What Comes Next If The Pentagon Strikes Down JEDI Cloud?

The Defense Department is considering pulling the plug on its $10 billion Joint Enterprise Defense Infrastructure (JEDI) cloud program pending an upcoming decision in federal court, according to a new memorandum to Congress.

The decision to cancel JEDI, the “focal point” of the Pentagon’s enterprise cloud strategy, may have far-reaching implications. Below, Bloomberg Government summarizes the latest developments in the ongoing legal proceedings against JEDI, and offers an analysis of the cancellation’s potential impact on the DOD’s cloud strategy.

What’s the Latest In the JEDI Legal Saga?

Defense officials told Congress they may cancel JEDI if Judge Patricia Campbell-Smith agrees to hear arguments from Amazon Web Services Inc. about alleged political interference in the acquisition. Subsequent litigation could drag on for months or years and bring the future of the program into question, according to the memo. Amazon Web Services alleges the Trump Administration pressured Pentagon officials to steer the massive IT contract away from Amazon, a violation of federal acquisition regulations.

The claim of political interference is one of several claims Amazon levels against the Defense Department. The suit also alleges that errors in JEDI’s technical evaluation led Pentagon officials to award the deal to Amazon competitor, Microsoft Corp. If Judge Campbell-Smith sides with the Pentagon, officials expect the legal case to narrow in on technical aspects of the procurement, perhaps only delaying the program by “four to five months,” according to the memo.

“Whatever the outcome, the Department’s unsolved capability gaps would still remain for enterprise wide, commercial cloud services — at all three classification levels – stretching from the homefront to the tactical edge — at scale,” DOD officials wrote.

What Happens If the Pentagon Cancels JEDI?

If the Defense Department cuts JEDI instead of facing months of further litigation, it will open up an enterprise cloud-sized hole in its IT modernization strategy. JEDI is the Pentagon’s “general purpose” cloud, the first among many, according to the strategy developed by now-former chief information officer Dana Deasy. Although the department has dozens, perhaps hundreds, of other cloud computing programs underway, all of them are intended as “fit-for-purpose” clouds, designed for specialized applications and use cases.

The question of how to replace a program like JEDI poses an immediate challenge to President Biden’s team at the Pentagon, led by Defense Secretary Lloyd Austin and acting chief information officer John Sherman. Pentagon leaders could attempt a wholesale do-over to acquire a general purpose cloud contract, expand an existing program to fit the role, or adopt a more federated strategy built on ensuring compatibility across various component-led cloud programs.

If the Pentagon opts for a new program entirely, odds are it will be led by the Defense Information Systems Agency (DISA). In January, DISA assumed control of the DOD’s Cloud Computing Program Office, which oversees programs like JEDI. The Fort Meade, Md.-based agency already manages a sizeable portfolio of cloud infrastructure programs that could be modified to take on a larger workload, sans JEDI. Its two largest programs are MilCloud 2.0 and a hybrid cloud-storage program called Enterprise Storage Services II (ESS II).

MilCloud 2.0’s contract generated $58 million since June 2017 for vendor CSRA LLC, now a subsidiary of General Dynamics Corp. MilCloud is authorized to handle sensitive workloads up to Impact Level (IL) 5, with the approval process underway for IL 6, according to MilCloud’s website. DISA’s ESS II, which has generated $254 million for World Wide Technology Holding Co Inc., is ending Apr. 4. DISA posted a request for information for the follow-on contract in December 2020, with a draft request for proposal likely by the end of March.

Another more radical option may be to scale back the “general purpose” cloud, and embrace a more component-led cloud strategy. In the two years JEDI has been mired in federal court, several Pentagon agencies have had no choice but to launch their own cloud projects, hoping to stitch them to the enterprise cloud environment at a later date.

The largest of these has been the Air Force’s Common Computing Environment (CCE), built by Leidos Holdings Inc., which offers dozens of cloud-based services to Air Force components, including classified data hosting up to IL 6. In September 2019, Science Applications International Inc. won the recompete contract, which could generate as much as $760 million by June 2024.

The Air Force is hardly alone in its journey to the cloud. In September 2018, the Army launched the Army Cloud Computing Enterprise Transformation (ACCENT) program, which has earned Oracle Corp. $14 million to date. The Army’s cloud management office announced plans in November to dramatically scale-up its own enterprise cloud environment, known as cArmy, built on Amazon and Microsoft infrastructure. The Navy, meanwhile, awarded General Dynamics two blanket purchase agreements to support departmentwide cloud adoption. Even the Joint Artificial Intelligence Center has launched its own cloud program, the Deloitte-built Joint Common Foundation, to support AI research and development.

Common among all these programs is a systems integrator-led, cloud-agnostic approach. In contrast to JEDI’s single-vendor, winner-take-all acquisition strategy, the military services are turning to traditional contractors to serve as cloud brokers and integrators offering access to multiple cloud service providers. This approach offers internal customers greater flexibility to pick cloud services best-suited to their missions, while mitigating the risk of over-reliance on a single vendor.

If the Pentagon opts to bid a new enterprise cloud contract to replace JEDI, expect it to use a single-integrator, multi-cloud strategy. Expect opportunities for Microsoft and Amazon, as well as Oracle, International Business Machines Corp., and possibly Google Inc. Expect requirements to be tailored around enabling emerging technologies, such as AI and 5G wireless, as well as departmentwide initiatives like Joint All Domain Command and Control. But given defense officials’ prior attempts to manage expectations around JEDI, don’t expect another $10 billion price tag.

What’s Ahead

The Pentagon’s Jan. 28 memo to Congress, also distributed to members of the press, is a signal its leaders are bracing for the possibility of an adverse ruling in the coming weeks. In that scenario, the Pentagon could cancel the contract to preclude months of additional litigation and a potentially bruising legal discovery process.

But after more than two years of bid protests, and years of further litigation a possibility, killing the JEDI program could offer the DOD a chance to start fresh. Pentagon leaders could take advantage of recent innovations in federal technology acquisition practices to deliver a cloud platform that offers warfighters an edge on the battlefield, value for taxpayers, and a new hope for a fair and timely procurement process.

To contact the analyst on this story: Chris Cornillie in Washington at ccornillie@bgov.com

To contact the editors responsible for this story: Michael Clark at mclark@ic.bloombergindustry.com