$10B ‘Secret’ NSA Cloud Contract Awarded to AWS Is Already in Dispute

By Todd R. Weiss

August 11, 2021

A $10 billion ‘secret’ cloud computing contract that was recently won by Amazon Web Services from the U.S. National Security Agency quickly came under fire from Microsoft Corp., which has protested the decision.

The single-award contract, which was first reported in a July 30 story by Washington Technology, is slated by the NSA to bring in commercial cloud computing capabilities for the agency. The agency wants to move away from its existing on-premises infrastructure, the story continues.

Few details about the secret contract, which is codenamed “WildandStormy,” are available, but following the AWS bid award, Microsoft was notified of the decision and quickly filed a protest with the U.S. Government Accountability Office (GAO) under the award protest rules.

The contract would help the NSA with its “Hybrid Compute Initiative,” which aims to allow the agency to decide what information it wants to keep inside a commercial cloud infrastructure and what it wants to keep out of such facilities, the story reported.

Microsoft’s protest to the GAO says that “the NSA didn’t conduct a proper evaluation” of the bids, and that if it had done so Microsoft’s proposal would have been picked over AWS, the story reported.

The NSA has been signaling its intent since 2020 to move its huge data pools to commercial cloud vendors so the agency can meet its vast storage, processing and analytics needs, according to an Aug. 10 story by Nextgov. The massive amounts of data being dealt with by the agency have been challenging its ability to scale, the story continued.

In an email reply to EnterpriseAI, the NSA confirmed the sequence of events but declined further comment on its cloud plans or on the contract status.

“NSA recently awarded a contract for cloud computing services to support the agency,” a spokesperson said in the statement. “The unsuccessful offeror has filed a protest with the GAO. The Agency will respond to the protest in accordance with appropriate federal regulations.”

An Amazon spokesperson declined to comment on the matter and referred all questions to the NSA.

A Microsoft spokesperson confirmed that the company is fighting the NSA’s initial award in the matter.

“Based on the decision we are filing an administrative protest via the GAO,” the spokesperson said in a statement. “We are exercising our legal rights and will do so carefully and responsibly.”

A decision by the GAO is expected by Oct. 29, according to the July 21 protest filing.

Not the First Cloud Contract Battle Between AWS and Microsoft

If the story about a $10 billion government cloud contract involving AWS and Microsoft sounds familiar, that is because a similar case was previously in the news only a month ago when the Pentagon’s JEDI cloud modernization contract was canceled after two years of controversy.

The JEDI contract, which was awarded to Microsoft Corp. in late 2019 under the Trump administration, immediately was under fire from AWS, which challenged the contract award in the courts. Amazon charged that the Trump administration pushed to award the deal to Microsoft due in part to his personal distaste for Amazon and its then-CEO, Jeff Bezos.

The JEDI (Joint Enterprise Defense Infrastructure) cloud Request for Proposal (RFP) will now be re-issued, according to the Pentagon, with specific language calling for the next contract specifications to use a multi-cloud approach, as is the practice of most enterprises today.

The U.S. Department of Defense (DOD) said in July that the original JEDI contract and RFP was canceled to allow the agency to meet new evolving requirements for cloud technologies, including a critical multi-cloud approach rather than a single cloud provider as stipulated in the original RFP. The original contract approved in 2019 no longer meets the DOD’s needs, which is why it was canceled, the statement reported.

The new contract RFP, known as The Joint Warfighter Cloud Capability (JWCC) RFP, will be a multi-cloud/multi-vendor Indefinite Delivery-Indefinite Quantity (IDIQ) contract. The JWCC replaces the now out-of-date JEDI contract specifications.

Interestingly, the JWCC is seeking “proposals from a limited number of sources, namely the Microsoft Corp. and Amazon Web Services as available market research indicates that these two vendors are the only cloud service providers (CSPs) capable of meeting the department’s requirements,” the agency said. The DOD will, however, also conduct research to determine whether any other U.S.-based hyperscale CSPs can also meet the DOD’s requirements and should be included in the contract RFP. That could include companies such as Oracle Corp., Google Cloud and IBM Cloud.

Such Is the Challenge of Huge Contracts: Analysts

R. “Ray” Wang, analyst

R. “Ray” Wang, the principal analyst and founder of Constellation Research, told EnterpriseAI that the prize of winning such lucrative contracts means that it is ultimately not much of a surprise when the loser protests after the bids are awarded to a rival.

“The contract sizes are now in the billions given the specific needs of the government,” said Wang. “Both Amazon and Microsoft have the dedicated teams to win in this market. The challenge is the fierce competitiveness of the deals. Every deal will be challenged given what is at stake.”

At the same time, though, “there really is a lot to go around,” said Wang. “The vendors should just take a deep breath and consider that there will be at least two players in every deal. There will be a need to diversify providers to avoid supplier risk. You want a diverse set of strong suppliers so that the government has choice, competition and agility in their supplier base.”

Some of those future contracts could even go to smaller cloud vendors, he said. “For example, don’t count Google Cloud Platform out, and expect a smaller minority-based provider to win a few contracts. Multi-cloud is here to stay. we need a diversity of suppliers and the agility that provides.”

Dan Maycock, analyst

Dan Maycock, principal analyst of data engineering with Loftus Labs, said the latest situation surrounding the NSA contract case illustrates the problems of these huge government contracts when they are awarded.

“There are real concerns with a government agency sourcing their cloud solutions from any major vendor, but it is also necessary to move into more modern data solutions,” said Maycock. “This creates a ‘necessary evil’ in having an agency like the NSA partnering with a company like Amazon. On one hand, you have agencies needing to partner with large cloud providers, but there are enough holes in any one vendor’s business model or portfolio that it opens them up to lawsuits from other companies who have nothing to lose but everything to gain from rocking the boat.”

Ultimately, this pattern hurts the very agencies that are trying to improve their technology infrastructure, he said.

“What this does is it puts these agencies further behind, waiting to resolve lawsuits before moving forward with the particular initiative, and that in turn makes us all worse off – or potentially less safe, depending on the agency,” said Maycock. “These are very large sums of money, so we will continue to see this kind of back and forth occurring as the government moves to the cloud.”

The process may have to be modified for true progress to finally occur, he said. “It will be interesting to see what changes are made in either the contracting process or the cloud landscape to get the government moving forward more aggressively into the cloud computing space.”

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