Oracle's Mark Hurd Echoes Concerns on Pentagon's Cloud Process

(Bloomberg) -- Oracle Corp. Chief Executive Officer Mark Hurd said he shares colleague Safra Catz’s concerns about the fairness of the process behind the Pentagon’s award of a multibillion-dollar cloud-computing contract, and argued that incumbent government vendors should snag the deal.

“We’re obviously a big supplier to the federal government, and I think it would only make sense for the government to leverage its install base,” Hurd said Monday at Oracle’s media day in Redwood City, California. The government would get “incredible” return on investment “by simply consolidating and modernizing their existing install base.”

The Pentagon intends to award a single contract for multiyear cloud services, and many of the contenders have expressed concern that Amazon.com Inc., which runs the biggest web-services business, is the front-runner. The contract could also go to a team made up of multiple companies. Hurd didn’t rule out the potential for Oracle to collaborate with partners, but said he’d need to see the request for proposals first. A final RFP, which outlines a contract of as long as 10 years, is scheduled to be released in May and awarded by the end of September.

Under Hurd, who shares the title of CEO with Catz, Oracle has battled a growing array of rivals for cloud business in the private and public sectors. Catz said she discussed the Pentagon contract with President Donald Trump in a private dinner at the White House, and noted that the Defense Department’s guidelines “just made no sense.” Oracle has led a campaign in Washington to prevent Amazon from winning the contract, Bloomberg reported last month. Catz’s company has cooperated with Microsoft Corp. and International Business Machines Corp., among others, on the effort, which has included lobbying lawmakers, defense officials and the White House, people familiar with the matter said.

While Hurd tried to stay clear of politics on Monday, he did discuss his concerns about Trump’s brewing trade war with China.

“We want to have fair trade,” Hurd said. “We want to be competitive in the marketplace. We have to give some time to see how the strategy of the U.S. government plays out.”

Oracle, the world’s second-largest software company, has customers in 175 countries around the world. At the end of the most recent quarter, the company had about $71 billion in cash, most of it earned and stored in foreign markets, Hurd said. After the U.S. government passed a tax overhaul at the end of 2017, Hurd said Oracle’s repatriation of cash had given it more flexibility.

Hurd said he hasn’t ruled out using the money brought back to the U.S. for an acceleration of share buybacks, dividend increases and acquisitions.

“We’ll invest our cash flow back into the business,” he said.

To contact the reporter on this story: Nico Grant in San Francisco at ngrant20@bloomberg.net.

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack

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