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theodore M I R A L D I mpa ... editor, publisher, writer
Friday, March 23, 2018
Obama HOLDOVERS and Federal Contracts
Illustration on Federal contracting by Greg Groesch Brian McNicoll
President Obama has been out of office for 14 months now, but his ability — and that of his allies still in government — to steer gargantuan federal contracts to his friends seems not to have diminished.
Earlier this month, the Pentagon announced it was looking to purchase cloud computing services for its 3.4 million users and their 4 million devices. Cloud services host and store computer power and information in remote data centers rather than on premises, and Pentagon officials said the project would help as it moves into technologies, such as artificial intelligence, machine learning and the Internet of things.
But the Department of Defense has elected to choose only one vendor for this project. Pentagon officials say they already have trouble moving information, including to the battlefield, and multiple clouds would “‘exponentially increase the complexity,’” to have to deal with multiple clouds, according to a deputy director at the Defense Digital Service.
The competition is open, and all the qualified vendors have a chance, officials say. “It’s about the best proposal,” Chanda Brooks, a Pentagon contracting officer, said on a conference call with reporters. “We have no favorites.”
But others in the industry and a growing number of outside observers say the Pentagon indeed does have a favorite, and that favorite is Amazon. Amazon already controls 44 percent of the cloud market — to 7.1 percent for its nearest competitor, Microsoft’s Azure system.
Amazon already has a $600 million contract to supply cloud services to the CIA and last month received a $950 million contract to help migrate Pentagon data to the cloud, regardless of who wins the contract. Moreover, its lobbying arm is the fastest-growing among tech companies and it has been working to win this contract since at least 2016.
Competitors say this makes it virtually certain the Pentagon will choose Amazon, and, given the terms of the contract the Pentagon is offering — two years up-front, then year-by-year options for the next eight — and the problems already expressed with “moving information,” it’s unlikely anyone but Amazon will have a chance at cloud computing for the Department of Defense for at least a decade.
The other vendors and their trade groups say this discourages innovation by having one huge, difficult-to-move company in charge for 10 years in a period when technology sometimes is out of date within weeks.
It also, they say, leaves the country open to hacking — break into Amazon’s cloud, and you have the entire U.S. military at your fingertips. “This is a monopoly story, but this really is a serious national security story,” said Matt Stoller, an economist at the Open Markets Institute who has taken a critical look at Amazon’s moves into the public contracting space. “A single-source provider for Pentagon cloud services is obviously reckless. The Pentagon should have multiple cloud providers so that if something happens to one of them, there is resiliency and redundancy.”
Then there’s the political aspect to all this. Jeff Bezos, who owns Amazon, also owns The Washington Post and has directed it to spend every day attacking President Trump in any way possible. He sent a memo to employees the Monday after Mr. Trump was inaugurated that announced opposition to the travel ban the president implemented from seven terrorist-infested countries from which we could not vet those entering the U.S. He has donated overwhelmingly to Democratic political candidates and has criticized the president repeatedly for his accusing the media of left-wing bias.
Moreover, the federal agencies that deal with technology purchases of this scope throughout government — 18f, the General Services Administration’s taxpayer-funded software development consultancy and the U.S. Digital Service — are led by Obama holdovers, and the Defense Innovation Board, which recommended some of these changes, is chaired by Eric Schmitt, executive chairman of Google’s parent company and longtime ally of Mr. Bezos.
Mr. Obama set up these agencies to outlast him. At 18f — named for the intersection in downtown Washington where its now-hundreds of employees work — gets its money from the agencies it helps, which means it never has to turn to Congress to keep funding levels consistent.
He also called for embedding Presidential Innovation Fellows — tech experts loaned by their companies to the agency for one-year stints — into the Defense Innovation Board.
If we wanted a government run by and for Obama holdovers, we would have elected Hillary Clinton, who promised a third term. We didn’t. We wanted competition and business and growth and innovation.