Pentagon cloud contract funds may be held back for explanation

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(Bloomberg) -- The annual defense policy bill proposed by House Republicans would bar the Pentagon from spending half the money designated for a broad-based cloud computing contract until Defense Secretary Jim Mattis offers Congress more information about the project.

The report should include “a description of the characteristics and considerations for accelerating the cloud architecture and services required for a global, resilient, and secure information environment to enable warfighting,” according to the draft authorization measure issued Friday by House Armed Services Chairman Mac Thornberry of Texas and obtained by Bloomberg Government.

It also demands that Mattis explain how the Defense Department will promote competition for a contract that may be valued in billions of dollars, addressing the main complaint of an alliance of technology companies. They say the planned winner-take-all award to a single bidder will favor Inc., the dominant provider in cloud computing. Amazon Web Services won a $600 million cloud contract from the Central Intelligence Agency in 2013.

In responses published last month to questions from contractors, the Defense Department simply refused to spell out why it isn’t breaking the contract into pieces. “This rationale is not going to be published at this time,” the department replied. But officials have underscored the importance of bringing scattered data together in one place to meet warfighting needs.

“Our goal is to get the best possible service for the front line,” Mattis told a Senate committee last month. “I’m aware that some people in industry believe this should be an equal opportunity thing where everyone gets a piece of the pie.”

President Donald Trump has repeatedly written tweets attacking Amazon and Jeff Bezos, its founder and chief executive officer, on other grounds. But White House Press Secretary Sarah Huckabee Sanders has said Trump isn’t interfering in the cloud contract decision. The Defense Department “runs a competitive bidding process,” she told reporters last month.

Tactical Edge

The Defense Department has said it intends to move the department’s technology needs -- 3.4 million users and 4 million devices -- to the cloud to give it a tactical edge in the battlefield and strengthen its use of emerging technologies. The department plans to issue the final request for proposal by May 15 and award the contract by the end of September.

Under the defense authorization measure, which House Armed Services is scheduled to take up on May 9, the Pentagon also would have to provide additional information about the make up of its Cloud Executive Steering Group, the cost to migrate the department to the cloud and how it will promote competition for the contract it calls the Joint Enterprise Defense Infrastructure, or JEDI.

The Pentagon didn’t immediately respond to a request for comment on the bill.

The authorization bill would be the second action by federal lawmakers to gain more information about the contract. In March, President Donald Trump signed a $1.3 trillion spending bill that included a requirement that the Pentagon provide two reports, outlining its procurement strategy for cloud services, budgetary outlook and a justification for why the agency is planning to award a single contract. The Pentagon has said it will submit those reports to Congress by Monday.

Bloomberg News