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AMAZON attempt to land major Pentagon job stokes antitrust fears

Issued: 201

Antitrust critics fear that a winner-take-all contract for the Defense Department’s cloud computing needs could help tech giant Amazon corner the government contract market even further.

The winner of the contract, which the DOD updated its position on last week, in its current form would give its winner control over serving the Pentagon’s cloud computing system as it switches over from an older IT system. The agency predicts that the contract will be worth billions.

Amazon competitors like IBM and Microsoft have been pushing for a multi-party contract that would split cloud-computing services between several companies. They argue that leaving the contract in the hands of a single provider unnecessarily increases cybersecurity risks.

“It’s certainly an indication that Amazon has enormous political power,” said Stacy Mitchell of the Institute for Local Self-Reliance, a research group that advocates for local businesses and tracks Amazon’s movements in government. “They have translated their corporate power and wealth into political power.”

Matt Stoller, an economist at the Open Markets Institute who has become a vocal critic of Amazon’s market power, said that Amazon landing the sole-source contract could have wide-ranging negative effects.

“This is a monopoly story but this is a really serious national security story,” Stoller said.

“A single-source provider for Pentagon cloud services is obviously reckless. The Pentagon should clearly have multiple cloud providers so that if something happens to one of them there is resiliency and redundancy.”

Companies frustrated by what they see as procurement bias towards Amazon have also slammed the decision.

IBM called the move “flawed,” while Microsoft said it was “disappointed."

The tech companies have voiced their frustration through their trade association, the Information Technology Industry Council, which also represents Amazon.

“We are concerned with reports regarding a single-award cloud contract for the Department Enterprise, as well as possibly canceling all awarded DOD cloud contracts leaving the Department with only one cloud solution,” ITI wrote in a November letter to the Pentagon that was obtained by The Hill.

The Pentagon has denied holding any bias towards any single company.

“We want the best solution for the department. We have no favorites,” Timothy Van Name, the deputy director of the ‎Defense Digital Service, told reporters on a call on Wednesday.

Amazon has also disputed the idea that it’s being favored in the contracting process.

"[The Pentagon] will select the provider that best meets their needs for the warfighter. Legacy providers that claim otherwise are focused on protecting their own bottom line and not advancing the mission of DOD,” an Amazon Web Services (AWS) spokeswoman told The Hill in an email.


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