Pentagon Finalizes Amazon, Microsoft, Google, and Oracle for $9B Cloud Contract
The contract, called Joint Warfighting Cloud Capability, is expected to run through June 2028.
Almost 18 months after the $10 billion Joint Enterprise Defense Infrastructure, or JEDI contract went bust, the U.S. Department of Defense awarded cloud services contracts worth up to $9 billion to three of the biggest cloud providers, viz., Amazon, Microsoft and Google, and Oracle.
The new $9 billion contract, called Joint Warfighting Cloud Capability, or JWCC, is fundamentally different from JEDI in that the Pentagon will now rely on multiple cloud vendors instead of one. As such, Amazon, Microsoft, Google, and Oracle will share the contract, which is expected to run through June 2028.
“The purpose of this contract is to provide the Department of Defense with enterprise-wide, globally available cloud services across all security domains and classification levels, from the strategic level to the tactical edge,” the U.S. Department of Defense (DoD) wrote.
Like JEDI, the cloud infrastructure under JWCC can support several elements of the government’s war and peace-time operations, including military communication, intelligence relay, unmanned flight operation, etc.
Pentagon’s decision to award JWCC to Amazon, Microsoft, Google, and Oracle was delayed by a better part of a year (expected initially in March 2022), possibly to avoid the hassles it faced when it chose Microsoft as the sole cloud vendor for the JEDI contract in 2019.
The DoD’s decision to award JEDI to Microsoft didn’t sit well with Amazon, Oracle, and IBM who pursued the matter legally. Notably, Amazon, one of the finalists in the JEDI contract, accused political interference on the part of the then president in awarding the contract to Microsoft.
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A years-long controversy ensued that, in July 2021, culminated in the Pentagon canceling JEDI altogether and developing JWSS as its successor.
While a multi-vendor cloud implementation can add to the complexity, it can also help ensure resilience in an outage. In its contract notice dated November 7, 2022, the Pentagon didn’t mention the specifics of the work assigned to each chosen vendor and thus did not provide a breakdown of the funds.
“No funds will be obligated at the time of award; funds will be obligated on individual orders as they are issued,” the DoD notice reads.
Even as the scope of each cloud vendor’s work is being worked out, let us assume the $9 billion will be divided equally among the four vendors over six years. This puts approximately $562.5 million in Amazon, Microsoft, Google and Oracle coffers per year.
Besides Oracle (FY2022 cloud revenue $2.9 billion), the contract is financially insignificant for Amazon, Microsoft and Google, whose 2021 cloud revenue stood at $62.2 billion, $60.08 billion (FY22), and $19.2 billion, respectively.
However, the value for all four companies lies in the fact that the Pentagon is entrusting them to process sensitive data and form the cornerstone of the federal body’s global operations.
In 2020, Amazon, Microsoft, Google, Oracle and IBM bagged CIA’s Intelligence Community (IC) Commercial Cloud Enterprise (C2E) Cloud Service Provider (CSP) contract worth tens of billions of dollars.
In 2021, Hewlett Packard Enterprise (HPE) also got a $2 billion cloud contract for ten years for GreenLake platform-based high-performance computing (HPC) services for the NSA.
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