The Pentagon’s plans for a huge cloud computing contract have spurred sharp debate over the winner-take-all award that competitors say will favor Amazon. The heated lobbying by companies is escalating as President Donald Trump fires a barrage of tweets against Amazon.
The Pentagon says it’s received 1,089 comments — including submissions from 46 companies — on its plans for a multibillion-dollar cloud computing contract in a sign of the intense interest and sharp debate over a winner-take-all award that competitors say will favor Amazon.
Industry comments and questions, but not the names of the companies making them, will be posted along with the Defense Department’s answers next week when a revised “request for proposal” is issued, according to a posting on a federal contracting website and a Pentagon spokeswoman. Comments also came from two trade associations and three government agencies.
A heated lobbying campaign by companies and industry groups is escalating even as President Donald Trump fires a barrage of Twitter attacks against Seattle-based Amazon, targeting its delivery contract with the U.S. Post Office, its tax payments and CEO Jeff Bezos’ separate ownership of The Washington Post.
The president hasn’t weighed in publicly on the Pentagon cloud contract. But in a private dinner with Trump on Tuesday, Oracle co-CEO Safra Catz criticized the bidding process for the contract, complaining that it seemed designed for Amazon to win, according to people familiar with the matter.
Trump heard her out and said he wants the contract competition to be fair, but made no indication he’d interfere in the bidding, the people said. Oracle is competing with Amazon for the contract, a point she didn’t emphasize to Trump, the people said.
White House press secretary Sarah Huckabee Sanders said Trump isn’t interfering in the contract decision.
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“The president is not involved in the process,” Sanders said at her daily press briefing Wednesday, adding that the Defense Department “runs a competitive bidding process.”
Officials announced March 7 that the Defense Department will choose a single winner to provide cloud services, upgrading and replacing online repositories that now inhibit communications between military services and even between units within the Army, Air Force, Navy and Marine Corps.
The plan to pick a single contractor prompted criticism from Microsoft, International Business Machines and industry groups representing rivals such as Oracle. Rivals say Amazon would be favored because of its market dominance.
Amazon has 44.2 percent of the cloud market followed by Microsoft’s Azure with 7.1 percent, China’s Alibaba Group Holding with 3 percent and Alphabet’s Google Cloud Platform at 2.3 percent, based on total cloud industry 2016 revenue, according to research firm Gartner.
The industry comments, to be posted on the contracting site, FedBizOpps.gov, may give hints about plans by companies to file pre-award protests with the Government Accountability Office, which could endorse or reject the arguments presented. The Defense Department’s responses are likely to flesh out the argument to entrust its cloud-computing needs to a single company.
“We appreciate industry’s participation in the draft solicitation process and are confident that these inputs will help us to refine and clarify the requirement,” Army Lt. Col. Michelle Baldanza, a Pentagon spokeswoman, said in an email. “DoD remains committed to a transparent process.”
The base two-year contract plus four two-year options may lock in the Defense Department’s cloud computing for as long as a decade. The Pentagon has given no estimate for the value of the contract except to confirm it will be in the billions of dollars.
As industry groups mobilize to lobby on the contract, Congress also has moved to play a role.
In a $1.3 trillion spending bill signed into law on March 23, lawmakers directed the Defense Department to provide a “framework” for how it will acquire cloud computing services for all of its entities as well as budget information within 60 days of the bill’s enactment, or the third week of May. That would come before the Pentagon releases its final version of its request for proposals by Memorial Day.
House Appropriations Committee spokeswoman Jennifer Hing said, “The committee has concerns about any contract that limits commercial competition by locking the Department into 10-year contracts with no exit strategy.”
Navy Cmdr. Patrick Evans, another Defense Department spokesman, said “no companies have been preselected. We have no favorites. We want the best solution for the department.”
Trump has repeatedly shown his willingness to publicly weigh in on Pentagon contracting decisions. As president-elect, he criticized costs for Lockheed Martin’s F-35 jet fighter and asked Boeing to cut costs for new Air Force One planes.
But he hasn’t yet sought to put his thumb on the scale in the middle of a contract competition, which would risk a lawsuit by a losing company protesting White House interference.
“We don’t do procurement by tweet. It doesn’t exist. The president actually has no say in the specific award of a contract,” said Stan Soloway, president of consulting firm Celero Strategies and a former Defense official under President Bill Clinton. “Any political interference at all would be illegal and inappropriate.”