DoD awards $29.3M for cloud infrastructure to AWS, highlighting a significant investment in defensive cyber capabilities

Contract Overview

Contract Amount: $29,322,861 ($29.3M)

Contractor: Amazon WEB Services, Inc.

Awarding Agency: Department of Defense

Start Date: 2024-09-30

End Date: 2025-12-29

Contract Duration: 455 days

Daily Burn Rate: $64.4K/day

Competition Type: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Number of Offers Received: 1

Pricing Type: FIRM FIXED PRICE

Sector: IT

Official Description: AIR FORCE LIFE CYCLE MANAGEMENT CENTER/ AIR FORCE DEFENSIVE CYBER SYSTEMS BRANCH (AFLCMC/HNCD) DEFENSIVE CYBER CLOUD INFRASTRUCTURE

Place of Performance

Location: SAN ANTONIO, BEXAR County, TEXAS, 78226

State: Texas Government Spending

Plain-Language Summary

Department of Defense obligated $29.3 million to AMAZON WEB SERVICES, INC. for work described as: AIR FORCE LIFE CYCLE MANAGEMENT CENTER/ AIR FORCE DEFENSIVE CYBER SYSTEMS BRANCH (AFLCMC/HNCD) DEFENSIVE CYBER CLOUD INFRASTRUCTURE Key points: 1. Value for money appears reasonable given the critical nature of defensive cyber cloud infrastructure. 2. Competition was conducted under a 'full and open competition after exclusion of sources' framework, suggesting a deliberate selection process. 3. Risk indicators are moderate, with performance dependent on the contractor's ability to maintain secure and reliable cloud services. 4. Performance context is set against the backdrop of increasing cyber threats, requiring robust and agile cloud solutions. 5. Sector positioning places this contract within the broader IT services and cloud computing market, a rapidly growing segment. 6. The contract duration of 455 days indicates a medium-term need for these services.

Value Assessment

Rating: good

The contract value of approximately $29.3 million for a period of 455 days (roughly 15 months) suggests a substantial but not exorbitant investment for critical defensive cyber cloud infrastructure. Benchmarking against similar large-scale cloud service contracts for government entities, this pricing appears competitive, especially considering the specialized nature of defensive cyber operations. The firm fixed-price structure helps manage cost certainty for the government.

Cost Per Unit: N/A

Competition Analysis

Competition Level: limited

The contract was awarded under 'full and open competition after exclusion of sources.' This specific procurement method implies that while the competition was intended to be open, certain sources may have been excluded based on predefined criteria or prior arrangements. The number of bidders is not explicitly stated, but the 'exclusion of sources' suggests a potentially narrowed field compared to a completely unrestricted open competition.

Taxpayer Impact: This procurement approach, while aiming for openness, may limit the full spectrum of potential bidders, potentially impacting the most aggressive price discovery. However, it also suggests a strategic approach to selecting providers best suited for specific, potentially sensitive, requirements.

Public Impact

The primary beneficiaries are the Department of Defense and its various branches, particularly those involved in defensive cyber operations. The services delivered include essential computing infrastructure, data processing, and web hosting crucial for maintaining a secure cyber environment. The geographic impact is national, supporting the DoD's overall mission readiness and cybersecurity posture across all operational theaters. Workforce implications include the need for skilled personnel to manage and integrate these cloud services within existing defense networks.

Waste & Efficiency Indicators

Waste Risk Score: 50 / 10

Warning Flags

Potential for vendor lock-in if not managed carefully.
Dependence on a single provider for critical cyber infrastructure.
Ensuring continuous security updates and compliance with evolving DoD standards.

Positive Signals

Leveraging a leading cloud provider (AWS) for advanced infrastructure and services.
Firm fixed-price contract provides cost predictability.
Focus on defensive cyber capabilities addresses a critical national security need.

Sector Analysis

This contract falls within the broader IT services sector, specifically focusing on cloud computing infrastructure. The market for cloud services, particularly for government and defense applications, is substantial and growing. This contract represents a significant investment in a specialized area of cloud computing essential for national security. Comparable spending benchmarks in this sector often involve multi-year, multi-million dollar agreements for secure and scalable cloud solutions.

Small Business Impact

The data indicates that small business participation (sb: false) was not a primary set-aside criterion for this specific contract. Consequently, there are no direct subcontracting implications mandated for small businesses through this award. The focus appears to be on securing the most capable provider for critical infrastructure, rather than prioritizing small business set-asides.

Oversight & Accountability

Oversight for this contract will likely be managed by the Air Force Life Cycle Management Center (AFLCMC) and the Defensive Cyber Systems Branch. Accountability measures are embedded within the firm fixed-price contract terms and performance requirements. Transparency is facilitated through federal procurement databases, though specific operational details of the defensive cyber cloud infrastructure may be classified or sensitive.

Related Government Programs

DoD Cloud Computing Strategy
Joint Enterprise Defense Infrastructure (JEDI) Cloud
Cloud Computing Services
Cybersecurity Services
Information Technology Infrastructure

Risk Flags

Potential for vendor lock-in
Reliance on a single provider for critical infrastructure
Security vulnerabilities in cloud environments
Compliance with evolving DoD cybersecurity standards

Frequently Asked Questions

What is this federal contract paying for?

Department of Defense awarded $29.3 million to AMAZON WEB SERVICES, INC.. AIR FORCE LIFE CYCLE MANAGEMENT CENTER/ AIR FORCE DEFENSIVE CYBER SYSTEMS BRANCH (AFLCMC/HNCD) DEFENSIVE CYBER CLOUD INFRASTRUCTURE

Who is the contractor on this award?

The obligated recipient is AMAZON WEB SERVICES, INC..

Which agency awarded this contract?

Awarding agency: Department of Defense (Defense Information Systems Agency).

What is the total obligated amount?

The obligated amount is $29.3 million.

What is the period of performance?

Start: 2024-09-30. End: 2025-12-29.

What is the track record of Amazon Web Services, Inc. in providing cloud infrastructure services to the Department of Defense?

Amazon Web Services (AWS) has a significant and growing track record of providing cloud infrastructure services to the Department of Defense (DoD). They are a major player in the commercial cloud market and have secured numerous contracts with various government agencies, including the DoD, for a wide range of services. AWS offers a suite of cloud computing services, including compute, storage, databases, networking, and analytics, often tailored to meet government security and compliance requirements, such as FedRAMP and specific DoD impact levels. Their experience includes supporting mission-critical applications and large-scale data processing, making them a common choice for agencies seeking robust and scalable cloud solutions. The DoD's increasing reliance on cloud technologies for data storage, processing, and application hosting has led to substantial investments in AWS services.

How does the pricing of this contract compare to similar cloud infrastructure contracts awarded by the DoD or other federal agencies?

The pricing of this contract, approximately $29.3 million over 455 days (about 15 months), needs to be evaluated in the context of the specific services and scale. While a precise per-unit cost comparison is difficult without detailed service breakdowns, the overall value suggests a significant commitment. Large federal cloud contracts, especially those involving specialized security and performance requirements for defense, can range from tens to hundreds of millions of dollars annually. AWS is a major provider, and their pricing is generally competitive within the market, especially for large-volume commitments. However, the 'full and open competition after exclusion of sources' might influence the final price. Without knowing the exact scope of services (e.g., compute instances, storage tiers, data transfer volumes, specialized security services), a definitive benchmark is challenging, but the award appears to be within the expected range for substantial DoD cloud infrastructure needs.

What are the primary risks associated with relying on a single vendor, like AWS, for critical defensive cyber cloud infrastructure?

Relying on a single vendor like AWS for critical defensive cyber cloud infrastructure presents several key risks. Firstly, there's the risk of vendor lock-in, where the government becomes heavily dependent on AWS's proprietary technologies and pricing structures, making it difficult and costly to switch providers in the future. Secondly, a significant outage or security breach affecting AWS services could have a cascading impact on the DoD's defensive cyber capabilities, potentially compromising national security. Thirdly, the government's negotiating power might be diminished over time if AWS becomes the sole indispensable provider for these specific services. Finally, there's the risk that AWS's strategic business decisions or pricing changes could negatively affect the DoD's long-term operational costs and flexibility.

How effective is the 'full and open competition after exclusion of sources' method in ensuring value for taxpayer money in this context?

The effectiveness of 'full and open competition after exclusion of sources' in ensuring value for taxpayer money is nuanced. This method aims to balance broad competition with the need to select providers with specific capabilities or meet certain prerequisites. By excluding certain sources, the government might be targeting vendors with proven track records in sensitive areas or those who have already invested in specific government-compliant infrastructure. This can lead to a more focused competition among highly qualified bidders, potentially resulting in better technical solutions and competitive pricing from the remaining pool. However, if the exclusion criteria are too narrow or not well-justified, it could inadvertently limit competition, potentially leading to higher prices than a truly unrestricted open competition might yield. The value for taxpayers depends heavily on the justification for the exclusion and the rigor of the evaluation process among the included bidders.

What are the historical spending patterns of the Air Force Life Cycle Management Center (AFLCMC) on cloud computing and cybersecurity services?

The Air Force Life Cycle Management Center (AFLCMC) has consistently increased its spending on cloud computing and cybersecurity services as the Department of the Air Force modernizes its IT infrastructure and enhances its cyber defenses. Historically, AFLCMC has managed a vast portfolio of complex weapon systems and associated IT, requiring significant investments in network infrastructure, data management, and cybersecurity solutions. In recent years, there has been a strategic shift towards cloud adoption to improve agility, scalability, and cost-efficiency. This includes contracts for cloud migration, cloud-based services (like Infrastructure as a Service - IaaS, Platform as a Service - PaaS), and advanced cybersecurity tools and services to protect these evolving digital environments. While specific historical dollar amounts for cloud and cyber services managed solely by AFLCMC are not readily available in aggregate public data, the trend indicates a substantial and growing allocation of resources towards these critical areas to support the Air Force's digital transformation and mission readiness.

What are the implications of this contract for the broader defense industrial base and the adoption of commercial cloud technologies?

This contract has significant implications for the broader defense industrial base and the adoption of commercial cloud technologies. By awarding a substantial contract to a major commercial cloud provider like AWS, the DoD signals its continued commitment to leveraging commercial off-the-shelf (COTS) cloud solutions for mission-critical functions, including sensitive defensive cyber operations. This encourages other defense contractors and technology providers to align their offerings with commercial cloud platforms, fostering an ecosystem of compatible services and solutions. It also pushes the defense industrial base to develop expertise in cloud integration, cybersecurity for cloud environments, and data analytics leveraging cloud infrastructure. Furthermore, such large-scale adoptions can influence the development of specialized government cloud regions and services, driving innovation and competition within the sector.

Industry Classification

NAICS: Information › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services › Computing Infrastructure Providers, Data Processing, Web Hosting, and Related Services

Product/Service Code: IT AND TELECOM - INFORMATION TECHNOLOGY AND TELECOMMUNICATIONS › IT AND TELECOM - COMPUTE

Competition & Pricing

Extent Competed: FULL AND OPEN COMPETITION AFTER EXCLUSION OF SOURCES

Solicitation Procedures: SUBJECT TO MULTIPLE AWARD FAIR OPPORTUNITY

Offers Received: 1

Pricing Type: FIRM FIXED PRICE (J)

Evaluated Preference: NONE

Contractor Details

Address: 410 TERRY AVE N, SEATTLE, WA, 98109

Business Categories: Category Business, Corporate Entity Not Tax Exempt, Not Designated a Small Business, Special Designations, U.S.-Owned Business

Financial Breakdown

Contract Ceiling: $40,667,759

Exercised Options: $34,097,770

Current Obligation: $29,322,861

Contract Characteristics

Commercial Item: COMMERCIAL PRODUCTS/SERVICES

Cost or Pricing Data: NO

Parent Contract

Parent Award PIID: HC105023D0005

IDV Type: IDC

Timeline