The Pentagon. (Charles Dharapak/AP)

Faced with criticism over the way that it awarded a contract to proceed agencies into the cloud, the Pentagon on Monday dropped a  deal given to an Amazon partner, cutting the sum from almost $1 billion to no greater than $65 million, while radically limiting the range of work.

When the Pentagon given the 950 million contract into Herndon, Va.-based Rean Cloud a month, then it was instantly hit with criticism because of showing favoritism to a partner of Amazon Web Services (AWS), which industry officials dread gets an inside track on the Pentagon’s cloud computing work. (Amazon founder Jeffrey P. Bezos possesses The Washington Post.)

Moving its computing systems into the cloud has come to be a priority to the Pentagon, and it suggests that the change will let it innovate faster in a period when it worries it is losing its technological advantage over potential adversaries, for example China. In a memo last year, ” Deputy Defense Secretary Patrick Shanahan stated the department will accelerate its movement into the cloud as part of the effort to “make sure we are using emerging technology to meet warfighters’ needs, and also to increase agility and speed in engineering procurement and development.”

The movement to curtail the worth of Rean’s contract with over 90 percent comes just two days before the Pentagon is set to sponsor an “industry day,” an opportunity for companies interested in bidding over the Pentagon’s cloud computing contract to hear by government procurement officials.

Plus it follows weeks of criticisms from some in industry which the procurement was not being treated correctly — charges which Pentagon officials suggested. Those criticisms spanned after Rean won the $1 billion deal to migrate protection agencies’ approaches. Rivals said that it made no sense to select a company to migrate the services when the supreme cloud provider had not yet been selected.

In response to the Rean award, Oracle filed a bid protest with the Government Accountability Office last month which called the procurement “an egregious abuse” of the procurement process for a contract which it charged was “shrouded in secrecy.” And it contended that Rean “functions as a front for AWS” and its close connection to AWS created a conflict of interest.

Industry officials lamented the fact that the Pentagon did little to announce   the award to Rean; it mostly became public when the firm put out a news release considering the contract.

Officials using Rean and AWS, which holds a $600 million deal to provide cloud services to get the CIA, didn’t immediately respond to requests for comment.

Last month, Rean founding partner Sekhar Puli said that while the vast bulk of the business’s national work has been with AWS, this contract has been specifically worded to allow his firm to operate at any cloud provider that agencies may request.

“There’s a perception that this really is an Amazon contract, however there’s little to no fact on that since we had been quite cautious about stocking the contract to say it might work at any cloud service provider,” Puli stated. “We are not deciding what cloud the customer should be on. They could select any cloud they want, and our system would support all that.”

But because the Pentagon hasn’t yet given the bigger deal, estimated to be worth billions of dollars over several decades, because of its cloud system, it shouldn’t have given such a large contract to begin moving its systems into the cloud, competitions claimed.

“If in fact you’re going to get an open competition and an industry day to have a multi-vendor chance for the cloud, then does it is reasonable to spend a thousand dollars to proceed to Amazon’s cloud until you’ve made the choice of what cloud you are moving to?” Oracle Senior Vice President Ken Glueck stated in the time. “You’d think they’d select what cloud they would like to head to first, then decide what migration support system required to proceed, if any”

Monday, the Pentagon backed away from the initial award, saying in a statement that after reviewing the contract, it decided “the arrangement should be narrowly tailored” so Rean would build a prototype support for one agency, the U.S. Transportation Command, instead of several distinct agencies within the Defense Department.

The Pentagon was criticized since the 950 million contract has been awarded by means of an arm of the Pentagon, the Defense Innovation Unit Experimental (DIUx), created to exploit the technology and innovation of Silicon Valley-type companies   which have traditionally shied away from Pentagon work.

The procurement, a follow-on into a lesser competed contract, has been given under an “other transaction authority,” a method for the Pentagon to procure goods and services quickly without being subject to the bureaucratic national acquisitions process. But industry officials said that a $1 billion award below that authority was unusually high.

Critics of the “other transaction authority” process say such arrangements are not competitive and insufficiently transparent. Bill Shook, a government contracting lawyer who has represented Microsoft as well as firms that operate with AWS, stated Rean shouldn’t have been eligible to get an OTA contract since cloud services are already available from the industrial sector.

The Rean Cloud contract award “is the improper use of OTA for easily available industrial services which are currently being sold directly to the government by cloud suppliers,” Shook said. “We need to add back in a level playing field, in contrast to the private tastes of government IT buyers”

Raj Shah, the head of DIUx, resigned the post.

On Monday, Glueck, the Oracle senior vice president, said the movement was a step in the ideal direction. “I believe this gets to the ideal place, and this clearly puts back the thought that there should be a rivalry for what really should be multi-vendor cloud services,” he explained. “And after that is over, there should be no focus on how best to deal with integration and migration.”

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