- Of the four companies receiving cloud-computing contracts from the Pentagon, all of them had received requests for bids from the U.S. federal agency last year.
- At that time, the General Services Administration didn't expect that Oracle, a lesser player in the cloud-infrastructure business, would be able to meet the Pentagon's needs.
- The contract for the four companies could reach a combined total of $9 billion.
The Pentagon said Wednesday that Amazon, Google, Microsoft and Oracle received a cloud-computing contract that can reach as high as $9 billion total through 2028.
The outcome of the Joint Warfighting Cloud Capability, or JWCC, effort is in line with the U.S. Defense Department's effort to rely on multiple providers of remotely operated infrastructure technology, as opposed to relying on a single company, a strategy promoted during the Trump Administration.
A Department of Defense spokesperson told CNBC by email that "JWCC is a multiple award procurement composed of four contracts with a shared ceiling of $9 Billion."
An increasing tally of businesses have also sought to rely on more than one cloud provider. In some cases they rely on specialized capabilities on one and the majority of front-end and back-end workloads on another. At other times, they come down to cost. Having more than one cloud might make organizations more confident that they can withstand service disruptions brought on by outages.
Originally, the Pentagon had awarded the Joint Enterprise Defense Infrastructure, or JEDI, to Microsoft in 2019. A legal battle ensued as Amazon, the top player in the cloud infrastructure market, challenged the Pentagon's decision. Oracle challenged the Pentagon's pick as well.
In 2020, the Pentagon's watchdog conducted a review and ruled that there was no evidence to conclude that the Trump Administration had intervened in the process of awarding the contract. Months later the Pentagon announced it would stick with Microsoft for the JEDI deal.
Last year the Pentagon changed its approach, asking for bids from Amazon, Google, Microsoft and Oracle to address cloud needs. But the General Services Administration stated at the time that only Amazon and Microsoft seemed to be able to meet the Pentagon's requirements.
Wednesday's result is a boon in particular for Oracle, which analysts don't see in the top tier of companies offering cloud-based computing services. Oracle generated $900 million in cloud infrastructure revenue in the quarter that ended Aug. 31, a small fraction of the $20.5 billion total for Amazon's cloud subsidiary, Amazon Web Services, in the third quarter.
All four of the technology companies have won indefinite delivery, indefinite quantity, or IDIQ, contracts, meaning that they can involve an indefinite amount of services for a specific period of time.
"The purpose of this contract is to provide the Department of Defense with enterprise-wide globally available cloud services across all security domains and classification levels, from the strategic level to the tactical edge," the Defense Department said.
Correction: A prior version of this story said each company was awarded a contract of up to $9 billion, but that number represents the combined total for the four.
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