Revenge of the JEDI Contract

The US Department of Defense recently awarded their Joint Enterprise Defense Infrastructure (or JEDI) contract to Microsoft rather than Amazon, and the decision immediately generated headlines, skepticism and the threat of a likely formal challenge.  The project lead, Dana Deasy, described JEDI as, “an initiative that will revolutionize how we fight and win wars.”  More specifically, this is a cloud-based services contract structured to accelerate the data flow analysis as US troops develop strategy and engage in combat.  So, there is an element of life and death, as well as the US’s national security.

None of the resulting commercial activities should surprise anyone in the Commercial Officer community.  Unfortunately, this will all likely lead to the contract generating yield rates below the range where a contract of this nature should land.  Sometimes, low-yield contracting should be tolerated when larger and more important purposes are in play.

Setting aside these larger issues, it is inevitable that the commercial aspects will be explored and debated through a long and arduous battle – all in the public domain.  This episode provides an excellent opportunity for us as a profession to learn (or reinforce) a number of best practices and pitfalls during the coming months.  Yet, many will shake their heads in frustration and walk away from the discussion.

To date, a few issues and lessons seem to be emerging:

  • The “Make versus Buy” decision – some are asking why a US$10 billion, ten-year contract needs to be outsourced. Could this work be performed internally, with the support of hired employees, rather than through a commercial option.  The commercial approach will inevitably lead to transparency around strategic and tactical warfare issues which might be best positioned outside of the global public view.
  • Does Collaborative Contracting allow multiple contractors to work in a teaming environment, embracing collaborative tenets, when the financial prize is so large and plentiful. Some would suggest that a US$10 billion budget would allow multiple contractors to participate and contribute to the overall project’s success.
  • Should Leading-Practice Process anticipate the protests and debates which will arise regardless of whomever is awarded the project, leading to the process owner being more proactive in preempting and mitigating the challenges?

What issues and lessons do you see?

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