Why Pentagon Cloud-Computing Contract Is a Huge Deal

The U.S. Defense Department is running a winner-take-all competition to choose a cloud-computing company to host its trove of information, perhaps including top national-security secrets, so that warfighters and military leaders can make data-driven decisions at "mission-speed." Amazon.com Inc., Microsoft Corp. and International Business Machines Corp. are among those vying for the multibillion-dollar contract. The Pentagon’s intention to award such a massive project to just one bidder has raised objections, and the prospect of a foreign country spying on the U.S. through the cloud, using manipulated hardware, stirs security worries.

The Defense Department project known as the Joint Enterprise Defense Infrastructure, or JEDI, could potentially change the business models of traditional technology providers to the Pentagon. The project calls for transitioning at least some of the department’s technology needs -- including some 3.4 million users and 4 million devices -- to a commercial cloud, and applications that make the move will need to be reconfigured to be compatible with that provider’s technical requirements. The transition could threaten the growth of legacy software and database providers that were later entrants into the cloud market, like IBM and Oracle Corp. The project will also likely create a lot of business for companies that help organizations move applications and systems to the cloud.