The Washington PostDemocracy Dies in Darkness

GAO axes IBM’s bid protest, teeing up a court battle over Pentagon’s $10 billion cloud effort

The Government Accountability Office on Tuesday struck down a bid protest filed last month by the computing giant IBM. (Mary Altaffer/AP)

The Government Accountability Office has struck down a bid protest filed last month by the computing giant IBM, handing a victory to Defense Department officials who want to turn to a single provider for the Pentagon’s $10 billion Joint Enterprise Defense Infrastructure cloud computing network, known as JEDI.

The decision came just a few weeks after the GAO ruled against a similar challenge from Oracle, which subsequently took its case to the U.S. Court of Federal Claims earlier this week. In the decision on the IBM protest announced Tuesday, GAO said it would leave the issue to the courts, noting that there was little difference between the arguments made by the two companies.

“We dismiss the protest because the matter involved is currently pending before a court of competent jurisdiction,” GAO general counsel Thomas Armstrong wrote. “Oracle’s complaint before the [Court of Federal Claims] includes arguments that are the same or similar to assertions presented in IBM’s protest to our office."

Both companies are trying to undo a Pentagon decision to turn to a single cloud-computing provider for the JEDI contract, which has been described as a “pathfinder effort” meant to enable new weapons capabilities that employ artificial intelligence algorithms. The JEDI cloud effort is estimated to have a $10 billion value over a 10-year time frame, and officials have said it will account for about 16 percent of the department’s overall cloud-computing work.

The contract is part of a broader effort to build advanced artificial intelligence algorithms into the Pentagon’s operations and weapons systems, something that is seen as pivotal to the U.S. military’s ability to maintain technological dominance over China and Russia.

Such a large, long-term opportunity has sparked a competitive frenzy from Beltway defense contractors and West Coast tech giants alike: Representatives from Amazon, Microsoft, IBM and Oracle confirmed their respective companies submitted bids. Officials have said they will award a contract in early 2019. (Amazon founder Jeffrey P. Bezos also owns The Washington Post.)

Top procurement officers have said they will work with more than one provider for the Pentagon’s broader cloud-computing infrastructure.

Even so, they have been firm in their intention to award the JEDI contract to a single company. Defense Department Chief Information Officer Dana Deasy said in a recent interview that moving to more than one provider for that effort would “double or triple [the] complexity" of moving legacy systems to the cloud.

“Starting with a number of firms while at the same time trying to build out an enterprise capability just simply did not make sense,” Deasy said.

Executives from Amazon Web Services, widely seen as a front-runner because of its earlier work with the CIA, have praised that approach in media interviews. Oracle and IBM, which have been playing catch-up to win the required government IT certifications that would put them on a par with Amazon, both criticized that decision from the moment it was announced in early March.

Oracle was the first to challenge that decision, arguing in an Aug. 6 bid protest that turning to a single provider would ultimately hurt the Pentagon’s technological prowess by shutting it out of innovations happening at other companies.

IBM jumped into the fray just days before bids were due in early October, arguing that the decision goes against stated Trump administration policies highlighting the need for Defense Department agencies to adopt best practices from the commercial business world.

IBM also argued that going to a single provider is a bad idea from a cybersecurity perspective.

“JEDI’s single-cloud approach also would give bad actors just one target to focus on should they want to undermine the military’s IT backbone,” the company wrote in a blog post. “The world’s largest businesses are increasingly moving in a multi-cloud direction because of security, flexibility and resilience; the Pentagon is moving in precisely the opposite direction.”

With IBM’s bid protest out of the way, the two companies must now look to the Court of Federal Claims to evaluate whether the department has followed procurement regulations as it has structured the contract.