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Pentagon kicks off a winner-take-all among tech companies for multibillion-dollar cloud-computing contract

Pentagon officials say a new cloud-computing contract will become a symbol of years-long efforts to reform its acquisition system. (Bill Clark/CQ Roll Call)

After months of scrutiny, complaints and at least one legal action, a group of Pentagon leaders sought to assure the country’s top technology companies Wednesday that the competition to build an Internet cloud network for the Defense Department would be an open and fair competition.

Speaker after speaker in a packed hotel ballroom in Pentagon City stressed that the Defense Department needs to upgrade its often-antiquated technology as a matter of urgent national security, and they insisted the program had the attention of the agency’s top leaders.

“This is not another IT project,” Air Force Brig. Gen. David Krumm said during the meeting, known as an “industry day.” This is going to make a difference like few things have — to get data to our warfighters when and where he or she needs it.”

“Whichever one of you wins this, am I am challenging you to bring your A-game,” he added.

Given the high stakes, the Pentagon's plans to pick a single winner have alarmed industry officials who fear the losers could be locked out of a multibillion-dollar program for a decade or more.

“The Pentagon would never limit the Air Force to flying only cargo planes for every mission,” said Sam Gordy, the general manager for IBM U.S. Federal. “Locking the entire U.S. military into a single, restrictive cloud environment would be equally flawed.”

In a statement, Microsoft expressed disappointment that the Pentagon would be pursuing “a single cloud solution.”

“We believe the best approach is one that leverages the innovations of multiple cloud service providers,” the company said.

In a call with reporters after the meeting, Tim Van Name, the deputy director of the ‎Defense Digital Service, said that having a single cloud provider is the best approach because having several “would exponentially increase the overall complexity.” With several providers, the Pentagon “would have to manage the seams between the applications,” making it riskier and more difficult to manage.

He vowed it would be an open and fair competition, despite some concerns in industry that Amazon's web services unit, which holds a $600 million cloud contract from the Central Intelligence Agency, has an advantage: “We want the best solution for the department. We have no favorites.”

Defense officials have said moving Pentagon computing systems to the cloud is a vital tenet of the nation’s strategy of staying ahead of countries such as China, which is investing heavily in technologies such as artificial intelligence.

For military leaders speaking Wednesday, it's also about getting decision-makers information more quickly. Much of the military's sensitive and confidential information is locked down on systems that can't communicate with each other. In some cases, the computers are not even connected to the Internet.

The cloud procurement “is about ensuring the women and men who fight our nations’ wars win. Period,” Krumm said. “And if you’re not prepared for that, you don’t need to be here.”

The industry day followed months of industry speculation that might have the inside track to the contract award. The Pentagon set off a firestorm last month when it awarded a nearly $1 billion contract to a partner of Amazon Web Services to migrate agencies systems to the cloud. After the outcry, and a legal challenge filed by Oracle, the Pentagon suddenly reversed course, announcing this week that it had dramatically scaled back the contract to the company, Herndon-based Rean Cloud. Instead of being worth $950 million, the value was slashed to $65 million, and its scope was much more narrowly defined.

Wednesday's appeal amounted to an effort to clear the air, and Pentagon officials seemed eager to channel Silicon Valley in their pitch to the mostly suited audience. They even dubbed the cloud initiative the Joint Enterprise Defense Infrastructure, or “JEDI,” for short, in an homage to the Star Wars franchise.

“This is a little bit like a tour of duty for nerds,” said Defense Digital Services director Chris Lynch, who wore a T-shirt in making his appeal to the crowd. "I promise at the next industry day for JEDI, everybody will be wearing T-shirts."

Throughout the meeting Wednesday, Pentagon officials repeatedly said that they were done with the old way of buying services, and that the cloud-computing contract would become a symbol of years-long efforts to reform the acquisition system.

“If we keep doing business the same old way, our software will be outdated,” said Ellen Lord, the Pentagon’s undersecretary for technology and logistics. “It will cost far more than it needs to. We won’t be able to attract the best software talent. And we’ll lose out technological edge.”

If that happens, she said “it won’t be because the United States doesn’t have access to great technology and talent. It will be because we, and frankly some of our existing software providers, aren’t able or willing to adapt.”

Some industry officials in attendance described the Wednesday meeting as a welcome attempt to clarify the government's intentions.

“It's clear they do want to do a fair and open competition as opposed to some of the more questionable contract actions that have happened recently,” said Donald Robinson, vice president and chief technology officer for defense at CSRA, a large government services firm that works with the Defense Department on MilCloud 2.0, a separate cloud technology effort.

Others were concerned that despite all of the talk of innovation, the Pentagon's decision to pick a single cloud provider will inhibit innovation. In a letter to the Pentagon last year, the Professional Services Council, a trade group, said “competition in the commercial marketplace is driving rapid innovation by technology companies. DOD should position itself to take advantage of this innovation by not limiting itself to the offerings of one vendor.”

Amazon's representatives have emphasized that they are not looking for anything other than full and open competition. (Amazon founder Jeffrey P. Bezos owns The Washington Post.)

“As we have always said, an open and competitive bidding process allows for the customer to thoroughly analyze the various providers and select the solutions that best meet their needs,” an AWS spokeswoman said in an email. “If selected, AWS, along with our partner community, stands ready to support and serve what’s most important — the DoD mission of protecting the security of our country.”