The High Stakes of Oracle’s Appeal

So now Oracle is appealing the Pentagon’s award to Amazon of its US$10 billion JEDI contract to provide cloud computing solutions.

“The Court of Federal Claims opinion in the JEDI bid protest describes the JEDI procurement as unlawful, notwithstanding dismissal of the protest solely on the legal technicality of Oracle’s purported lack of standing,” said Dorian Daley, general counsel, Oracle Corporation. “Federal procurement laws specifically bar single award procurements such as JEDI absent satisfying specific, mandatory requirements, and the Court in its opinion clearly found DoD did not satisfy these requirements.”

At the same time the DoD announced an official review of the award.

“We are reviewing the DoD’s handing of the JEDI cloud acquisition, including the development of requirements and the request for proposal process,” said Dwrena Allen, spokeswoman at the Department of Defense Office of Inspector General. “In addition, we are investigating whether current or former DoD officials committed misconduct relating to the JEDI acquisition, such as whether any had any conflicts of interest related to their involvement in the acquisition process.”

Frankly, a lot of people probably — likely, definitely — don’t care about JEDI and what it means, but if we were all small-d democrats in this republic, we might (ought to) care. Here are some reasons.

Advancing the Technology

Throughout the postwar history of tech and its relationship with government, a great symbiosis has advanced the frontiers of technology while giving government better, faster and cheaper solutions.

Government’s investments in numerous companies and think-tanks drove research and development, and supported emergence of globe-leading new companies and millions of taxpaying employees. All in all, it has been a productive relationship and a good investment.

Now the Pentagon wants to chuck all that and go with a single provider that it hopes will continue to advance cloud computing. Ironically, it can be argued vociferously, as Oracle continues to do, that the JEDI process has not selected the strongest technology for the job.

For instance, Oracle founder and CTO Larry Ellison takes no small measure of glee in presenting benchmarking data at Oracle OpenWorld (coming to San Francisco in September) comparing Oracle’s technology with Amazon’s. By many measures, Amazon’s tech is not that good for huge deployments, though many Oracle users use Amazon products for sandboxes in their development labs because it’s less expensive.

However, if you’re offering a $10 billion take it or leave it deal for what amounts to the kitchen sink, might cost suddenly move to the back burner?

Yet the Pentagon’s concern about having multiple vendors in the soup for what will be its cloud computing foundation at least to the middle of this century is also understandable. Cloud computing — heck, computing in general — is still a Balkanized jumble of vendors with often uncooperative standards that prevent information sharing. It’s getting better, but it is still unacceptable when you’re dealing with technology that will be used to make split-second decisions about friend and foe, war and peace.

I get that.

Still, it’s no reason for a sole source award. With history as a guide, we should be encouraging a multivendor award that demands that vendors do a whole lot more to advance interconnectability. Moreover, that’s the direction this industry is moving in anyhow — i.e., toward a big information utility much like the electric utility we all use. The JEDI award should be used to accelerate this process.

Don’t be confused, there is no single vertically integrated electric utility from sea to shining sea. Instead, there are thousands of companies and solutions that work within the same standards so that there’s an appearance of a utility and a grid. That’s what the JEDI procurement should be working toward.

Oracle Doesn’t Have Standing?

OK, I’m not a lawyer, but you have to admit that a ruling that Oracle doesn’t have standing in the appeal seems at best contrived. This procurement is a gnarly, complex can of snakes that about 1,000 people on the planet truly understand, and virtually all of them work for DoD, IBM, Microsoft, Amazon, Oracle and a few other places (China, Russia) — but essentially the companies that competed for the business in the first place.

So if Oracle doesn’t have standing, who does? Anybody? And is that any way to run a democracy?

“The opinion also acknowledges that the procurement suffers from many significant conflicts of interest,” Oracle’s Daley said. “These conflicts violate the law and undermine the public trust. As a threshold matter, we believe that the determination of no standing is wrong as a matter of law, and the very analysis in the opinion compels a determination that the procurement was unlawful on several grounds.”

Bragging Rights and Picking Winners

Aside from the $10 billion (plus overages) that some lucky vendor will gain from this award, there’s the matter of bragging rights in the marketplace. It’s hard to believe the successful vendor won’t try to put some marketing muscle behind claims of superiority, thanks the endorsement such an award provides as a natural consequence. That means picking winners, something that politicians raged against when the Obama administration made an investment in a solar panel maker.

That’s why the after-award litigation is so hot. Oracle has the resources and is known for being a persistent litigant when it feels wronged and, in this case, it’s hard to see how it could not challenge the award.

This litigation could tie up any real work on the contract for years and deprive the Pentagon and the American people of advances in defense and security that they should expect from their government. It’s not too late for the Pentagon and DoD to take a step back and re-evaluate their goals.

My Two Bits

JEDI should be thrown out. It’s not a stretch to say that the better technology was not selected, at least by some important measures. Also, the belief in a sole source was misguided at best.

Even if you throw JEDI on the ash heap of history, you don’t have to begin again from zero. A broader requirements set based on a demand for interoperability could be put forth, and several other vendors (all of them American companies) should be incorporated into the process.

It’s hard to believe that Microsoft, with its expertise in system software, networking, apps, tools and databases wasn’t included. You can say similar things about IBM and HP, both of which have significant hardware, networking and Unix chops — and don’t forget IBM’s Watson. Add Oracle to the mix for its autonomous database, fault tolerant and ultra-secure hardware, apps and more.

The trend so far, to me, suggests that there are too many ids and egos involved in this deal, and not enough logic and dispassionate decision-making. The American people deserve better — as does the planet whose fragile peace depends on it.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network.

Denis Pombriant

Denis Pombriant is a well-known CRM industry analyst, strategist, writer and speaker. His new book, You Can't Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. Email Denis.

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