The Insider

Pentagon dials back nearly $1B cloud services agreement to $65 million

March 05, 2018 |
Justin Doubleday
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The Pentagon has lowered a controversial cloud services production agreement to just $65 million, limiting the services to U.S. Transportation Command, after it was initially awarded as a nearly $1 billion agreement available to the entire Defense Department.

In early February, DOD awarded a $950 million production agreement to REAN Cloud as a follow-on to a successful prototype project initiated last year by the Defense Innovation Unit Experimental and TRANSCOM. The prototype award was made competitively through an other transaction agreement, meaning DOD could award the follow-on production contract without further competition. While the prototype work was specific to TRANSCOM, the Pentagon said the production agreement made REAN's cloud migration services available to all DOD agencies.

The agreement generated controversy, however, because REAN Cloud is an Amazon Web Services premier partner, and the Pentagon's cloud executive steering group is in the midst of orchestrating a department-wide cloud services competition.

Today, DOD announced it is revising the agreement.

"After reviewing the production agreement recently awarded to REAN Cloud LLC, the department has determined that the agreement should be more narrowly tailored to the original scope of the prototype agreement, which was limited to United States Transportation Command applications," Army Col. Rob Manning said in a March 5 statement.

"We applaud the Defense Innovation Unit Experimental's (DIUx's) efforts to advance the department's initiative to accelerate adoption of cloud technologies," Manning continued. "After consideration, however, the Department has decided to modify the production agreement to descope the ceiling to $65,000,000 and limit the scope of work to services being only available to USTRANSCOM."

The announcement comes days before the cloud executive steering group is scheduled to hold an industry day in Arlington, VA.