Amazon, Oracle Battle for Pentagon Cloud Contract Worth Billions

In this June 3, 2011, file photo, the Pentagon is seen from air from Air Force One. (AP Photo/Charles Dharapak, File)
In this June 3, 2011, file photo, the Pentagon is seen from air from Air Force One. (AP Photo/Charles Dharapak, File)

The Pentagon just flipped the terms for bidding on a cloud technology contract worth billions as Amazon, Oracle, Microsoft and other high-tech giants lobby and jockey for position amid allegations of favoritism in the award process.

"We're doing things differently," Dana White, the Pentagon's chief spokesperson, told reporters at a briefing. The original contract terms out for bidding were for a 10-year deal worth about $10 billion, but White said the award will now be an initial two-year contract.

Once the two years are up, "we will re-examine the marketplace" and there will be open bidding again for extensions of five years and then three years, she said at a Pentagon briefing.

Moving to the cloud at the Defense Department "will rapidly deliver advantages to the battlefield by enabling new machine learning and artificial Intelligence [AI] capabilities," White said.

"We are looking for a fully interoperable, user-friendly, affordable and secure cloud solution," she said.

Cloud technology uses a network of remote servers hosted on the internet to store, manage, and process data -- rather than a local server.

"I want to separate fact from fiction, what it is, and what it is not," White said.

The remark was a possible reference to charges from other tech firms that Amazon Web Services had the inside track for the award.

"It is a single-award contract. It is not a sole-source contract, and is not designed with a specific vendor or company in mind," she said. "In fact, multiple vendors may form a partnership to offer us a competitive solution."

White said that 46 companies have already responded to the initial RFP (Request for Proposal) on the cloud contract, including Amazon, Oracle, Microsoft Corp. and International Business Machines Corp.

White's announcement came three days after Safra Catz, the co-chief executive officer of Oracle Corp., said she had discussed the contract with President Donald Trump and complained that Amazon is attempting to get an edge on the deal.

"It just made no sense," Catz told reporters at Oracle's offices in Israel, according to a Bloomberg report.

She said of Amazon, "I have no idea why they were given unfair advantage. I have no idea why anyone would think that is a good idea."

Trump told her "he was very confident that the Pentagon would have a fair review," Catz said.

Earlier this month, Trump unleashed a Twitter storm against Amazon and its CEO Jeff Bezos, accusing Bezos of running a company that fails to pay its share of taxes and takes advantage of the struggling U.S. Postal Service.

Trump has also continued to single out The Washington Post, which is owned by Bezos, for

allegedly spreading "fake news."

The president said he is "going to take a pretty serious look" at Amazon because "the playing field has to be leveled."

However, White House Press Secretary Sarah Sanders later said that Trump was staying out of the negotiations on the cloud contract's award.

She said that Trump "is not involved in the process," adding that the Pentagon "runs a competitive bidding process."

Amazon spokesmen have said that neither Bezos nor the company would comment on the president's criticisms.

The haggling over the award of the cloud contract put a spotlight on Dana Deasy, recently named as the Pentagon's new chief information officer and probable point person in the bidding negotiations.

Deasy, the former CIO for the J.P. Morgan investment bank, is expected to start at the Defense Department in early May.

-- Richard Sisk can be reached at Richard.Sisk@Military.com.

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