DoD clarifies winner-take-all cloud contract

Published April 23, 2018

When the Department of Defense announced in March a 10-year winner-take-all cloud contract that could be worth up to $10 billion, it raised a few eyebrows. Last week, they clarified some of the conditions, and it turns out that much like a modern baseball free agent contract, there are a couple of points where the DoD can opt out of the deal.

In a press conference last week, chief Pentagon spokesperson Dana W. White indicated that the original contract award is for just two years. After that there are two additional options for five years and three years. The department can opt out after the first two years if it’s not working out, or seven years if it accepts the second option. Obviously if it takes the final option, that would add up to a full 10-year commitment.

Leigh Madden, who heads up Microsoft’s defense effort, says he believes Microsoft can win such a contract, but it isn’t necessarily the best approach for the DoD. “If the DoD goes with a single award path, we are in it to win, but having said that, it’s counter to what we are seeing across the globe where 80 percent of customers are adopting a multi-cloud solution,” Madden told TechCrunch.

White indicated that 46 companies have responded to the request for proposal, but it seems clear there are only a handful of companies that could handle a project of this scope. For starters, we have Amazon and Microsoft, along with Google, IBM and Oracle.

That said, White indicated that companies can band together and form a partnership, which means you could see some extremely strange bedfellows trying to form the equivalent of a rock supergroup with multiple players coming together to win the deal.

This development certainly opens up some interesting options for the vendors involved and creates a level of competition and alliances the likes of which the tech industry might have never seen. Whoever gets the contract, they get two years to prove they can do this, then they will be evaluated before getting a shot at the second five-year window.