Microsoft’s unexpected win of a $10 billion contract to run unified cloud services for the US’s Department of Defense has sent its share price soaring. The contract, announced October 26, will see Redmond develop a department-wide cloud services that will underpin new AI-powered war-fighting capabilities.
The Pentagon says it currently uses over 3.4 million end users, four million endpoint devices, 1,700 different data centres and 500 cloud initiatives. Under the contract, these will be bundled into a single common cloud environment.
Microsoft beat AWS to the contract, which will “address critical and urgent unmet warfighter requirements for modern cloud infrastructure at all three classification levels delivered out to the tactical edge”, the Pentagon said.
AWS’s $600 million cloud contract with the CIA and significantly greater market heft had left it firm favourite to win the contract: “We’re surprised about this conclusion,” AWS said. “AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion.
The DoD softened the blow (the single vendor approach and tender process itself have both been hugely controversial) by suggesting more large-scale opportunities were on the horizon: “The Department continues to assess and pursue various cloud contracting opportunities to diversify the capabilities of the DoD Enterprise Cloud Environment. Additional contracting opportunities are anticipated.
“The National Defense Strategy dictates that we must improve the speed and effectiveness with which we develop and deploy modernized technical capabilities to our women and men in uniform,” DOD Chief Information Officer Dana Deasy said. “The DOD Digital Modernization Strategy was created to support this imperative. This award is an important step in execution of the Digital Modernization Strategy.”
The “Information Technology Alliance for Public Sector” group is among those who have hit out at the single vendor approach to the colossal contract.
The organisation earlier noted: “A winner-take-all award dilutes the benefits of best practices, strongly increasing the likelihood of vendor and technology lock-in, and negatively impacting innovation, costs, and security.”
Microsoft JEDI Contract: Likely to Face Challenges
Microsoft will face a number of challenges in executing on the contract, not least quelling any employee unease about the ethics of the contract.
The company had to conduct internal fire-fighting in 2018 amid a row over its contract with the Immigration and Customs Enforcement (ICE), which was facing severe blowback over its policy of separating children from their parents at the border. With the weaponisation of AI already a hot topic among ethicists, policy makers and developers alike, it can no doubt expect to face more sharply opinion (which $10 billion will no doubt help assuage), along with colossal pressure to execute.
The Pentagon, meanwhile, will be hoping Microsoft performs better than Gartner’s analysts thought it did when they wrote their most recent Magic Quadrant for Infrastructure-as-a-Service: “Microsoft Azure’s reliability issues continue to be a challenge for customers” that reported noted in July.
“Since September 2018, Azure has had multiple service-impacting incidents, including significant outages involving Azure Active Directory… Enterprises frequently lament the quality of Microsoft technical support (along with the increasing cost of support) and field solution architects” it added.
Azure CTO Mark Russinovic on July 19 said Azure had 99.995 percent average uptime across its global cloud infrastructure, but promised improvement. He noted that three high profile outages between September 2018 and May 2019 were the result of “multiple failures that only through intricate interactions led to a customer-impacting outage,” adding: “In response, we are creating better ways to mitigate incidents through steps such as redundancies in our platform, quality assurance throughout our release pipeline, and automation in our processes.”