Oracle Lawsuit Clouds DoD’s IT Strategy
Just in time for the holidays, cloud rivals are fighting like cats and dogs over one of the biggest ever federal IT contracts. The battle lines for the Joint Enterprise Defense Infrastructure contract shifted to federal court with Oracle’s early December lawsuit and JEDI frontrunner Amazon Web Services’ countermove to join the Defense Department as a co-defendant in the case.
Given the enormous stakes involved in the JEDI competition, estimated to be worth $10 billion over ten years, observers predict DoD’s intention to award a sole-source contract could either shake up the cloud market or solidify Amazon’s (NASDAQ: AMZN) dominance. (AWS has not responded to requests for comment on the JEDI lawsuit.)
“This is the most important lawsuit of the cloud era,” asserts Sash Sunkara, CEO and co-founder of RackWare, an Oracle cloud partner.
Earlier this month, Oracle (NYSE: ORCL) sued the Defense Department in the U.S. Court of Federal Claims to block its planned single-source cloud procurement after the U.S. General Accountability Office rejected its JEDI protest. The lawsuit touched off a legal chain reaction, including GAO’s denying IBM’s (NYSE: IBM) JEDI protest and ceding jurisdiction in the cloud dispute to the federal court.
Then, AWS joined the Defense Department as a defendant in the Oracle lawsuit. Hence, the battle lines are drawn in a cloud competition most observers assume is tilted toward AWS, which also provides cloud services to U.S. intelligence agencies.
“The legal action taken by Oracle and IBM lines up with what we're hearing about in the marketplace: Having a multi-cloud strategy is critically important, and this is not going to be a single-player game,” said RackWare’s Sunkara. “It’s key for commercial and government users of the cloud to say that this is a multi-cloud world, and we can't have a monopoly."
Sunkara and others argue DoD officials need to update their acquisition strategy to reflect the inexorable shift to multi-cloud deployments, each designed to better handle key components like database management, security and availability. “If it was an even playing field, a multi-cloud strategy would win the contract—and Amazon would certainly win a piece of that, but not all of it,” Sunkara said.
“Whoever wins this contract will be in position to grow it over time,” she added. “This single agreement could eventually make up a decent portion of a service provider’s market share."
Hence, cloud upstarts like Oracle are pulling out all the stops to gain at least of piece of the JEDI contract in hopes of whittling away at Amazon’s huge share of the public and government cloud market.