The U.S. Government Needs a New Plan for Buying Technology

(Bloomberg Opinion) -- Last month, the National Security Agency put a $10 billion cloud-computing contract awarded to Amazon Web Services on hold, due to a protest lodged by Microsoft, which believes it was treated unfairly during the bidding process. The dispute comes after the Pentagon canceled a similarly ambitious project earlier this summer. Both cases underscore how the government’s process for buying critical technology harms both taxpayers and national security.

The NSA’s program, code-named “WildandStormy,” is part of a push by U.S. intelligence agencies to upgrade their computing technology using commercial capabilities. Immediately after the agency awarded Amazon the contract, Microsoft filed an “administrative protest” with the Government Accountability Office, which is not expected to reach a decision until late October.

The GAO should work to resolve the matter quickly. The Pentagon’s Joint Enterprise Defense Infrastructure (or JEDI) project provides an object lesson in the costs of delay.

Launched in 2017, JEDI aimed to create a single general-purpose cloud for storing and sharing data across the 2.9-million-person Defense Department. Before the contract was even awarded, Oracle sued, alleging that the bidding process unfairly favored Amazon — only for the Pentagon to then announce Microsoft as the winner. In response, Amazon filed its own suit; it charged that the decision had been influenced by then-President Donald Trump’s animosity toward Amazon founder Jeff Bezos. Though the Pentagon denied any political interference, a federal judge in April refused to dismiss the suit. Faced with the prospect of putting JEDI on hold indefinitely while the legal challenge played out, President Joe Biden’s administration opted to scrap the project altogether.

The Pentagon now plans to divide enterprise-cloud tasks between Microsoft and Amazon, and could offer additional pieces to companies such as Oracle, Alphabet’s Google and IBM. That would be a good idea: It should allow the military to take advantage of innovation and reduce the costs and risks of being tethered to a single provider. The department should invest in tools to integrate smaller cloud programs already in use by the military with the general-purpose one operated by the bigger tech companies.

Both JEDI and WildandStormy highlight the need for broader reform. Multi-year, winner-take-all contracts — typically awarded to defense contractors to build weapons systems — make little sense for software applications that require constant updating and may soon be replaced by better products. Creating a more flexible system, in which the terms of purchase could be adjusted as technology evolves, should be a priority. National-security agencies should also hire and train more IT specialists familiar with cloud computing and streamline the approval process for new acquisitions.

For its part, Congress should consider measures to reduce the frequency and duration of lawsuits filed by companies that lose out on government contracts. Though fewer than 10% of all such protests are successful in court, the litigation consumes significant time and attention and delays the adoption of new military and intelligence capabilities.

While the government’s effort to transition to cloud computing is welcome, the U.S. has yet to reap its full benefits. Scrapping winner-take-all contracts should pave the way for a more nimble, efficient system that gives national-security agencies the technology needed to win the wars of the future.

Editorials are written by the Bloomberg Opinion editorial board.

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