Amazon Web Services is on the cusp of securing a massive government contract that may hit $100 billion over the next ten years – possibly the largest IT contract ever. The great irony is that it appears that the fix is in and there will be zero competition for this contract. Cronyism is something that Tea Party minded voters hate, and we are seeing an example of it roll out before our eyes.
When the Tea Party came to Washington, they were fighting the cronyism of the TARP bailout of Wall Street and later the numerous sweetheart deals doled out by the Obama Administration – remember Solyndra? Now we have President Donald Trump who can stop the friendly relationship between favored companies and the federal government. If he can stop this deal being cut by his own Department of Defense to migrate all the classified and unclassified data to an Amazon Web Services managed cloud for computing, then he will be keeping his promise to drain the swamp.
The Obama Administration handed a large contract to migrate all the Central Intelligence Agency (CIA) data to the Amazon cloud. In March, Bloomberg reported on the CIA contract that the 2013 agreement was worth about $600 million and that Amazon had “the fastest-growing lobbying arm among tech companies and has spoken to the Pentagon about cloud or procurement since at least 2016, according to federal lobbying disclosures.” Amazon was rewarded for CEO Jeff Bezos’ strong support for liberal Democrats with a contract that dwarfs in comparison to the Department of Defense deal.
One piece of evidence that the fix is in is that sources with knowledge of the deal consider it done. Business Insider reported on April 4, 2018 “the Pentagon is close to awarding a cloud-services contract worth as much as $10 billion to Amazon, even as President Donald Trump attacks the e-commerce giant from the White House, according to a source with knowledge of the deal.” The magnitude of the deal might be even greater – up to $100 billion because once Amazon Web Services locks down the cloud computing for the DoD, it is likely they will have it forever. The contract is expected to last about ten years, yet after that time is up, it is not expected that the Department of Defense would use a different contractor. They would have to migrate data from one cloud to another.
The smoking gun that this is a done deal is that an Amazon partner was already given a contract to start the process of migrating data to the cloud, REAN Cloud, LLC as reported by Bloomberg. That initial deal approached one billion but was reduced to $65 million when this insider deal was revealed to the public.
The biggest policy objection to this deal is that awarding a sole source contract to one company may hurt national security by making Department of Defense data, including sensitive military classified information, easier to hack and be accessed by America’s enemies. Diversifying the contract over a number of contractors to have redundancy would help, as would a contracting process that creates real competition. Competition will lower the price to the consumer who is the taxpayer and force the bidders to tighten up the plan to both house and protect Department of Defense sensitive data.
Insider deals make for bad contracting decisions and this one stinks. President Donald Trump is right to criticize Amazon for bilking the Postal Service when sending packages and he should look to this contract as another opportunity for Amazon to stick it to the taxpayers.