Inside IBM's deal to build a private cloud for the Army

Several years of investment and building out its capabilities have helped IBM land a $62 million to build a secure, private cloud for the Army at Redstone Arsenal.

The five-year task order, known as Army Private Cloud Enterprise, might not be worth a lot of dollars, but it is an important strategic win for Big Blue, executives told me.

“This is the wave of the future, and there are more on deck like it,” said Jimmy Norcross, vice president of defense and intelligence for IBM.

The Army also described the project moves the service into the 21st century. "Cloud computing is a game-changing architecture that provides improved performance with high efficiency, all in a secure environment," said Lt. Gen. Robert Ferrell, Army CIO, in a statement.

The project calls for IBM to consolidate a large number of data centers into a single infrastructure as well as beginning to migrate what eventually will be hundreds of applications. The applications will cover the gamut from logistics and mission systems to payroll and business systems.

IBM will offer the private cloud solution as an infrastructure-as-a-service at Redstone that will be contractor-owned and operated but will be based at the Army facility, Norcross said.

“We and others have been working with the Army on how to consolidate the data centers for a number of years,” said Tim Kleppinger, vice president and senior client partner for IBM. He led the capture effort for the contract. “This is the first of four or five private cloud implementations across the Army.”

Over the next several years, the Army likely will consolidate as many as 1,000 data centers.

But this is the first, and IBM laid the ground work for winning the contract by building a similar infrastructure at the Allegany Ballistics Lab in West Virginia. IBM spent its own money to build the infrastructure at the Navy facility.

IBM was the first commercial company to earn DISA’s highest security level for controlled unclassified information, known as Impact Level 5, for that infrastructure. That credential helped IBM win the work at Redstone, Norcross and Kleppinger said.

The Army Private Cloud Enterprise or APCE has similar security requirements. “They saw that we have been there and done that,” Norcross said.

Eventually, IBM plans to have the infrastructure certified at Impact Level 6, which means it has the security qualifications to handle classified information up to the secret level, they said.

For the Army this is a “big chance to save money and improve efficiencies,” Kleppinger said.

Cost savings will come from things such as bundling software licenses and regular technology updates, he said. The Army only pays for what it uses.

“All of the risk is shifted to the contractor,” Kleppinger said.

As for future opportunities, there will be other Army data center consolidations. There is the large MIL Cloud 2.0 contract. The other services and civilian agencies also will be watching how the project progresses, Norcross said.

“There will be lots of lessons learned,” he said.

The win also builds on IBM’s Logistics Support Activity contract it won with the Army in 2015 to provide a hybrid cloud for the Army’s Logistics Information Warehouse.

These kinds of projects allow IBM to pull its commercial experiences into the government space, Norcross said.

“We are unique in a good way,” he said. “We can bring the full equation of IBM to defense and civilian customers.”

IBM also is pursuing a related opportunity, the Army Cloud Computing Enterprise Transformation or ACCENT contract. This will be a multiple award contract for modernizing applications before they can be moved to the cloud.

“There will be multiple vendors and there is good reason for that,” he said. “Some vendors are stronger on some software and platforms than others, so you need multiple vendors on the vehicle.”

Deltek estimates that the contract is worth $247.7 million over three years. Awards are expected in February.

ACCENT will work hand in glove with the IBM private cloud contract because many of the applications that will move to the IBM infrastructure need to be modernized first.

“The Army has a plan and many need to be modernized and then migrated,” Kleppinger said.

As for future cloud opportunities, the Army last year extended the life of the multiple award Army Private Cloud 2 contract, under which this contract awarded. Seven companies won the vehicle including IBM in 2011, and it has been extended through 2021.

So, we should expect more competitions under this vehicle moving forward. Other primes include Northrop Grumman, Lockheed Martin, HP Enterprise Services, General Dynamics, Criterion Systems and MicroTech.