CIA Gives Tech Rivals Chance to Take on Amazon in Cloud Services

Naomi Nix (Bloomberg) -- The CIA is preparing to significantly increase its reliance on cloud computing services, with plans to solicit tens of billions of dollars of work divided among multiple tech companies.

The program would also dramatically expand the federal market for the technology -- and give a chance for other companies to compete with Amazon.com Inc.

Potential contenders for the new work include Microsoft Corp., International Business Machines Corp. and Oracle Corp., which are all seeking to catch up to market leader Amazon Web Services in selling cloud services to the intelligence community.

Amazon already has a $600 million contract from the CIA, and Oracle has gone to court to challenge a Defense Department winner-take-all solicitation that it says would favor Amazon.

The CIA’s initiative, which was outlined to potential vendors last week, calls for buying cloud computing services from multiple companies to handle both unclassified and secret information, according to preliminary government documents presented to industry representatives and obtained by Bloomberg News.

C2E Program

Dubbed the Commercial Cloud Enterprise initiative, or C2E, the program is at the heart of the Central Intelligence Agency’s plans to use cloud services to power the intelligence community’s technology needs worldwide, according to the documents.

With the new competition, the CIA plans to expand the cloud computing capabilities it gained through the Amazon contract awarded in 2013. Amazon, the dominant player in cloud computing, also became the leader in the federal market through that deal, which has been described as "transformational” by Sean Roche, the CIA’s associate deputy director of digital innovation, and won praise from former Defense Secretary Jim Mattis.

The agency indicated it intends to award one or more contracts that would last at least five years, with the option to extend the time frame of those agreements. The government plans to release draft contract requirements by January and a final request for proposals in May 2020, according to the documents. The agency aims to make an award in 2021.

Soliciting Feedback

The CIA is still soliciting feedback from market leaders and the exact scope and strategy of the project -- including the goal to use multiple companies -- has yet to be made final.

If the CIA follows through on its intention to use multiple companies, it may avoid the industry criticism that has plagued the Defense Department’s plans to award its $10 billion Joint Enterprise Defense Infrastructure contract, or JEDI, to a sole company.

The lawsuit by Redwood City, California-based Oracle alleges that conflicts of interest among some Defense Department officials with ties to Amazon led to the winner-take-all award and to narrow criteria that could only be met by the company. The Pentagon has said a single cloud provider would be more efficient and secure.

The CIA approach was welcomed by potential bidders.

“The intelligence community, with this approach, recognizes the value of cloud diversity and the advantages of a hybrid, multi-cloud approach,”said Ray Spicer, director of defense and intelligence for IBM U.S. Federal. “That’s the way the majority of the industry is operating today and throughout the world.”

Amazon Web Services said in a statement that it’s “excited to see the intelligence community build on its transformational success and extend its commitment to the commercial cloud.”

The CIA, Oracle and Microsoft declined to comment.

Since the CIA’s 2013 deal with Amazon, Microsoft and other companies have made headway in the broader federal market for cloud services, which has grown more competitive and lucrative as more agencies seek to modernize their technology infrastructure.

If the new CIA initiative expands its pool of providers to include companies such as IBM, Oracle and Alphabet Inc.’s Google, those companies may have more standing to pitch themselves to other federal agencies as offering products that are as secure as Amazon’s.

Microsoft Certification

In May, Redmond, Washington-based Microsoft announced a deal that would let 17 intelligence agencies use Azure Government, a cloud service tailored for federal and local governments. The company also said it would soon obtain a top certification required to host the government’s most sensitive information -- a distinction currently held only by Amazon Web Services.

Amazon leads among U.S. companies in the worldwide public cloud infrastructure market with 45.6 percent, followed by Microsoft with 10.7 percent, IBM with 5.6 percent and Google 3.3 percent, based on cloud industry 2017 revenue, according to the International Data Corporation, a market intelligence firm based in Framingham, Massachusetts.