, a Pentagon spokeswoman, confirmed the 80 percent figure. She said the earlier 20 percent assertion is accurate as well, but is based on a different methodology.
To arrive at the 20 percent figure — which Deputy Defense Secretary Patrick Shanahan first articulated to reporters in April — the Pentagon tallied all of the costs it currently incurs to host systems in its legacy data centers, and compared that amount against the maximum amount it might spend on JEDI under the contract’s ten-year, $10 billion ceiling.
The 80 percent figure, on the other hand, reflects the total number of applications the department hopes to move to JEDI, she said.
However the JEDI contract’s share of the eventual defense cloud market is calculated, the department continued to emphasize that it will not be DoD’s only way to access cloud services.
“The scale of the missions at DoD will require the DoD to have multiple clouds from multiple vendors,” Babb said in a statement to Federal News Network. “The JEDI Cloud is a critical first step toward an enterprise cloud solution that enables data-driven decision making and allows DoD to take full advantage of applications and data resources.”
Oracle argues violation of procurement regulations
In its protest, Oracle had argued that DoD violated government procurement regulations which generally require agencies to pick multiple vendors when they’re awarding indefinite-delivery/indefinite quantity (ID/IQ) contracts, and that doing so prejudiced the award in favor of potential competitors — most notably, Amazon Web Services (AWS).
In denying the protest, GAO gave broad deference to DoD, saying the department appeared to have given reasonable grounds for setting JEDI’s requirements.
“The contemporaneous agency record contains significant documentation supporting the agency’s national security concerns associated with a multiple-award solution for the JEDI Cloud procurement,” the office wrote in the decision it publicly released last week. “In our view, such concerns reasonably support the contracting officer’s ‘best interest of the government’ determination.”
Oracle had also argued there was a conflict of interest involving DoD and AWS, partially because Shanahan’s chief of staff had previously worked as a consultant to AWS, and because a former employee of the Defense Digital Service who conducted some of the initial market research for JEDI later went on to work for the company.
GAO said it was unwilling to overturn the procurement on conflict of interest grounds, at least at the pre-award stage. Because no award has been made yet, it’s impossible to tell whether AWS got an unfair advantage, they reasoned.
But the office seemed to encourage Oracle to file another challenge if and when AWS does receive the contract.
“We have recognized that, in post-award protests involving the award to a contractor that has hired a former government employee who possesses competitively useful non-public information, our office will presume prejudice ‘without the need for an inquiry as to whether that information was actually utilized by the awardee,’” GAO wrote. “In the event the agency’s subsequent actions provide a basis for protest, Oracle may raise this matter consistent with our bid protest regulations.”
First though, DoD needs to survive at least one more pre-award protest before it moves on to issue a contract. IBM filed a challenge on similar grounds in October; GAO’s decision is not expected until mid-January.
Lauren Brier, an attorney who specializes in government contracts at the Federal Practice Group, said the pre-award protests were always a longshot, considering the wide latitude federal law and GAO precedent affords agencies in setting requirements however they see fit.
“GAO doesn’t want to trip up the government in the early stages. They want these awards to go through as quickly as possible, and I think that’s why there’s broad discretion afforded to the government,” she said.
But assuming GAO also denies the IBM protest, it’s a virtual certainty that firms will file post-award protests. And those ones stand a better chance of success, Brier said.
“At that point, you’re challenging the [government’s] evaluation of the proposal, so it’s easier to show that there’s impaired objectivity or some type of bias,” she said. “It’s a little more tricky to show that there’s bias built into the drafting of the requirements themselves. At this point, what’s to say that another company isn’t going to get the award? It’s not worth it to tell the government to go back and reissue the solicitation if there’s no challenge that’s actually ripe. You can’t really say there’s a conflict until there’s an award.”