The JEDI Cloud History: From A Cloud Goal To A Microsoft Win

Here's the history of the contentious, bitter, and often ugly JEDI procurement process that ended last week with Microsoft being named the recipient of one of the industry's most prestigious and lucrative contracts.

Timeline Of A Cloud Procurement Saga

The United States military is embarking on an ambitious and expensive cloud transformation project to modernize IT resources across all branches of the armed forces.

Like many organizations that have been using outdated computing technology and struggling with disparate environments, the Pentagon recognizes the value of cloud transformation with a leading commercial vendor.

"The Department of Defense (DoD) has entered the modern age of warfighting where the battlefield exists as much in the digital world as it does in the physical," wrote former Acting Defense Secretary Patrick Shanahan to Congress in explaining the need for the cloud transformation initiative.

"Cloud is a fundamental component of the global infrastructure that will empower the warfighter with data and is critical to maintaining our military' s technological advantage."

Bogging down that effort, however, has been the anchor of the military's cloud transformation project— the Joint Enterprise Defense Infrastructure initiative.

JEDI ignited a firestorm of controversy that has raged across the industry for more than a year as leading cloud providers have gone to war in pursuit of the spoils of a potentially $10 billion cloud spend.

The Channel Precursor

Before JEDI exploded into a cloud computing battle royale, a smaller skirmish played out centered around an Amazon Web Services-aligned solution provider that set a tone for things to come.

In February of 2018, REAN Cloud, since acquired by Hitachi Vantara, had just won a lucrative contract with the Defense Innovation Unit Experimental (DIUx), which looks to implement commercial technologies beneficial to the U.S military. The five-year deal, capped at $950 million, involved implementing a custom solution for automating the procurement of cloud resources for the military while maintaining price stability.

But REAN's newly inked military contract brought on fierce opposition from Oracle, which argued the born-in-the-cloud consultancy's close relationship with AWS was a de facto win for the industry's largest cloud provider.

After Oracle lodged a protest with the Government Accountability Office, REAN's initial contract fell apart—it was ultimately reduced to a sole project for the U.S. Transportation Command, with a maximum cost of $65 million.

JEDI On The Horizon

Fresh off its success in scuttling REAN Cloud's nearly $1 billion military contract, Oracle set its sights on the big prize in the distance.

AWS already had notched some high-profile wins with the federal government, including a 2013 deal to build a $600 million cloud environment for the CIA. Many procurement experts viewed the public cloud leader as a prohibitive favorite to win the looming Joint Enterprise Defense Infrastructure initiative that promised a contract potentially worth $10 billion.

As draft RFPs and statements at a DoD Industry Day indicated JEDI would have one big winner, Oracle began lobbying the federal government against prematurely selecting AWS and advocating an approach to break the award up for multiple vendors.

The campaign led by the Redwood Shores, Calif.-based tech giant involved coordinating efforts with allies in the tech world, as well as a comprehensive media strategy and outreach to government leaders, defense officials and the Trump administration.

An Anti-AWS Alliance Forms

Well before the final RFP was released, industry heavyweights, led by Oracle, began aligning on fears that AWS had prematurely been selected as the JEDI initiative winner.

In April of 2018, Microsoft teamed with Oracle and IBM to lobby against one company winning the entirety of the cloud contract. A coalition ultimately gelled with SAP America, General Dynamics Corp.’s CSRA unit, Red Hat Inc., and VMware Inc., Dell Technologies and HPE joining the group to oppose the terms of the coming solicitation for bids.

That coalition got the support of the Information Technology Industry (ITI) Council's IT Alliance for Public Sector, a consortium that's comprised of all the cloud providers involved in the dispute.

The ITI letter argued a multi-cloud approach would adhere to best practices for ensuring price competitiveness and avoiding vendor lock-in.

Pentagon Defends Winner-Take-All

The most controversial aspect of the JEDI initiative—one argued about even before anyone saw a final RFP—was that a single cloud vendor would take the vast bulk of the spoils.

Pentagon officials have contended they are adopting a multi-cloud posture by incorporating a 'General Purpose' cloud and 'Fit For Purpose' clouds as part of the military's cloud transformation strategy. Those resources will also be complemented by cloud software purchased from other vendors.

But the reality is the General Purpose Cloud—provided by the JEDI winner—will be the default environment for most military agencies, and the "Fit-for-Purpose Program" will only allow selection from multiple vendors in special cases.

Military leaders have adamantly defended their desire for a single throat to choke. They pushed back on several tech industry powerhouses that argued the looming multi-billion-dollar contract should be divided among vendors per industry best practices.

Officials at the Department of Defense believe it will best serve troops in the field to place data in the hands of one Infrastructure-as-a-Service provider, said a letter sent in May of 2018 to congressional committees.

The letter was originally intended not to be disclosed to the public, but the Pentagon opted for more transparency amid protests from news outlets and congressional staffers.

The Pentagon said it wants submittals to include plans to avoid vendor lock-in so that within two years it can consider switching to another provider.

Amazon Holds Strong

Despite the vociferous pushback from its competitors and mounting controversy over how JEDI criteria were crafted, AWS didn't relent in aggressively pursuing the deal.

In May of 2018, CEO Andy Jassy (pictured) promised in a CNBC interview his company would make a "very competitive" bid for the soon-to-be-released JEDI RFP.

Jassy, who acknowledged that the race will be tight, pointed to AWS' "significant" public sector business, noting more than 3,000 government agencies worldwide rely on the Amazon cloud, including the CIA.

Jassy suggested that some of the recent complaints from competitors are sour grapes.

"I think that there has been a lot of noise from some of the older guard suppliers who are worried about losing some business, but our government deserves the best -- the best technology, the most capabilities, innovations, and best cost structure -- especially at this time," he said.

The RFP Unveiled

By the time the final RFP presenting requirements for a cloud computing vendor to fulfill the JEDI initiative was made public in July of 2018, battle lines had been drawn and combatants were deeply entrenched.

"The JEDI Cloud Program is a pathfinder and a critical first step in the DOD's overall cloud environment that will provide an enterprise approach for obtaining general purpose infrastructure and platform services that can meet a majority of the department's needs," Dana Deasy, the Department of Defense's CIO, said in announcing the RFP.

A Department of Defense spokesperson told CRN via email that while JEDI is a full and open competition that will result in a single-award contract, it does not preclude multiple vendors from participating in the project.

"Multiple vendors may form a partnership and offer a solution to compete for the single-contract award. Extensive market research has shown that multiple vendors are capable of meeting the requirements of the department," the spokesperson said.

But DoD plans to hold one-on-one meetings with potential bidders suggested it would be a difficult project for partnerships of multiple providers to prepare bids.

Take It To the GAO

Oracle lodged a complaint with the Government Accountability Office in August of 2018, just weeks after a final JEDI RFP became available to scrutinize,

And in the days before final bids were due in October of 2018, IBM also brought a formal protest to the GAO, arguing the Pentagon's decision to go with a single cloud provider created a military liability.

The course pursued, and ardently defended, by military leaders "would not provide the strongest possible foundation for the 21st century battlefield," IBM's Sam Gordy, general manager for U.S. Federal, said in a blog post.

The winner-take-all approach is also a bad use of taxpayer dollars, Gordy added.

"The importance of this transition cannot be overstated: JEDI will be the foundation for integrating advanced technologies such artificial intelligence and augmented reality into America’s warfighting capability," Gordy said.

Google Bows Out

The pack of competitors vying for a lucrative deal to provide cloud computing services to the Pentagon thinned in October of 2018 as Google, the third-largest public cloud provider, dropped out of contention.

While JEDI had stoked acrimony and heated debate among technology stalwarts, Google was never prominent in the debate, despite reports that U.S. Defense Secretary James Mattis was partly convinced of the wisdom of migrating to a commercial cloud provider in a meeting with Google founder Sergey Brin and CEO Sundar Pichai.

Google's decision to pull out of the contest didn't impact the state of the race much. But the comments it made explaining that decision added fuel to the fire.

Google joined the public criticism of the winner-take-all approach, a refrain that Oracle and allies had repeated for several months.

"Had the JEDI contract been open to multiple vendors, we would have submitted a compelling solution for portions of it. Google Cloud believes that a multi-cloud approach is in the best interest of government agencies, because it allows them to choose the right cloud for the right workload," a spokesperson for the company said.

Microsoft Resists Employee Pressure

Soon after Google pulled out of JEDI contention, Microsoft faced pressure to do the same.

Anonymous Microsoft employees posted on Medium, a social journalism platform, an article that concluded: "Microsoft, don’t bid on JEDI."

"Many Microsoft employees don’t believe that what we build should be used for waging war," the letter posted in October of 2018 read.

The anonymous authors cited ethical concerns involving the application of artificial intelligence on the battlefield. They advocated an approach similar to that of Google, which withdrew partly out of concerns the technology delivered for JEDI would not align with the company's principles.

But Microsoft, notably, didn't follow Google's lead.

Microsoft will continue to pursue contracts supplying advanced digital technology, including artificial intelligence, to the U.S. military, despite the protests from its employees, Microsoft President Brad Smith wrote a few weeks later.

The company has a duty to supply those who serve in the military with the best technology—then engage in the conversation over its ethical use in war.

Smith, also Microsoft's chief legal officer, said he and CEO Satya Nadella (pictured) talked over the issue with employees at Microsoft's monthly Q&A session to let them know where the company stands.

The answer was clear: "when it comes to the U.S. military, as a company, Microsoft will be engaged," Smith wrote.

To avoid disastrous scenarios, technology leaders must have a seat at the table.

"We can’t expect these new developments to be addressed wisely if the people in the tech sector who know the most about technology withdraw from the conversation," Smith said.

Oracle Goes To Court

Even before the Pentagon revealed its final shortlist, Oracle challenged the JEDI procurement process with a lawsuit against the federal government filed on Dec. 6 in the U.S. Court of Federal Claims. The company's protest to the Government Accountability Office had been rejected a month earlier.

The lawsuit, which AWS later joined voluntarily as a co-defendant, focused on several issues, including what Oracle painted as a complex web of potential conflicts of interest.

The Redwood City, Calif., tech giant alleged that two people who helped lead the JEDI initiative–Deap Ubhi, who served as JEDI project manager at the DoD, and Anthony DeMartino, chief of staff for the Deputy Secretary of Defense – were conflicted because of their relationship with Amazon Web Services.

Oracle raised other concerns in its lawsuit.

The DoD issued a single IDIQ contract award determination "in direct violation of the U.S. Code," Oracle argued, and three of the RFP’s seven "Gate Criteria" that each bidder must pass in order to compete for the contract exceed the DoD’s needs and violate the Competition In Contracting Act (CICA), to the "significant competitive disadvantage of Oracle."

One of the "arbitrary gating criteria" required JEDI spending would represent the majority of total, unclassified cloud revenue in January and February of 2018. Had that ratio been calculated a month later, or any time since, Oracle would have cleared the first gate, the company said.

A Smear Dossier

As 2018 came to a close, the JEDI contest remarkably turned even uglier.

Bloomberg reported that December on the existence of a dossier looking to smear AWS execs and U.S. military officials to undermine the cloud leader's efforts to win the Pentagon's multi-billion-dollar JEDI cloud computing contract.

The dossier, according to the Bloomberg article, was part of a "dirty-tricks campaigns" to deny the award to Amazon, perceived as the likely choice of military leaders.

The article reported no evidence had surfaced that AWS' primary JEDI rivals—Oracle, IBM and Microsoft—were behind the document, which was shopped around the nation's capital by a private intelligence firm called RosettiStarr.

The 33-page document put forward a number of unsupported insinuations based on established facts--some highly personal in nature and tenuous at best.

FBI Investigating

In March of 2019, it became clear that the FBI was involved in a probe of the process by which the military crafted criteria for its potentially $10 billion JEDI cloud computing contract, according to a report in the Federal News Network, an outlet that covers the federal government.

At least one person involved in the matter met with the Department of Defense's inspector general as well as the FBI's Public Corruption Squad to answer questions about Joint Enterprise Defense Infrastructure procurement, that publication reported.

The FBI's involvement suggested investigators were looking into potential criminal conduct around the contract.

The Federal News Network source said the DoD IG and FBI also asked about relationships of contractors and government personnel working on JEDI and other contracts.

Two Finalists Emerge

Amid all the controversy, protests, lawsuits, lobbying, investigations and public relations efforts, and after a number of delays, AWS and Microsoft were named the JEDI Cloud finalists in April of 2019.

The first and second largest enterprise cloud providers, respectively, were the only two bidders in the potentially $10 billion sweepstakes that met the military's "competitive range determination" to proceed in the process, said Elissa Smith, a spokeswoman for the U.S. Department of Defense.

The Pentagon simultaneously announced it had concluded that potential conflicts did not impact the integrity of the military's process in selecting an enterprise cloud computing provider.

A Defense Department Inspector General's investigation was still probing "potential ethical violations" surrounding two former Amazon employees who were involved in the military's vendor selection process, Smith said.

But "the investigation determined that there are no conflicts of interest that affected the integrity of the acquisition process," she said.

Congressional Outreach

Congress had early on been pulled into the JEDI debate.

In October of 2018, two Republicans—Steve Womack from Arkansas and Tom Cole from Oklahoma–in a letter to the principal deputy inspector general for the U.S. Department of Defense, accused military leaders of violating federal law and industry best practices to deliver the entirety of the massive contract to a single provider.

The congressmen said it had come to their attention through media reports that people in high-ranking positions within the military were going against the department's ethics guidelines because they "have significant connections" to that contractor.

By referencing preliminary requirements that a provider meet Defense Information Systems Agency Impact Level 6, Womack and Cole made clear the contractor they referred to but didn't name was Amazon Web Services.

After Oracle was eliminated from the JEDI running, the company ramped its congressional outreach strategy.

Kenneth Glueck, the executive vice president who leads Oracle's lobbying efforts, wrote leaders of the U.S. House Committee on Appropriations on April 25, appealing for the congressional body responsible for federal spending to exercise oversight to counter a flawed procurement process.

"We believe that a full and fair consideration of four competing JEDI proposals is in the best interests of the warfighter, the taxpayer, and the United States," Glueck said.

Oracle's Legal Challenge Tossed

Oracle's hail-Mary legal challenge to the JEDI procurement process was rejected by a federal judge in July.

Eric Bruggink, who sits on the U.S. Court of Federal Claims, ruled in favor of the government and Amazon Web Services, which voluntarily joined the case as a co-defendant to protect its own interests, clearing one of the last potential obstacles to delivering the potentially $10 billion cloud transformation contract to the two finalists in the process: AWS and Microsoft.

In the short judgment, Bruggink wrote that a specific "gate criteria" for "high availability and failover"— one that Oracle argued exceeded the military's needs—can be enforced. Oracle conceded it could not meet that threshold when it submitted its bid last year, he noted.

The judge went on to find conflicts of interest did not undermine the integrity of the process. The investigation conducted by the Pentagon's contracting officer concluding there was no "organizational conflict of interest" and that "individual conflicts of interest did not impact the procurement" was done in a way that was "not arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law," he said.

Enter the President And SecDef

If the JEDI procurement process wasn't bogged down enough, President Donald Trump waded into the controversy in July, telling reporters at the White House that complaints from companies with unsuccessful bids had convinced him to intervene.

"Some of the greatest companies in the world are complaining about it," the president said during a sit-down with the prime minister of the Netherlands, specifically citing Oracle, IBM and eventual winner Microsoft.

Two weeks later, the final decision that had been expected by August was put on hold by then-recently confirmed defense secretary Mark Esper, who instead implemented a review of the military's process for procuring the project.

Just days before Microsoft was announced the JEDI winner in late October, Esper stepped aside from the contracting process, citing a conflict as his son worked as a consultant for IBM—a company that had originally bid for the contract, but had not made the shortlist.

Microsoft Wins Big

While so much of the JEDI controversy revolved around the heated, bitter feud between Oracle and Amazon Web Services, Microsoft, which had stayed largely in the background during the protests, lawsuits, recriminations and political influence campaigns, took home the final prize.

In announcing Microsoft as its enterprise cloud vendor, the Defense Department said the base contract period would be two years, with only a $1 million in spending guaranteed. The department also said it "projects that user adoption will drive an estimated $210 million of spending during the two-year base period."

The Pentagon said it would "rigorously review" the performance of the awardee before exercising any options that would add to its Azure spend.

"We brought our best efforts to the rigorous JEDI evaluation process and appreciate that DoD has chosen Microsoft. We are proud that we are an integral partner in DoD’s overall mission cloud strategy," Microsoft's president for US Regulated Industries, Toni Townes-Whitley, said after.

"We look forward to expanding our longstanding partnership with DoD and support our men and women in uniform at home, abroad, and at the tactical edge with our latest unique and differentiated Azure cloud capabilities.”

The Pentagon heralded the contract for an enterprise general-purpose cloud as a "step forward" in its cloud strategy.

"This continues our strategy of a multi-vendor, multi-cloud environment as the department’s needs are diverse and cannot be met by any single supplier."