The Department of Defense is expected to offer $5 billion to Amazon to act as the military’s sole cloud solution provider. Only in America could Jeff Bezos have started an online bookstore in 1994 that would eventually be approached by one of the largest agencies within the federal government. While this story should be one focused on success, the pending contract should raise bipartisan concerns about the costs of no-bid contracts, the prevalence of single-source providers, and the outsized role of unelected civil servants in the federal bureaucracy.
It’s no secret that the government is always several steps behind when it comes to technological innovation. The DoD determined that it needs to update its cloud services architecture, but does not have the capacity to do so on their own. An ad hoc committee, called the Defense Department Cloud Executive Steering Group, or CESG, published a “Request for Information” soliciting advice from the private sector on how to modernize its cloud services.
Competition drives prices down and quality of service up. It is for this reason that the law generally requires government agencies to explore multiple options when contracting out. Yet for some reason CESG may make an unsolicited, winner-take-all offer of $5 billion to one firm. Military observers expect Amazon to be the recipient considering several multimillion-dollar contracts the company has entered into for cloud services with the Air Force, CIA, and 15 other intelligence agencies. This lack of process behind the offer represents a dangerous move for the government for three main reasons.
Have you ever been told not to buy the first apple you see at the farmers market? As pretty as it may look, the apple seller a few feet away may have a prettier and less expensive apple to offer and you would have no idea. The same concepts of competition and options should apply here, yet the Pentagon may formally offer the contract to Amazon without receiving formal bids from many competing firms.
Deputy Defense Secretary Patrick Shanahan emphasized the importance of competitive sourcing in his recent guidance on procurement. While he talks the talk, often times this is ignored. Billions of dollars in government contracts are routinely awarded through loopholes allowing taxpayer money to be distributed without competing on quality and price. At the Pentagon, the majority of outsourced spending is on noncompetitive contracts. The only reason that should be happening is if there is only one firm in the market that has the requisite capability — a “sole source,” as it is known in government jargon. You don’t need to be a millennial to know that Amazon is surely not the only company with the ability to provide cloud services.
Two heads are always better than one. Making this deal would effectively make Amazon the only cloud services provider for the DoD, eliminating the military's leverage to negotiate with Amazon in the future. Again, this is not an uncommon practice for government contracts. By excluding other companies, the government is depriving itself of the benefits different companies can provide in their particular areas of expertise. Failing to diversify puts any investor, especially the government, at a greater risk. The stakes are high here, as a breach by a cloud services provider could lead to the leak of military secrets to China and other U.S. competitors that do business with Amazon. In a world where nude photos of celebrities have been ripped out of the cloud, Americans and their elected officials should see this deal as a real threat.
If this $5 billion, unsought offer goes through, it will be the most expensive procurement in history. While these unruly practices are not uncommon, Congress and the Trump administration should not approve the deal without considering the broader implications of this. Having an outsourcing process that lacks competition, diversification of risk, and democratic accountability is not consistent with American values.
Elected officials need to make it clear that this will not be the norm and that permitting unelected bureaucrats to dole out a no-bid, $5 billion contract to one firm is lacking in the basic precepts of good governance.
This piece has been corrected to show that the Pentagon has not yet offered Amazon a contract.
Casey Given (@CaseyJGiven) is a contributor to the Washington Examiner's Beltway Confidential blog. He is the executive director of Young Voices.
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