scorecardThere's a race for a $10 billion Pentagon cloud contract underway. Here's how the government shutdown could affect it
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There's a race for a $10 billion Pentagon cloud contract underway. Here's how the government shutdown could affect it

There's a race for a $10 billion Pentagon cloud contract underway. Here's how the government shutdown could affect it
Enterprise4 min read

WASHINGTON, DC - JANUARY 02: U.S. President Donald Trump (L) talks to journalists during a meeting with members of his Cabinet, including acting Defense Secretary Patrick Shanahan, in the Cabinet Room at the White House January 02, 2019 in Washington, DC. A partial federal government shutdown entered its 12th day as Trump and House Democrats are at an impasse over funding for border security, including the president's demand for  Dollar 5 billion for a wall along the U.S.-Mexico border. (Photo by Chip Somodevilla/Getty Images)

Chip Somodevilla/Getty Images

President Donald Trump

  • The bid for the Joint Enterprise Defense Infrastructure (JEDI) contract, a $10 billion cloud contract with the Pentagon that cloud giants are competing for, might potentially be delayed because of the government shutdown, some analysts say.
  • Since the Department of Defense wasn't closed from the shutdown, there won't be a direct impact on the JEDI race.
  • However, the shutdown could affect government cybersecurity, the ability of companies to obtain government security certifications, and the timing of the winner's announcement.

Three weeks have already passed since the government shutdown began, tying it for the longest shutdown in history. While Congress tries to settle the standoff, there's one thing that cloud giants may have to worry about.

There's a race for a $10 billion cloud contract with the Pentagon called the Joint Enterprise Defense Infrastructure (JEDI) contract, and it's a winner-take-all competition between Amazon, Microsoft, IBM and Oracle. An award is expected in April, and the shutdown could potentially affect this match some analysts say.

The good news is, the government shutdown has no direct impact on the race. That's because the shutdown applies to agencies and functions outside the Department of Defense. The Defense Department was not closed as a result of the shutdown.

Still, there could potentially be an indirect impact, although analysts disagree to what extent. Government cybersecurity is already weakening, as nearly 45% of employees at the Cybersecurity and Infrastructure Security Agency have already been furloughed during the shutdown, according to a Duo Security report.

Renee Murphy, a principal analyst at Forrester, says that although the Department of Defense itself isn't shut down, the agencies it works with are shutdown, and this could lead to a delay.

"I don't think for a second they would make a move on JEDI without having an office and budget there," Murphy told Business Insider. "They can't keep going. They're going to end up with a longer timeline. It's just going to take longer to get it down."

Right now, Amazon is the only company in the race with the highest security authorization to handle government data - a major reason why it's the favorite to win the contract. If the other contenders want to catch up, they could face delays in getting the necessary certifications. After all, in the midst of the shutdown, this isn't a top priority.

Read more: As bidding closes, Amazon's cloud is the favorite to win a $10 billion defense deal. Here's why everybody else is so mad about it

Potentially, the situation could take a turn if the scope of the shutdown widens or if President Donald Trump decides he wants to use funds from the Department of Defense for the border wall, says Pund-IT Principal Analyst Charles King, but the chances are slim.

"The chances of that happening seem remote since it would require the President removing JEDI funds and would also be challenged in court," King told Business Insider. "But with this administration, you should never say 'Never.'"

Still, the shutdown itself will likely have minimal impact on JEDI. There are bigger fish to fry - members of Congress have requested an investigation of the bidding process, and Oracle filed a formal complaint protesting the winner-take-all bidding process. These are more likely to delay JEDI than the shutdown itself, King says.

In the past few months, the contest for the JEDI contract has had its fill of turmoil, including Google dropping out of the race, an Amazon smear campaign circulating in Washington, and both IBM and Oracle filing official protests.

"A government shutdown just adds a little more uncertainty from a timing perspective to when the deal could be announced," Daniel Ives, managing director of equity research at Wedbush Securities, told Business Insider.

Already, as a result of the shutdown, national parks are closed, federal workers aren't getting paid, food programs are losing funding, and airplane lines are growing longer.

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