DOD scales back $950M cloud agreement

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The Defense Department is scaling back its $950 million cloud agreement with REAN Cloud LLC by more than 90 percent, a DOD spokesperson announced March 5.

Pentagon spokesman Col. Robert Manning told a group of reporters at the Pentagon during an off-camera interview that DOD concluded the deal should be "narrowly tailored" to cover only U.S. Transportation Command, and decided to lower the price ceiling to $65 million from the original $950 million announced in February. FCW obtained a transcript of the interview from the Pentagon press office.

"After reviewing the production agreement recently awarded to REAN Cloud LLC, the Department has determined that the agreement should be more narrowly tailored to the original scope of the prototype agreement, which was limited to United States Transportation Command applications," Manning said.

The REAN production agreement was made under an Other Transaction Authority by the Defense Innovation Unit Experimental. Manning said DIUx's efforts to "accelerate adoption of cloud technologies" were appreciated, but that DOD ultimately decided the deal was too broad.

REAN, a cloud system integrator and Amazon Web Services partner, was first awarded its contract in February as part of DOD's plan to move to an enterprise commercial cloud solution.

Oracle protested the contract with the Government Accountability Office.

The award was seen by some as another sign DOD wants to consolidate cloud services with a single provider -- namely Amazon -- which critics say would hamper competition in the government cloud market. DOD previously floated the idea of a single-award contract worth as much as $2 billion for department-wide cloud services, and various documents hinting that AWS was the preferred solution. DOD walked back that notion down after criticism from industry and Capitol Hill.

REAN's prototype for USTRANSCOM was AWS-based, although an executive from the firm told FCW prior to DOD's March 5 announcement that the services demonstrated also can work with Microsoft Azure and other cloud service providers.

The announcement of the agreement's nearly $900 million reduction comes just two days before the March 7 industry day for DOD's Joint Enterprise Defense Infrastructure cloud acquisition. That event aims to clarify the Pentagon's cloud strategy.

The rollback was first reported by Inside Defense.

About the Author

Lauren C. Williams is senior editor for FCW and Defense Systems, covering defense and cybersecurity.

Prior to joining FCW, Williams was the tech reporter for ThinkProgress, where she covered everything from internet culture to national security issues. In past positions, Williams covered health care, politics and crime for various publications, including The Seattle Times.

Williams graduated with a master's in journalism from the University of Maryland, College Park and a bachelor's in dietetics from the University of Delaware. She can be contacted at, or follow her on Twitter @lalaurenista.

Click here for previous articles by Wiliams.

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