The Pentagon stands by its decision to reject Oracle's bid for the $10 billion JEDI cloud contract: It's 'not in the same class' as Microsoft and Amazon
- The Pentagon said Oracle is "not in the same class" as rivals Microsoft and Amazon, the finalists in the contract bid process for the $10 billion JEDI cloud project.
- Oracle had filed a lawsuit challenging the Defense Department's decision. It accused Amazon of using job offers and bonuses to gain an edge in the bidding process.
- The Pentagon has rejected the claims, and claimed Oracle misstated an industry report which downplayed the company's position in the cloud.
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The Pentagon threw some serious shade at Oracle, say that it had rejected its aggressive bid for a $10 billion cloud contract because the tech behemoth is "not in the same class" as rivals Microsoft and Amazon.
The Defense Department had named Microsoft and Amazon as the final contenders for the Joint Enterprise Defense Infrastructure (JEDI) project, a platform that will store and manage sensitive military and defense data. In naming those two finalists, the Pentagon rejected the bids of Oracle and IBM. Google dropped out of the running in October, before the bidding process closed.
But Oracle filed a lawsuit challenging the Pentagon's decision, and the bidding process. In a legal complaint first reported in May, Oracle argued that "JEDI is riddled with improprieties," claiming that "[Amazon Web Services] made undisclosed employment and bonus offers to at least two DoD (Dept. of Defense) JEDI officials."
The Pentagon has denied the allegations. In new legal filings made public last week, the Defense Department also defended its selection of Microsoft and Amazon, arguing that Oracle does not have the qualifications and capabilities of the two finalists.
"Oracle is not in the same class as Microsoft and AWS when it comes to providing commercial IaaS and PaaS cloud services on a broad scale," the fling said, referring to two key cloud technology offerings - specifically, "infrastructure as a service" and "platform as a service."
The Pentagon also accused Oracle of making erroneous claims about its standing in cloud computing.
"Oracle misleadingly asserts that a recent Gartner report has identified Oracle as one of 'six leading IaaS providers,'" the filing said. The report, it added, "identified only AWS, Microsoft, and Google as 'Leaders,' while identifying Oracle as a 'Niche Player.'"
It's not clear which report from analyst firm Gartner that the filing refers to, exactly. However, Gartner research from 2018 viewed by Business Insider shows that that firm rates Oracle below Microsoft, Amazon, and Google on metrics including "completeness of vision" and "ability to execute."
Oracle declined to comment.
An important player
Amazon dominated the $25 billion public cloud market with 46% market share, according to analyst firm IDC's 2017 data. Microsoft was second with 11%, followed by IBM with 5.6%, Alibaba Group with 4.5% and Google with 3.3%
Oracle has been a dominant player in enterprise software, but the Redwood City, California company is widely considered to have been late in expanding to the cloud.
Still, IDC President Crawford Del Prete considers Oracle an important player in the cloud market.
"Oracle is a IaaS and PaaS vendor in a market where it is not the share leader," he told Business Insider. "However, there are Oracle customers that rely on the Oracle Cloud to run their business every day. That's for sure."
Analyst Ray Wang of Constellation Research also questioned the Pentagon's decision to limit such a massive cloud product to just one vendor - echoing concerns with the process raised previously by both Oracle and Google.
"The Pentagon's desire for a one-stop shop in cloud with a winner takes all model is not good for competition and will allow the winner to gain a significant market advantage over the losers," Wang told Business Insider.
The Pentagon JEDI project is expected to be one of the biggest public cloud initiatives in history. That explains the intense interest from major tech giants, highlighted by Oracle's campaign even after its bid was rejected by the Defense Department.
"This is the most important cloud deal ever," Wedbush analyst Daniel Ives told Business Insider, who has speculated that Oracle's legal action has boosted Microsoft's chances against Amazon. "There's a lot riding on it."
A Defense Department spokesperson told Business Insider that the JEDI contract will be awarded as early as August 23. The Pentagon also stressed the importance of moving forward with the project. In its filing, Lieutenant General Bradford Shwedo, chief information officer of the Pentagon Joint Staff, said, "Any delays in the adoption of JEDI Cloud delays our warfighters from receiving information that could make the difference in successfully completing missions and getting home to their families."
Read the Department of Defense response to Oracle's complaint.
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