The much-touted "JEDI" cloud contract certainly looms over the market but is far from the only the large enterprise IT opportunity analysts are watching closely.
Calendar year 2019 already is brewing as a year of the megadeal in terms of IT contracting awards and specifically when it comes to the U.S. military’s move to commercial cloud environments.
That move is going to happen regardless of how the court case and various investigations play out regarding the single-award $10 billion “JEDI” cloud infrastructure contract. Just look at the Defense Department’s nearly $8 billion “DEOS” contract as an example.
The DEOS buy of cloud-based email, calendaring and other back office services is going pretty much full-steam ahead without much controversy and an initial batch awards for task orders could come down by the fall of this year.
Those are the two most-high profile but also are part of “the large number of large scale, network modernization bids coming up in 2019 and 2020” that include several brand new contracts, analysts at investment bank Cowen & Company wrote in a note for clients Friday.
It should be noted that Cowen’s analysis did not include a look at the controversial Joint Enterprise Defense Infrastructure contract currently in the midst of a pre-award protest by Oracle to the Court of Federal Claims and reportedly also being looked at by the FBI.
DOD wrote JEDI’s requirements to narrow the field to only commercial competitors. Amazon, Microsoft, Oracle and IBM are the four known bidders. By comparison, DEOS will be a multiple-award contract that will see systems integrators bid for prime positions to integrate commercial back office tools via task orders.
And we have not even begun to scratch the surface yet on the intelligence community's just-disclosed "C2E" commercial cloud contract worth tens of billions of dollars to multiple awardees.
Absent JEDI but including DEOS, Cowen analysts highlighted roughly $22 billion in opportunities they are watching this year and next that could reset the government IT market’s competitive landscape.
These awards could also serve as test cases for the notion of scale that has spurred nearly one megamerger or acquisition of another in recent years to position better for those larger contracts.
Leidos’ 2016 merger with the former Lockheed Martin IT services business and General Dynamics’ acquisition of CSRA last year were partly centered around the notion of scale, which they see as boosting their chances to win big deals with agencies.
In a roundtable with reporters at their headquarters last month, GDIT executives described to us then how they have restructured their business with a new model inherited from CSRA to pay special attention to pursuing awards north of $500 million.
GDIT has a centralized team of solution architects, engineers and pricing analysts whose main job responsibility is to identify and pursue opportunities of that size. That team supports all three of GDIT’s market-facing divisions. The business has $15 billion in bids awaiting a decision on award and plans to submit $50 billion in proposals this year.
Two big recompete awards coming this summer include the Navy’s $3.4 billion “NGEN-R” contract for broad systems integration and related services to support the branch’s global Intranet. Longtime incumbent Perspecta -- created last year out of a complex three-way merger -- faces a pair of bulked-up competitors in Leidos and General Dynamics IT.
This year will also see Leidos defend its $6.5 billion “Global Solutions Management-Operations” contract for broad telecommunications and IT services to the Defense Information Systems Agency. In an ironic twist of fate compared to NGEN-R, Cowen sees Perspecta and GDIT as the two main takeaway rivals for that work.
Then there is calendar year 2020 that Cowen analysts see as one that could see almost $4 billion in brand new work get awarded for large enterprise IT jobs at the Homeland Security Department, Air Force and Army.
DHS has a $2 billion cloud procurement on the horizon, while the Air Force has in store a $1 billion “Enterprise IT as a Service” contract for computer and storage solutions. The Army is also planning a $1 billion “Software as a service” buy.