The Pentagon, DC & Amazon Web Services Cronyism

Canary. Photo by 4028mdk09.

Bloomberg reported in March of this year the Pentagon was opening up a “winner-take-all competition” for a 10-year, $10 billion cloud service contract.

While rival companies, which include Oracle Corp., IBM, Microsoft Corp., Alphabet Inc., and Google, worried the move would favor Amazon Web Services (AWS), the Amazon, Inc. cloud services arm – which had already won two previous government cloud service contracts, one with the CIA since 2013 worth $600 million, and has “the fastest growing lobbying arm among tech companies” in DC – they also “pushed for the use of multiple cloud providers,” the Pentagon instead announced it would “go with a single company.”

The reason they gave? Because, deputy director of Defense Digital Service Tim Van Name told reporters at that time, “the department already has difficulty moving information, particularly to the battlefield, and using multiple clouds would “exponentially increase the complexity.””

While Van Name “denied that the department [was] leaning toward Amazon, saying, “it’s about the proposal, we have no favorites” and Pentagon contracting officer Chanda Brooks said the “full and open competition” would result in a single award,” those in the industry were still concerned considering a recent Pentagon cloud service contract awarded to AWS just the month before.

Technology companies worried that the Pentagon favors Amazon point to the decision in early February to award a contract of as much as $950 million to REAN Cloud LLC, an Amazon partner, to help migrate its data to the cloud. On Monday, the Pentagon said it was unaware of the award, made by its Silicon Valley-based innovation unit, and reduced the contract to $65 million.

Oracle formally protested the REAN contract in February, saying the company was opening a door for Amazon Web Services and asserting that Amazon pressures clients to use REAN, according to a person familiar with the filing.

Bloomberg; March 7 2018

One of the chief architects of the idea, and who would also help create the contract the industry would bid on, was Air Force Brigadier General David Krumm, the Joint Chiefs of Staff director of requirements told representatives, “This is going to make a difference like few things have to get our data to our war-fighters when and where he or she needs it.”

A final request proposal, the Pentagon told the industry representatives, would be released in May, projecting that they would award the contract by September.

The contract request the Pentagon would eventually put out for bid would be called “JEDI” – Joint Enterprise Defense Infrastructure – and it would store the military’s unclassifed and classified data, troop movements, NATO plans, weapons systems, intelligence and operations, personnel and service member personal data, possibly even nuclear codes, everything, all in one place.

In May, the Seattle Times reported in an unsealed 15-page report, demanded by Congress, the Defense Department continued its planned winner-take-all award,” saying “across a multitude of clouds would inhibit the ability to access and analyze critical data,” and that the “lack of a common environment for computing and data storage would limit the effectiveness of machine learning and artificial intelligence for warfighters.”

By summer, controversy began growing over the DOD’s plan to overhaul the Pentagon’s and the US military’s entire data systems and the single contract it was about to award.

A letter to the House Armed Committee, LifeZette reported, from the IT Alliance for Public Sector, which represents groups in the industry, said the single awarded contract would “close the market to just that vendor,” and would stifle competition and “strongly increase the likelihood of vendor and technology lock-in, negatively impacting innovation, costs, and security.”

By June, the Pentagon’s contract proposal request, which was to be released in May, was now being announced it would be “delayed indefinitely,” citing, ““extensive industry interest” as a way to avoid “a rush to failure.””

But the DOD continued to fall short of explaining why they were prepared to award a monopoly contract as rumors swirled of a “cozy relationship” between Jeff Bezos and Secretary of Defense James Mattis, evidence began to come to light increasing the likelihood the fix was already in for Amazon and more pieces to the puzzle begin to emerge.

“According to Business Insider, DOD agencies are “sure that Amazon will be awarded the contract,” due to the department’s preparation for a transition to GovCloud, an Amazon cloud infrastructure designed specifically for government use,” which BI reported in April.

Via a Wall Street Journal report in Nov 2017, “Just last year, Amazon sold computing equipment used for its cloud services to its local partner in China, a move that forced U.S. companies to essentially transfer ownership and operations of their cloud systems to Chinese partners, LifeZette wrote.

With the Chinese government’s desire to control cyberspace, U.S. tech companies have been constrained to operate normally in the global perspective, leading to inefficiency and higher risk of cyber threats.

In awarding Amazon the DOD data cloud contract to AWS, it is practically handing all of America’s defense data over to the Chinese government and hackers. This is a dangerous deal and a recipe for a major disaster.

LifeZette

On August 5th, the Washington Post reported that on July 26th, “the Defense Department released a long-awaited request for proposals for what it is calling the Joint Enterprise Defense Infrastructure (JEDI),” indicating it had “doubled down” and “would use just one company for the contract” despite mounting fears the DOD’s approach was about to “give one company too much influence over the government’s information systems.”

Then, on August 13th, as details began to emerge from the DOD’s request for proposals, Vanity Fair drops the story, Everybody Immediately Knew That It Was For Amazon.

But when JEDI was issued, on the day Congress recessed for the summer, the deal appeared to be rigged in favor of a single provider: Amazon. According to insiders familiar with the 1,375-page request for proposal, the language contains a host of technical stipulations that only Amazon can meet, making it hard for other leading cloud-services providers to win—or even apply for—the contract. One provision, for instance, stipulates that bidders must already generate more than $2 billion a year in commercial cloud revenues—a “bigger is better” requirement that rules out all but a few of Amazon’s rivals.

What’s more, the process of crafting JEDI bears all the hallmarks of the swamp that Trump has vowed to drain. Though there has long been talk about the Defense Department joining the cloud, the current call for bids was put together only after Defense Secretary James Mattis hired a D.C. lobbyist who had previously consulted for Amazon. The lobbyist, Sally Donnelly, served as a top advisor to Mattis while the details of JEDI were being hammered out. During her tenure, Mattis flew to Seattle to tour Amazon’s headquarters and meet with Jeff Bezos. Then, as the cloud-computing contract was being finalized, Donnelly’s former lobbying firm, SBD Advisors, was bought by an investment fund with ties to Amazon’s cloud-computing unit.

Vanity Fair; Aug 13 2018

High-ranking congressional staff and insider sources said questions were raised during the review process Donnelly may have “violated a federal law that bars executive-branch employee from participating in government decisions that affect their personal interests,” adding that there were also concerns about the “implications of the appearance of conflicts of interest and impropriety,” and how personnel within the Pentagon “with close ties to Amazon may have influenced” the contracts.

“When you have that kind of access during a $10 billion procurement, that compromises the integrity of the procurement. Amazon was basically able to write the playbook,” said industry expert John Weiler.

Who is Sally Donnelly, “the lobbyist at the center of the controversy?” She is a “former reporter for Time who set up her own lobbying shop a half mile from the White House in 2012. Stacked with former high-ranking officials from the NSA and the Pentagon,” which “boasted that it helped clients“navigate the political and media environment in the national security space and maximize opportunities,”” and Amazon Web Services was one of Donnelly’s SBD clients.

It was at SBD Donnelly “grew close” to Mattis. Donnelly was “brought in” to run Mattis’ Senate confirmation. “The day after he was sworn in, Donnelly went to work for him as a special advisor.”

Donnelly enjoyed direct access to Mattis, and the cloud community knew it. “It was a well known thing that if you needed something you would give it to Sally, and Sally would give it to the defense secretary,” says an insider who worked closely with Donnelly. As one of the secretary’s top advisors, Donnelly vetted his schedule and arranged his meetings. And among the most signficant [sic] meetings that took place under her watch was a visit to Amazon’s headquarters in Seattle on August 10, 2017. Amazon CEO Jeff Bezos personally tweeted a photo of himself hosting #SecDef Mattis.

Vanity Fair

Mattis returned from his trip “convinced that the Pentagon needed to turn its data over to a commercial cloud provider.” Within the next month a Pentagon memo was calling Mattis’ trip to Seattle an “epicenter of innovation.” It was that memo which “called for a cloud bid that would cover all of the Pentagon’s data for its 2.3 million employees and service members,” and Amazon was in prime position.

Through a statement from her lawyer, Donnelly denies doing anything wrong. “Ms. Donnelly sold her entire stake in SBD Advisors before setting foot in the Pentagon,” the lawyer said. “From that moment forward, she has had absolutely no financial or other interest in SBD Advisors or its clients.”

According to financial records, Donnelly sold SBD two days before Mattis brought her in to work for him as Secretary of Defense and continued to receive payments while at the Pentagon, while AWS was still a client of SBD.

Donnelly left the Pentagon in March, and the company who bought SBD while the cloud contract was being finalized was C5 Capital whose website boasts working with AWS. In 2016, the two businesses “partnered in [a] Bahrain-fund” for Africa and Middle East cloud startups.

Who is C5 Capital?

“Is US military cloud safe from Russia?”

“A technology company bidding for a Pentagon contract to store sensitive data has close partnerships with a firm linked to a sanctioned Russian oligarch, the BBC has learned.”

“Who is Andre Pienaar and how is he linked to Russia?”

And for the cliff hanger?

It emerged earlier this year that Columbus Nova, a company affiliated to his Renova Group empire, paid £500,000 to Michael Cohen, Mr Trump’s lawyer at the time.

The money went to his company, Essential Consultants LLC, the firm he used as part of a “hush agreement” with Stormy Daniels to prevent her publicising her alleged affair with Mr Trump.

Andrey Shtorkh, a spokesman for Mr Vekselberg, told NBC News that neither Mr Vekselberg nor Renova “has ever had any contractual relationship with Mr Cohen or Essential Consultants”.

BBC News

Bet you didn’t see that one coming.

The contract, to date, has still not been awarded, as far as is known.

For the rest of the story,

Is US military cloud safe from Russia? Fears over sensitive data; By Ruth Clegg & Manveen Rana; December 12, 2018; BBC News

Everybody Immediately Knew That It Was For Amazon; By May Jeong; August 13, 2018; Vanity Fair

For further reading, I highly recommend,

 Oracle names DoD staff in lawsuit against the Federal Government; By Tanwen Dawn-Hiscox; December 12, 2018; DataCenter Dynamics (DCD)



On A Side Note (Opinion)

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