DoD cloud strategy: Stifling innovation in the name of innovation

The recent Other Transaction Authority (OTA) acquisition for a cloud migration tool, combined with the incomplete draft JEDI RFP, raises significant questions a...

This column was originally published on Roger Waldron’s blog at The Coalition for Government Procurement and was republished here with permission from the author.

As the deadline for comments on the JEDI draft RFP rapidly approaches, the Coalition for Government Procurement believes it is an appropriate time to take stock of the Department of Defense’s (DoD’s) current efforts to acquire cloud technologies and capabilities. The recent Other Transaction Authority (OTA) acquisition for a cloud migration tool, combined with the incomplete draft JEDI RFP, raises significant questions as to whether DoD is sacrificing innovation in the name of innovation. In its efforts to acquire innovative cloud technologies rapidly, DoD appears to be limiting transparency and jettisoning time-tested procurement principles that promote continued access to new capabilities from the commercial technology market.

As noted in a recent FAR & Beyond blog, the aforementioned DoD OTA raises a number management concerns. In February, the initial $6 million OTA for a cloud migration tool morphed into a $950 million follow-on OTA for cloud services available department-wide. The lack of transparency surrounding the follow-on OTA, along with the significantly expanded scope both in terms of dollar amount and work to be performed, prompted questions regarding compliance with the competitive process.

Ultimately, DoD reduced the scope of the follow-on OTA to $65 million and limited its use to TRANSCOM. There remains, however, the open question whether an OTA for a migration tool is the appropriate, competitive vehicle for the delivery of cloud services themselves, whether that tool is appropriate for such a significant increase in scope, and whether that tool is tailored for a particular cloud solution. Migration services and cloud services are different functions, and, in the absence of transparency surrounding the TRANSCOM OTA, it is difficult to determine whether this approach is appropriate. Moreover, the reduced scope of the follow-on OTA from $950 million to $65 million (a 95 percent reduction in value) raises uncertainty regarding the overall management, planning and oversight of these efforts.

The incomplete draft JEDI RFP adds further confusion regarding DoD’s acquisition strategy and cloud performance requirements. This RFP has been characterized as an infrastructure solution. At the same time, the RFP has been described as a purely commercial cloud services solution. The lack of clarity in the requirements has left many to wonder whether the procurement is more appropriate for an integrator or a cloud services provider. So too, this lack of clarity raises significant contract performance risks regarding the eventual costs to the government and access to new capabilities.

The risk associated with the unclear performance requirements is magnified by the Section M evaluation criteria and the single-award mandate. As we have noted in prior blogs, the evaluation criteria provide no real guidance on how DoD will assess and value technical capabilities. As currently written, the performance requirements and evaluation criteria fail to provide offerors with an intelligent basis upon which to compete, let alone determine whether they meet the go-no factors. Without greater detail in the performance requirements and evaluation criteria, the JEDI acquisition effectively becomes a low price technically acceptable award to fulfill requirements envisioned to expand the tactical edge.

DoD’s insistence on awarding a single contract for this effort continues to prompt skepticism. The expansive scope of the procurement, with complex and changing performance requirements across the DoD enterprise, combined with the 10-year performance period, is a textbook requirement for use of a multiple award strategy to mitigate performance, cost, and national security risks. The facts, the law, and commercial practice all support a multiple award approach.

10 USC 2304a, which provides defense agencies the authority to award single or multiple task or delivery contracts, specifically states that, in implementing this authority, regulations must, “establish a preference for awarding, to the maximum extent practicable, multiple task or delivery order contracts … and establish criteria for determining when award of multiple task or delivery order contracts would not be in the best interest of the Federal Government.” [Emphasis added.] We do not know if DoD followed this process, or whether any rationale for their approach was articulated. Without more information, a single award approach here seems asynchronous to normal commercial/organizational buying practice and prompts questions about the risk to national security. Given the nature of cloud technology innovation and its rapid evolution, a virtually monopolistic award of such a long duration risks locking-up the government market for cloud services. Ironically, rather than expediting access to innovative technology, reduced competition ultimately will impede the government’s access to that technology.

Given the risk associated with the current approach, the Coalition recommends that DoD institute a pause on the current acquisition strategy and reach out to industry through a series of market research initiatives to identify strategies that embrace continuous competition, transparency, and innovation. The Coalition and its members stand ready to work with DoD on this important and vital effort.

Roger Waldron is the president of the Coalition for Government Procurement, and host of Off the Shelf on Federal News Radio.

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