Silicon Valley Comes to the Swamp
In January, Amazon announced 20 cities on the shortlist for its new corporate headquarters, “HQ2.” Three of the candidates are located in the Washington, D.C., metropolitan area — D.C. proper, Northern Virginia, and Montgomery County, Maryland. Observers have noted that a move to the nation’s capital would make sense for Jeff Bezos’s empire since the business mogul also owns the Washington Post.
But there is another, more obvious reason that Amazon might pull up its stakes and slog to the swamp: government contracts. One particular contract announced by the Department of Defense this month may be indicative of the budding courtship between Amazon and Uncle Sam.
On March 7, the Pentagon announced a winner-take-all competition for one company to manage its cloud service needs for 3.4 million users and 4 million devices. Bloomberg estimates that the contract could be worth up to $10 billion — making it one of the largest single military contracts in history.
For months, there has been speculation among journalists and military experts that Amazon Web Services is the top contender. A clue came in the form of a $950 million contract the Pentagon awarded to REAN Cloud, a Northern Virginia-based company with close ties to Amazon.
The timing and rollout of the announcement provoked outrage, having come just weeks before an “industry day,” when potential bidders for DoD cloud service contracts were scheduled to meet with military officials. Moreover, the Pentagon did not disclose that the contract had been awarded; it only came to light after REAN issued a press release. This led Oracle to file a bid protest with the Government Accountability Office, describing the award as an “egregious abuse” of the procurement process “shrouded in secrecy.”
As a result of the criticism, the Pentagon slashed REAN’s contract to $65 million. But the DoD is still soliciting bids for the larger $10 billion winner-take-all cloud contract — a move that the Coalition for Government Procurement has criticized for “the fact that there exists a statutory and regulatory preference for multiple award[s].” If Amazon secures the bid, it will create a major new revenue stream for the company, perhaps influencing its potential decision to settle in D.C.
The sheer size of the potential $10 billion contract raises important questions about the future of government contracting for the a “new era in government buying” we seem to be entering. With the federal government now soliciting historically high contracts from tech companies, Silicon Valley giants will be more tempted than ever to take the bait — potentially creating unintended consequences for national security and individual privacy.
The DoD, for instance, is scheduled to start transferring top secret data to Amazon’s secret cloud platform thanks to another contract the company won last year. Citizens and government watchdogs should start asking ourselves: How much power and influence over government operations should a single company to have?
With Amazon’s potential cloud contract and relocation to D.C., Silicon Valley may soon be coming to the swamp.
Casey Given is the executive director of Young Voices.
