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Oracle challenges Pentagon’s multibillion-dollar cloud computing contract before bids are even submitted

The Pentagon in Washington. (Charles Dharapak/AP)

Software giant Oracle is challenging the Pentagon’s decision to choose just one company for a not-yet-awarded $10 billion cloud computing contract, according to a bid protest document reviewed by The Washington Post, firing off a salvo in what is shaping up to be a heated competition among tech giants for one of the biggest government software contracts in years.

Oracle took the unusual step of bringing its protest long before contractors have even submitted bids, alleging that the procurement of what is called the Joint Enterprise Defense Infrastructure (JEDI) has been problematic from the outset. In the bid protest document dated Aug. 6, the company accused the Pentagon of failing to adhere to procurement regulations and pursuing a strategy that will hurt the U.S. military’s technological prowess.

“The technology industry is innovating around next generation cloud at an unprecedented pace and JEDI virtually assures DoD will be locked into legacy cloud for a decade or more,” an Oracle spokeswoman said in a statement Tuesday. “The single-award approach is contrary to [the commercial technology] industry’s multi-cloud strategy, which promotes constant competition, fosters innovation and lowers prices.”

Pentagon doubles down on ‘single-cloud’ strategy for $10 billion contract

The bid protest is the latest point of conflict between the Pentagon bureaucracy and the West Coast tech companies that are at the cutting edge of innovations in computing. Google ruffled feathers in Washington in early June when it discontinued its involvement in a project to use its artificial intelligence capabilities to rapidly scan drone footage, declining to bid on follow-on contracts. The move was prompted by pressure from employees.

At the heart of Oracle’s dispute is whether the Pentagon should turn to a single company for its cloud computing services — an approach the CIA followed years ago through a $600 million contract with Amazon — or pursue a patchwork of IT solutions matched to individual agencies’ needs.

The Pentagon has explicitly said it wants to rely on multiple clouds for its overall strategy. It has committed, however, to selecting a single provider for the JEDI contract, which officials have described as a “pathfinder effort” to help agencies build technical know-how.

The $10 billion opportunity promises to be many times larger than Amazon’s earlier work with the CIA, something that has attracted interest from a diverse pool of software companies, including Amazon, Microsoft, Oracle, Google, IBM and General Dynamics. (Amazon founder Jeffrey P. Bezos owns The Post.)

While it is far from the only cloud computing initiative under the Defense Department’s umbrella, JEDI is among the largest: Officials have indicated it would account for about 16 percent of the Pentagon’s overall cloud computing work. Whichever company wins will have a strong foothold from which to compete for other opportunities.

Amazon has often been alone among potential competitors in praising the Pentagon’s single-cloud strategy for the JEDI contract, arguing that operating a single cloud will make for an easier transition. Competitors have criticized that approach, arguing that giving one company too much influence over the Pentagon’s computing systems will lock the government out of innovations happening elsewhere.

In its protest, Oracle accused the Pentagon of ignoring procurement regulations that require contracting officers to give preference to making multiple awards for certain contracts. It also said the decision to go to one provider will ultimately hamper the Defense Department’s ability to employ the best technologies.

The Pentagon’s strategy “effectively closes a significant market … to competition in violation of statutory and regulatory mandates and assuredly (by tying DoD to a single technological cloud vendor for ten years) will frustrate (not foster) the innovation necessary for DoD to operate on technology’s leading edge,” a lawyer representing Oracle wrote in the bid protest.

Oracle argues that advancements in technology areas such as quantum computing, blockchain and artificial intelligence, promise to remake the IT systems of the future but that such technologies are unlikely to be limited to within the walls of any particular company.

“The only constant is change. DoD knows this,” the company wrote. “Indeed, DoD routinely warns Congress and others about the rapid pace of technological change. Yet, the DoD … oddly intimates that DoD … can determine the single best value cloud computing technological leader over the next ten years when some — if not most — of the impactful technology has yet to be developed.”

Oracle has had success getting the Pentagon to reverse course in past procurements.

In February, the Defense Department awarded a contract worth up to $950 million to REAN Cloud, a Herndon, Va.-based small business that specializes in migrating computing systems onto modern cloud-based systems. The award sparked consternation among those watching the Pentagon’s cloud efforts because REAN was thought to have an overly close relationship with Amazon. At the time of the award, the company advertised itself as an Amazon Web Services partner, and founder Sekhar Puli told The Post that almost all of the company’s cloud migration experience had involved Amazon.

Oracle protested the award, accusing REAN of being “a front for AWS,” and the Pentagon responded by abruptly slashing the contract award from almost $1 billion to no more than $65 million, as well as limiting the scope of work. The Government Accountability Office later sided with Oracle.