Even after Microsoft wins, JEDI saga could drag on – TechSwitch

    The DoD JEDI contract saga got here to an exciting conclusion on Friday afternoon, appropriately sufficient, with one last plot twist. The presumptive favourite, Amazon, didn’t win, beautiful many, together with probably the corporate itself. In the tip, Microsoft took residence the $10 billion prize.
    This contract was crammed with drama from the start, given the amount of cash concerned, the size of the contract, the winner-take-all nature of the deal — and the politics. We can’t overlook the politics. This was Washington in any case, and Jeff Bezos does personal The Washington Post.
    Then there was Oracle’s fury all through the procurement course of. The president bought concerned in August. The present protection secretary recused himself on Wednesday, two days earlier than the choice got here down. It was all simply a lot drama, even the ultimate resolution itself, handed down late Friday afternoon — however it’s unclear if that is the tip or simply one other twist on this ongoing story.

    Some perspective on $10 billion
    Before we get too loopy about Microsoft getting a $10 billion, 10-year contract, contemplate that Amazon earned $9 billion final quarter alone in cloud income. Microsoft reported $33 billion final quarter in whole income. It reported round $11 billion in cloud income. Synergy Research pegs the present cloud infrastructure market at nicely over $100 billion yearly (and rising).
    What we’ve got here’s a contract that’s value a billion a 12 months. What’s extra, it’s attainable it may not even be value that a lot if the federal government makes use of one in all its out clauses. The deal is definitely initially assured for simply two years. Then there are a few three-year choices, with a last two-year possibility on the finish if it will get that far.
    The DOD acknowledged that with the distinctive nature of this contract, going with a single vendor, it needed to maintain its choices open ought to the tech world shift all of the sudden underneath its ft. It didn’t wish to be inextricably tied to 1 firm for a decade if that firm was all of the sudden disrupted by another person. Given the shifting sands of expertise, that a part of the technique was a clever one.

    Where the worth lies
    If the worth of this deal was not the contract itself, it begs the query, why did everybody need it so badly? The $10 billion JEDI deal was merely some extent of entree. If you might modernize the DoD’s infrastructure, the argument goes, likelihood is you might do the identical for different areas of the federal government. It might open the door for Microsoft for a way more profitable authorities cloud enterprise.
    But it’s not as if Microsoft didn’t have already got a profitable cloud enterprise. In 2016, for instance, the corporate signed a deal value nearly a billion {dollars} to assist transfer your complete division to Windows 10. Amazon too, has had its share of presidency contracts, famously touchdown the $600 million to construct the CIA’s non-public cloud.
    But given all the eye to this deal, it all the time felt a bit of totally different out of your customary authorities contract. Just the very fact the DoD used a Star Wars reference for the venture acronym drew extra consideration to the venture from the beginning. Therefore, there was some status for the winner of this deal, and Microsoft will get bragging rights this morning, whereas Amazon is left to ponder what the heck occurred. As for different corporations like Oracle, who is aware of how they’re feeling about this consequence.

    Hell hath no fury like Oracle scorned
    Ah sure, Oracle; this story wouldn’t be full with out discussing the craze of Oracle all through the JEDI RFP course of. Even earlier than the RFP course of began, they have been complaining concerning the procurement course of. Co-CEO Safra Catz had dinner with the president to complain that the contract course of wasn’t honest (not honest!). Then it tried complaining to the Government Accountability Office. They discovered no difficulty with the method.
    They went to court docket. The choose dismissed their claims that concerned each the procurement course of and {that a} former Amazon worker, who was employed by the DoD, was concerned within the course of of making the RFP. They claimed that the previous worker was proof that the deal was tilted towards Amazon. The choose disagreed and dismissed their complaints.
    What Oracle might by no means admit was that it merely didn’t have the identical cloud chops as Microsoft and Amazon, the 2 finalists. It couldn’t be that they have been late to the cloud or had a fraction of the market share that Amazon and Microsoft had. It needed to be the method or that somebody was boxing them out.

    What Microsoft brings to the desk
    Outside of the politics of this resolution (which we’ll get to shortly), Microsoft dropped at the desk some expertise and tooling that actually gave it some benefit within the choice course of. Until we see the explanations for the alternatives, it’s laborious to know precisely why the DoD selected Microsoft, however we all know a number of issues.
    First of all there are the prevailing contracts with the DoD, together with the aforementioned Windows 10 contract and a five-year $1.76 billion contract with DoD Intelligence to offer “innovative enterprise services” to the DoD.
    Then there may be Azure Stack, a transportable non-public cloud stack that the navy might rise up anyplace. It might have nice utility for missions within the area when speaking with a cloud server might be problematic.

    Fool if you happen to assume it’s over
    So that’s that proper? The resolution has been made and it’s time to maneuver on. Amazon will go residence and lick its wounds. Microsoft will get bragging rights and we’re good. Actually, this may not be the place it ends in any respect.
    Amazon, as an example, might level to Jim Mattis’ e book the place he wrote that the president instructed the then Defense Secretary to “screw Bezos out of that $10 billion contract.” Mattis says he refused, saying he would go by the e book, however it actually leaves the door open to a battle query.
    It’s additionally value stating that Jeff Bezos owns The Washington Post and the president isn’t precisely in love with that specific publication. In reality, this week, the White House canceled its subscription and inspired different authorities companies to take action as nicely.
    Then there may be the matter of present Defense Secretary Mark Espers all of the sudden recusing himself final Wednesday afternoon based mostly on a minor level that one in all his grownup kids works at IBM (in a non-cloud consulting job). He claimed he needed to take away any trace of battle of curiosity, however at this level within the course of, it was right down to Microsoft and Amazon. IBM wasn’t even concerned.
    If Amazon needed to protest this resolution, it appears it could have rather more strong floor to take action than Oracle ever had. An Amazon spokesperson would solely say that the corporate “was keeping its options open.”
    The backside line is a choice has been made, no less than for now, however this course of has been rife with controversy from the beginning, simply by the design of the venture, so it wouldn’t be shocking to see Amazon take some protest motion of its personal. It appears oddly acceptable.

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