Disputed Pentagon Cloud Proposal to Be Delayed for More Study

Tony Capaccio (Bloomberg) -- The Pentagon, intent on avoiding a “rush to failure,” has delayed indefinitely its final request for proposals that will spell out requirements for a multibillion-dollar cloud contract, according to spokeswoman Dana White.

“We are still working on it,” White said Thursday of the document Defense Department officials had said they’d hoped to release by now. Citing extensive industry interest, she said, “It’s important that we don’t rush toward failure.”

Industry groups representing major technology companies including Microsoft Corp. and Oracle Corp. have objected to the Pentagon’s plans for a winner-take-all award that they say will favor Amazon.com Inc., the leading provider of cloud computing services. Once the final version of the request is issued, companies may challenge its terms before the Government Accountability Office or in the courts.

“I don’t have a timeline” for release of the final request for proposals, White said. At a Pentagon press conference and in an interview afterward she said the Defense Department was carefully weighing more than 1,000 industry comments submitted in response to a draft request for proposals.

But White said there’s been no change to the winner-take-all strategy that would cover an initial two-year contract and two options that may add as many as eight years. She said award of the contract in September remains the “notional” target.

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White said the Pentagon has received no political pressure from the White House on who should win the contract, adding, “This remains a full and open competition.”

Amazon and its Chief Executive Officer Jeff Bezos have been frequent targets of hostile tweets by President Donald Trump. But the president gave no indication that he’d interfere in the cloud contract bidding when Oracle CEO Safra Catz criticized the winner-take-all bidding process over a private dinner with Trump in April, according to people familiar with the event.

After initially declining to provide a formal justification for a single-source award, the Pentagon said in a May report to Congress that it would be the best and most secure approach for “rapidly delivering new capabilities” to U.S. forces deployed worldwide.

The prospect that a contractor might exercise the right to protest drew a combative reaction in April from Tim Van Name, deputy director of the Defense Digital Service, which is overseeing the contract competition.

The lack of advanced technology is “putting a lot of folks in harm’s way, so the idea of a protest makes me sick to my stomach,” he told Bloomberg News.

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