Antitrust, Transparency Concerns Cast Doubt on Pentagon’s Cloud Computing Project

Innovation can only truly thrive when there is competition in the marketplace that spurs the creation of newer, better products. In our military and aerospace manufacturing industries, there is fierce competition to develop the most cutting-edge technologies for the planes, ships, and weapons systems that are required for modern-day warfare and national security. The leaps in innovation that result from such stiff competition also mean that our servicemen and women are safer and better prepared in battle. In deciding how to award the contract for the massive cloud computing system that will drag our military’s information technology out of the last century, the Pentagon must consider the benefits reaped from competition in other areas, as well as the consequences of disincentivizing future innovations.

Thus far, the mixed signals coming from the Pentagon are casting serious doubts over the bidding process for a project that will be worth (or cost, depending on whether you’re the winning bidder or a taxpayer) billions of dollars. At best, this lack of transparency creates significant uncertainty about the oversight of a critically important project. At worst, it raises crony capitalism suspicions that the process has been rigged for Amazon, which is already heavily involved in the rapidly expanding federal government cloud computing market.

These concerns are not without merit. Last fall, the Pentagon “signaled it would pursue a multi-party cloud computing contract” according to The Hill, only to release a request for proposal in March that called for a single source provider, leading watchdog groups to suspect Amazon has the inside track.

To add fuel to the fire, serious accountability concerns were raised last month when DoD said it was “unaware” of a project worth nearly $1 billion that had been awarded to an Amazon partner to migrate existing data to the cloud. While the Pentagon eventually slashed the contract’s value by more than 90 percent, from $950 million to $65 million, questions about who ultimately has the final say in the DoD’s cloud procurement remain.

In addition, the fact that Obama administration holdovers and others with deep ties to Amazon and other tech firms whose senior leadership skews leftward remain highly influential at the Pentagon and elsewhere adds credence to crony capitalism fears that politics are playing a large role in this project.

Amazon’s competitors argue a single provider for the cloud infrastructure “unnecessarily increases cybersecurity risks” and continue to push for a multi-party contract. They may be right, and certainly any hack of our military’s cloud poses dire national security consequences and could put our soldiers’ lives at risk. But in a broader context, the anti-trust consequences of awarding a monopoly for such a critical project threaten future innovations in cloud computing and create disincentives for competitors to make the R&D investments that lead to technological breakthroughs.

Given that taxpayers are on the hook for the bill and the fact that a single-party contract could lock out competition for a decade or more, Secretary of Defense James Mattis and senior Pentagon leadership must instill the oversight necessary to ensure a fair, transparent and competitive process. At the very least, all potential conflicts of interest within the Pentagon and anyone remotely connected to the bidding process must be publicly disclosed.

However, given the national security implications and the sheer complexity of a project of this scope, serious consideration should be given to the multi-party cloud computing framework that was originally envisioned. Fostering competition in this arena will pay dividends in the form of future innovations in military cloud computing, while putting to rest fears of a politically motivated bidding process. Surely this is a better course of action than awarding a long-term monopoly for a technology that is so rapidly changing and evolving.


Demetrios Karoutsos is a political and public affairs strategist who has worked on a number of congressional, gubernatorial and Senate campaigns.

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