Amazon Competes for Government Contracts
When you mention Amazon to many people they immediately think of Amazon shopping and Prime delivery, but not as many are aware of the huge inroads that Amazon has made over the past years into cloud computing.
It has been reported that the Pentagon has opened a competition for a multi-billion-dollar cloud services contract, which many of the big players such as Microsoft, IBM and Oracle fear will favor Amazon.com Inc.
Many of the companies looking to compete for government contracts had been pushing for the use of multiple cloud providers, however, the Pentagon announced on March 7 that it was planning to go forward with a single company.
US Department of Defense Chief Management Officer, Jay Gibson, has confirmed that this will be a multi-billion-dollar contract due to the Defense Department’s current technology needs.
The Pentagon confirmed that it intends to strengthen its use of emerging technologies, such as artificial intelligence, machine learning and internet of things and for this reason is switching to cloud services.
As Amazon has already won two huge Defense Department contracts for cloud services, others in the industry believe it is in a good position to win this contract. Whilst the Pentagon’s contracting office stated that they had no preference in contractors, offering the contract to a single vendor, not only causes those who do not win the contract to be locked out of the market for 10 years, it also creates problems for existing government contract vendors, such as Oracle.
Oracle currently has long-term contracts with several government agencies that use its database to store information on their own systems, and switching to cloud computing, would seriously affect Oracle’s traditional source of revenue.
In February of this year a contract was awarded to REAN Cloud LLC, an Amazon partner for a reported value of $950 million, and although this contract was later challenged by Oracle and then reduced to $65 million, it still worries some that Amazon is now the leader in cloud services.
There is no question that the Pentagon’s planned transition to the cloud will threaten on-site database providers such as Oracle and IBM, and while other vendors plan to emphasize their strengths to win this contract, it will be interesting to see which company is ultimately awarded the contract.