Amazon.com Inc, the most valuable Internet retailer, has hired advisers to work on cloud infrastructure to prepare a potential bid for a $600 million contract to run the U.S. government’s newest cloud computing service, according to a source familiar with the situation.
Amazon’s move highlights the deep industry interest in a contract to operate a cloud service for the Defense Department, which could be announced as early as June. It could also set the stage for more fierce bidding for other government cloud service contracts in the future.
Amazon, Microsoft Corp and Alphabet Inc’s Google are all competing for the Defense Department’s cloud computing contract, known as the Joint Enterprise Defense Infrastructure (JEDI) contract. Amazon and Microsoft are incumbents in the cloud computing business in the commercial market. Google was not among the original competitors but joined the bidding in recent months.
JEDI could become the world’s biggest cloud computing contract, worth billions of dollars. Amazon and Microsoft already provide cloud computing to the U.S. military, and any Amazon victory in JEDI would be an affront to Alphabet, which now claims billions of dollars in cloud revenue from Google contracts.
In early February, Amazon hired recruiting consultants to help prepare its bid, the source said. “JEDI could be as large, or larger, than AWS (Amazon Web Services),” the source said.
A second source said that potential JEDI bidders are expected to receive a Pentagon request for information, or RFI, around the end of March. The RFI, a request for proposals, will lay out what JEDI could be, the second source said.
Amazon’s interest in the Defense Department comes as President Donald Trump has publicly criticized both Amazon and Alphabet, saying the two companies unfairly compete with the U.S. Postal Service for packages.
The Defense Department has been racing to implement cloud computing services to increase efficiency and cut costs. The department’s industrial base assessment, an evaluation of capabilities to handle cloud applications, is expected to be completed this month. The Industrial Base Impact Assessment evaluates cloud computing as well.
A JEDI win by one cloud provider would set an important precedent that sets the stage for other defense department cloud deals, the second source said.
Under current government law, smaller companies are banned from winning such significant cloud computing contracts. Since JEDI does not apply to smaller cloud providers, that legislation could be amended to allow competitors of JEDI cloud providers to compete, the source said.
Amazon Chief Executive Jeff Bezos, who is also the owner of The Washington Post, signed a memorandum of understanding last week with the Department of Defense that lays out the e-commerce giant’s services for government customers.
Amazon and the Department of Defense declined to comment.