Dec 22 2022

Department of Defense Signals a Multicloud Shift

Instead of relying on a single cloud provider, the DOD has tapped four tech giants to build its Joint Warfighting Cloud Capability network.

The Department of Defense recently announced it has awarded its Joint Warfighting Cloud Capability (JWCC) contract to Amazon, Google, Microsoft and Oracle, a deal worth up to $9 billion through 2028. Funds will be allocated to individual orders as they are issued.

The contract, formerly named JEDI, will have the four tech giants build the DOD’s cloud computing network. The JWCC is intended to provide access to unclassified, secret and top-secret data to military personnel all over the world.

“The purpose of this contract is to provide the Department of Defense with enterprise-wide, globally available cloud services across all security domains and classification levels, from the strategic level to the tactical edge,” the Defense Department said in its announcement.

The DOD pegged the four companies as contenders for the award as early as November 2021. However, it delayed the multibillion-dollar award in March, with agency CIO John Sherman saying that conducting due diligence with four vendors took longer than expected.

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Why the DoD Is Shifting to Multiple Cloud Providers

The outcome of the JWCC effort presents a shift from the previous administration’s strategy of relying on a single cloud provider. As the DOD said in a release, “JWCC is a multiple-award contract vehicle that will provide the DoD the opportunity to acquire commercial cloud capabilities and services directly from the commercial Cloud Service Providers (CSPs) at the speed of mission.”

Forrester analyst Devin Dickerson says awarding the contract to more than one company shows a multicloud strategy that could improve the Pentagon’s bargaining position with major cloud providers and make it easier for offices within the DOD to acquire cloud technologies and services.

CNBC notes that DOD is among a growing number of organizations opting to rely on more than one cloud provider, with some citing cost as a factor and others needing more specialized capabilities from several providers.

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How the Pentagon Is Influencing Cloud Competition

The Associated Press reports there is “intense” competition to snag large corporate and government cloud contracts. The Pentagon’s award is one of the most coveted because it indicates a stamp of approval in a market where ensuring a client’s data security is imperative. Defense officials say the arrangement of the JWCC deal will promote price and product competition. It’s unclear how many orders will be made, and the task order competition process could take weeks or months to execute.

In comments to The New York Times, Daniel Ives, an analyst who monitors the cloud industry for Wedbush Securities, said this is the biggest Beltway cloud deal in history and was key for all the software vendors involved. “It’s good to finally end this chapter and get a cloud deal finally done for the Pentagon,” he said.

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