Shanahan: Giant Cloud-Computing Contract Not ‘Winner-Take-All’

Deputy Secretary of Defense Pat Shanahan is defending plans to award a single contract for migrating its information technology service to a cloud, because the award is not, in fact, a sole-source deal.

The first company to snag an indefinite-delivery, indefinite-quantity (IDIQ) contract through the Joint Enterprise Defense Infrastructure (JEDI) initiative will perform cloud migration services unopposed for a period of two years and account for 10 percent to 20 percent of the department’s overall computing services, according to Shanahan.

Deputy Secretary of Defense (DSD) Patrick M. Shanahan speaks to Keystone class 18-1 at the Pentagon, March 13, 2018. Keystone educates Command Senior Enlisted Leaders serving in or slated to serve in general or flag officer level joint or service headquarters. DSD Shanahan spoke about the Secretary’s lines of effort for the department. (DoD Photo by U.S. Army Sgt. James K. McCann)

Deputy Secretary of Defense (DSD) Patrick M. Shanahan speaks to Keystone class 18-1 at the Pentagon, March 13, 2018. Keystone educates Command Senior Enlisted Leaders serving in or slated to serve in general or flag officer level joint or service headquarters. DSD Shanahan spoke about the Secretary’s lines of effort for the department. (DoD Photo by U.S. Army Sgt. James K. McCann)

“The cloud was a real opportunity to do IT modernization,” he said. “When you look at the amount of … cloud-like capacity that we have to build for the Department of Defense, this contract represents less than 20 percent. When people say ‘It’s a winner-take-all,” it’s a winner-take-all that is less than 20 percent.”

The Department of Defense issued a draft solicitation March 7 for the potential multi-billion-dollar JEDI cloud services project aimed at improving data analytics and security across all facets of the department. The project will be a single-award contract for two years, with potential for eight years of follow-up options.

DoD officials have referred to JEDI as a single-award indefinite delivery, indefinite quantity contract, and said that the eventual contract award will include firm-fixed pricing items purchased from a commercial vendor.

A final solicitation will be posted in early May, and a final contract for the initial phase of the program is scheduled to be awarded in September. Shanahan said by attaching future contracts to the initial deal allows the Pentagon to recompete the program without going back through the federal contracting process.  

“The inference of sole-source is that for 100 percent of the business, you let one contract,” Shanahan said. “For 10 percent … we’re going to award it to someone. But, then there’s going to be a 20 percent, 30 percent, 40 percent. So, you still end up with multiple providers. I think that’s where some of the confusion is.”

Relative to the Defense Department’s entire IT budget, spending on the initial contract will amount to less than five percent, Shanahan said.

“It’s a small step, of many steps, that are going to occur over the next many years,” he said. “When we say winner-take-all, it’s also winner take it all back after two years. It’s like leasing a car. If you decide to get married and have a family and now need a minivan, you’ve got an out. This is about preserving options.”

Initially, the program will find areas where the department can transition to cloud computing and retire legacy IT systems entirely, he said. It will focus on migrating non-classified computing systems to the cloud so cyber security and other concerns can be addressed before sensitive systems are transitioned. Systems also will be prioritized by how completely they can jettison old, inefficient computing systems, he said.

“We’re not going to allow people to move to the cloud unless they can demonstrate they can retire the environments they’ve been in,” Shanahan said. “Our intent is to understand how we can distribute access and then take cost out. … We’re using this cloud effort to … create the environment so in restructuring intel and support agencies, now we’re in a secure environment.”





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