As Pentagon Cloud Computing Bid Deadline Nears, Google Drops Out, IBM Protests

Earlier this year, the Department of Defense announced a winner-take-all competition in order to select a cloud computing company to host its sensitive information. 

Some of the initial contenders included Amazon.com, Inc. AMZN, Microsoft Corporation MSFT, Oracle Corporation ORCL, International Business Machines Corp. IBM and Alphabet Inc. GOOGL GOOG’s Google.

The Competition

This week, Google withdrew from the Joint Enterprise Defense Initiative, or JEDI, competition, as it said it conflicts with the company’s principles.

"We are not bidding on the JEDI contract because first, we couldn't be assured that it would align with our AI Principles," a Google spokesman told Bloomberg. "And second, we determined that there were portions of the contract that were out of scope with our current government certifications."

IBM then filed a protest, claiming the bid process restricts competition, according to Bloomberg. Oracle has also protested the process. 

“Throughout the yearlong JEDI saga, countless concerns have been raised that this solicitation is aimed at a specific vendor. At no point have steps been taken to alleviate those concerns," Sam Gordy, IBM's general manager for federal and government industries, said in a blog post. 

Why It’s Important

The project could alter traditional business models for the Pentagon and transition several users to a commercial cloud, according to Bloomberg. The JEDI project could threaten companies that have yet to enter the cloud space or have been slow to develop, but provide tailwinds for companies that help organize software for big cloud computing entities. 

The $10-billion deal includes a two-year base contract with the potential for an eight-year renewal.

What’s Next

Despite several protests, the Defense Department is firm in its decision to select one company and one company only, as multiple players “could prevent DoD from rapidly delivering new capabilities and improved effectiveness to the warfighter that enterprise-level cloud computing can enable,” according to Bloomberg.

The deadline for interested companies is Friday, according to the Defense Department.

At this point, Amazon is considered a clear frontrunner. 

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