Aug 9, 2018

Oracle challenged Pentagon’s $10 billion cloud contract

Photo: Saul Loeb/AFP/Getty Images

Oracle this week challenged the Department of Defense’s decision to award a major, $10-billion cloud computing contract to just one company as "anti-competitive," according to a 40-page challenge document obtained by Axios and originally reported by The Washington Post.

Why it matters: Several industry leaders have expressed concerns that the proposal is written to favor Amazon. Oracle has already been vocal about its concerns with this contracting process this year.

Why now: Companies have until September 17 to contest it, and it comes just two weeks after the final request for proposals came out.

What they're saying:

  • Oracle argues the Pentagon’s current strategy of using just one cloud would strain the military’s technical standing. Part of Oracle's concern is it is standard commercially to use a multi-cloud environment to allow for redundancy and resiliency, which, in military operations would be particularly crucial in case of failure.
"DoD's single awardee...contract approach is...contrary to DoD's own stated objectives of flexibility, innovation, a broad industrial base, and keeping pace with evolving technology."
— Oracle's bid challenge
  • Oracle claims the single award setup would "frustrate" competition. The contract, which would last for 10 years, is so long that competitors also raise the concern that the Pentagon could get locked in to a bad business deal.

The background:

  • When the Pentagon contracted out with a company linked with Amazon earlier this year, called REAN Cloud, Oracle contested it and the Government Accountability Office sided with Oracle.
  • The CIA has contracted out cloud computing services with just Amazon. IBM, another likely bidder, protested the deal in 2013, but Amazon prevailed.

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