Microsoft lands lucrative Pentagon cloud deal
While Microsoft trails Amazon in the cloud market, executives say it offers customers unique advantages
Washington — Microsoft says it has secured a huge cloud deal with the intelligence community that marks a rapid expansion by the software company into a market led by Amazon.
The deal, which the company said on Wednesday was worth hundreds of millions of dollars, allows 17 intelligence agencies and offices to use Microsoft’s Azure Government, a cloud service tailored for federal and local governments, in addition to other products Microsoft already offers, such as its Windows 10 operating system and word-processing programs.
The cloud agreement gives Microsoft more power to make its case to the Pentagon as goes up against competitors like Amazon, Oracle and International Business Machines and for the agency’s winner-take-all cloud computing contract for up to 10 years.
Amazon Web Services, the leading cloud provider, is widely perceived to be the front-runner for the job.
"What this does is it reinforces the fact that we are a solid cloud platform that the federal government can put their trust in," Dana Barnes, the vice-president of the company’s national security group, said.
The Pentagon did not comment on the cloud agreement.
Microsoft’s new deal renews and expands a previous agreement between the office of the director of national intelligence and Dell, which licenses Microsoft’s products to the federal government.
The office of the director of national intelligence manages the efforts of the Central Intelligence Agency (CIA), the National Security Agency and parts of other agencies, including the defence department.
Under the deal, each agency could choose whether and when to adopt Microsoft’s cloud, Barnes said.
As part of a separate deal, the US defence department has said it intends to move the department’s technology needs — 3.4-million users and 4-million devices — to the cloud to give it a tactical edge on the battlefield and strengthen its use of emerging technologies.
Tech companies jockeying for the contract, including Microsoft, have urged the agency to pick more than one vendor for the project, arguing that awarding only one contract will stifle innovation and increase security risks.
Microsoft’s entry into the intelligence community follows Amazon’s 2013 contract with the CIA. That $600m deal has elicited praise from Defence Secretary James Mattis.
"We’ve examined what the CIA achieved in terms of availability of data and also security of their data, and it’s very impressive," Mattis said at congressional hearing in April.
In April, President Donald Trump fired off several tweets that were sharply critical of Amazon on topics that included the US postal service, taxes and retailing.
Despite that, several people said at the time there were no active discussions about turning his rhetoric into concrete steps against the company.
While Microsoft trails Amazon in the cloud market, company executives say it offers customers unique advantages including artificial intelligence capabilities, voice recognition and translation products and the ability to support hybrid technology environments that mix legacy on-premise computing systems with cloud systems. The ability to apply Micro-soft’s analytical capabilities to the data on Azure through artificial intelligence was "very valuable to this community," Barnes said.
Microsoft is not new to government business. It is the primary vendor on $1.3bn of unclassified contracts signed in the last five fiscal years, according to Bloomberg government data. The defence department accounted for nearly $1bn of the contracts.
In addition to its computers, operating systems and marquee word processing software, the company’s government cloud services have also won security certification to host sensitive data in the US justice department, the veterans affairs department and the immigration and customs enforcement.
Every federal cabinet level agency had access to Azure, including the defence department, Microsoft said.