In an unusually public war of words, the likes of IBM, Microsoft and Oracle have publicly criticized the government’s approach, fearful that Amazon has an inside track that would allow it to dominate the government technology market, and freeze out competitors for years to come.
Oracle chief executive Safra Catz brought her concerns directly to President Trump at a private dinner last Spring, hoping to influence the process. And Congress has weighed in, pressing the military for greater transparency. (Amazon founder Jeffrey P. Bezos owns The Washington Post).
At the center of it all is the Pentagon’s newly appointed Chief Information Officer, Dana Deasy, a polished and soft-spoken executive who left a retirement filled with hiking with his wife in North Carolina to plunge into one of the most controversial and highly charged Pentagon procurements in years. In his role, he works directly with Defense Secretary Jim Mattis and top Pentagon officials, who he said are following the process closely.
In his most extensive comments to date on the cloud contract, which could be worth as much as $10 billion over a decade, Deasy laid out his strategy for what’s known as the Joint Enterprise Defense Infrastructure (JEDI) program. He told The Post during an interview at the Pentagon, “I’m here for a very specific purpose. I want to help the Defense Department put the best long-term technology in place.”
Deasy does not have a military background and was most recently the global chief information officer at JP Morgan Chase. Even though there is tumult and contractor warfare swirling all around him, Deasy said his philosophy is to “keep pushing ahead. We are going to build the right cloud environment. I tell the team every day, ‘Just focus on that.’” He reiterated that the department is running a fair and open competition, with no favorites. An award is expected next year.
The contract comes as the Pentagon’s National Defense Strategy has, after years of fighting counterinsurgencies in Iraq and Afghanistan, placed an increasing importance on facing superpowers such as Russia and China. For years, those countries have steadily been working to erode the technological superiority that the U.S. has enjoyed since World War II.
A robust cloud system would allow the Pentagon the kind of computing power to unleash artificial intelligence, deep learning and the technologies of the future that the Pentagon thinks will be essential for modern warfare.
Developing the system “will revolutionize how we fight and win wars,” Deasy said in a statement last summer.
In the interview, he stressed that “it’s not lost on us that this strategy is of paramount importance to the Department of Defense. It’s important to industry. There are a lot of people watching this. “
Tuning out the noise may prove difficult. The procurement has been controversial from the start, with allegations that it was rigged for Amazon Web Services, one of the world’s largest cloud providers, which also holds a $600 million contract to provide cloud services for the CIA.
The opportunity comes as Amazon is moving aggressively to expand its business with the federal government, seeking to remake the $100 billion federal IT market just as it did commercial retail. The sudden emergence of the company’s Amazon Web Services cloud computing unit — now the fastest-growing part of Amazon’s business — has left legacy contractors alarmed and ready to fight.
Earlier this year, Amazon’s competitors said their suspicions were heightened when the Pentagon awarded a contract worth up to $950 million to a start-up called Rean Cloud that is a partner with AWS. Oracle successfully protested the award and the Defense Department slashed the contract value to no more than $65 million.
Then in early March, Pentagon officials revealed that they would go to just one provider for JEDI contract, sparking even more criticism from many potential bidders — though not Amazon.
Microsoft said a better approach would “leverage the innovations of multiple cloud service providers.” An IBM executive likened it to the Air Force using only cargo planes for every mission.
Oracle took the highly unusual step of challenging the bid before a winner was even selected. If its challenge is successful that could delay the effort or force Deasy’s team to change course.
Throughout it all, the Pentagon hasn’t budged in its approach to the JEDI contract.
In the interview, Deasy was adamant that awarding the contract to a single company was in the Pentagon’s best interests and would give it a better chance of success to build a cloud system capable of serving the entire department. He declined to commit to a date or year by which the JEDI cloud needs to be set up.
“We’ve never built an enterprise cloud,” he said. “So starting with a number of firms while at the same time trying to build out an enterprise capability just simply did not make sense.” Having additional companies involved would “just double or triple your complexity,” he said.
The Defense Department is treating the JEDI contract as a sort of “pathfinder effort” that could enable advanced military technologies and modernize outdated systems, and usher in a revolution in battlefield technology.
“Cloud is foundational to things that you actually need to build upon it,” Deasy said.
Amazon has said that all it expects is an open competition, and that if it wins it would be ready to support “the DoD mission of protecting the security of our country.”
Microsoft and General Dynamics, for example, have teamed up to offer Marines “Hololens,” augmented reality glasses to visualize battlefield terrain that relies on the additional computing power the cloud. Microsoft also has developed a system that uses cloud-based artificial intelligence to scan reams of video footage from security cameras for threats or suspicious activity.
IBM, another competitor for the contract, says it has already tested its cloud-based “Watson” artificial intelligence technology to predict when combat vehicles are likely to start having mechanical problems. It also helps the military find the most efficient way to quickly deploy personnel.
Right now the Pentagon has “dozens” of cloud systems, Deasy said, each built for some highly specific purpose and often siloed off from parallel efforts elsewhere across the Defense Department. The department is going through a methodical process to evaluate each of them to determine which should stay on their own, and which should fall under the JEDI program.
Officials have said they won’t kill or cut short existing contracts, such as the milCloud2.0 effort overseen by General Dynamics. Still, the contest is seen as a potential crossroads for the military industrial complex, allowing new players to expand their business with America’s war machine.
Whichever company wins the JEDI contract “will have a significant role in helping to shape the strategy for how we stand up the enterprise cloud capability,” Deasy said.