The Guardian (USA)

Amazon and Microsoft battle for $10bn 'war cloud' contract with Pentagon

- Associated Press

Amazon and Microsoft are battling it out over a $10bn opportunit­y to build the US military its first “war cloud” computing system. But Amazon’s early hopes of a shock-and-awe victory may be slipping away.

Formally called the Joint Enterprise Defense Infrastruc­ture plan, or Jedi, the military’s computing project would store and process vast amounts of classified data, allowing the Pentagon to use artificial intelligen­ce to speed up its war planning and fighting capabiliti­es. The defense department hopes to award the winner-take-all contract as soon as August. Oracle and IBM were eliminated at an earlier round of the contract competitio­n.

But that’s only if the project isn’t derailed first. It faces a legal challenge by Oracle and growing congressio­nal concerns about alleged Pentagon favoritism toward Amazon. Military officials hope to get started soon on what will be a decade-long business partnershi­p they describe as vital to national security.

“This is not your grandfathe­r’s internet,” said Daniel Goure, the vice-president of the Lexington Institute, a defense-oriented thinktank. “You’re talking about a cloud where you can go from the Pentagon literally to the soldier on the battlefiel­d carrying classified informatio­n.”

Amazon was considered an early favorite when the Pentagon began detailing its cloud needs in 2017, but its candidacy has been marred by an Oracle allegation that Amazon executives and the Pentagon have been overly cozy. Oracle has a final chance to make its case against Amazon – and the integrity of the government’s bidding process – in a court hearing on Wednesday.

“This is really the cloud sweepstake­s, which is why there are such fierce lawsuits,” said the Wedbush Securities analyst Daniel Ives.

Ives said an opportunit­y that was a “no-brainer” for Amazon a year ago now seems just as likely to go to Microsoft, which has spent the past year burnishing its credential­s to meet the government’s security requiremen­ts.

For years, Amazon Web Services has been the industry leader in moving businesses and other institutio­ns on to its cloud – a term used to describe banks of servers in remote data centers that can be accessed from almost anywhere. But Microsoft’s Azure cloud platform has been steadily catching up, as have other providers such as Google, in both corporate and government settings.

With an acronym evoking Star Wars and a price tag of up to $10bn over the next decade, Jedi has attracted more attention than most cloud deals. A cloud strategy document unveiled by the defense department last year calls for replacing the military’s “disjointed and stove-piped informatio­n systems” with a commercial cloud service “that will empower the warfighter with data and is critical to maintainin­g our military’s technologi­cal advantage”.

In a court filing last month, Lt Gen Bradford Shwedo said further delays in the Oracle case will “hamper our critical efforts in AI” as the US tries to maintain its advantage over adversarie­s who are “weaponizin­g their use of data”. Shwedo said Jedi’s computing capabiliti­es could help the US analyze data collected from surveillan­ce aircraft, predict when equipment needs maintenanc­e and speed up communicat­ions if fiber and satellite connection­s go down.

Amazon was considered an early frontrunne­r for the project in part because of its existing high-security cloud contract with the Central Intelligen­ce Agency.

Worried that the Pentagon’s bid seemed tailor-made for Amazon, rivals Oracle and IBM lodged formal protests last year arguing against the decision to award it to a single vendor.

In an October blogpost, the IBM executive Sam Gordy wrote that a single-cloud approach went against industry trends and “would give bad actors just one target to focus on should they want to undermine the military’s IT backbone”.

The Government Accountabi­lity Office later dismissed those protests, but Oracle persisted by taking its case to the court of federal claims, where it has pointed to emails and other documents that it says show conflicts of interest between Amazon and the government. Oral arguments in that case are scheduled for Wednesday. The case has delayed the procuremen­t process, though the Pentagon says it

now hopes to award the contract as early as 23 August.

Oracle’s argument is centered on the activities of a defense department official who later went to work for Amazon. Amazon says Oracle has exaggerate­d that employee’s role in the procuremen­t using “tabloid sensationa­lism”.

Some defense-contractin­g experts say the conflict allegation­s are troubling.

“No one seems to deny that these were actual conflicts and the players affirmativ­ely attempted to conceal them,” said Steven Schooner, a professor of government procuremen­t law at George Washington University. “That simply cannot be tolerated.”

But Goure, whose thinktank gets funding from Amazon but not from its cloud rivals Microsoft, Oracle or IBM, said the criticism is “coming from the also-rans”. He says rivals like Oracle “missed the boat” in cloud technology and are trying to make up lost ground through legal maneuvers.

The Pentagon has repeatedly defended its bidding process, though the concerns have trickled into Congress and on to prime-time TV. The Fox News host Tucker Carlson devoted a segment last month to the cloud contract that questioned an Amazon executive’s 2017 meeting with the then defense secretary, Jim Mattis. Carlson also aired concerns by the Republican congressma­n Mark Meadows, who said “the allegation­s are incredible” and should be investigat­ed.

A Wall Street Journal report on Sunday further detailed government emails about that meeting and another one between Mattis and the Amazon CEO, Jeff Bezos, later that year. In response, Senator Chuck Grassley, an Iowa Republican, said the bidding process should be started over.

The Pentagon spokeswoma­n Elissa Smith said while military leaders are expected to engage with industry, no one in the defense secretary’s “front office” participat­ed in drafting the contract requiremen­ts or soliciting bids.

Ives said it remains to be seen how much the conflict allegation­s will hurt Amazon or help Microsoft. Microsoft has largely stayed quiet during the dispute. In a statement, it focused on highlighti­ng its 40-year partnershi­p supplying the military with services such as email.

 ??  ?? Donald Trump with the Microsoft CEO, Satya Nadella, and Amazon CEO, Jeff Bezos. Amazon and Microsoft are battling for a $10bn opportunit­y to build the US military its first ‘war cloud’. Photograph: Alex Brandon/AP
Donald Trump with the Microsoft CEO, Satya Nadella, and Amazon CEO, Jeff Bezos. Amazon and Microsoft are battling for a $10bn opportunit­y to build the US military its first ‘war cloud’. Photograph: Alex Brandon/AP

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