DISA backs off controversial $1.6B VMware license

DISA’s plan to sign a joint enterprise licensing agreement with VMware appears to be dead in its current form.

The agreement drew fire from a variety of VMware competitors, who filed protests in February with the Government Accountability Office, complaining that the agreement, known as a JELA, would unduly restrict competition.

Four companies—Amazon Web Services, Citrix Systems, Minburn Technology Group and Nutanix—filed protests with GAO, while other companies, notably Cisco, voiced their concerns with DISA.

On their face, JELAs are a good idea because they consolidate a vast number of software licenses and maintenance agreements, lowering costs and increasing efficiency.

But the agreement between VMware and DISA covered $1.6 billion in products and related services and drew fire because it went beyond VMware’s dominant position in server virtualization and into virtualization areas such as storage, networking and the desktop. These are areas where other companies have a larger market share in government than VMware.

That’s when they went to GAO with their argument that the agreement would give VMware an unfair advantage and restrict competition.

DISA apparently has agreed with enough of their arguments to inform the lawyers for those companies that they are pulling the JELA back, a source has told me.

Once the agreement is formally canceled, GAO will dismiss the protests. Right now, the GAO docket still shows the protests as active, but that will change in the next few days as the process moves along. [UPDATE: GAO dismissed the protests on Thursday, but the public docket didn't update until this morning. The four protests are now marked dismissed.]

The most likely next step is that DISA creates another agreement with VMware, but one that has a narrower focus, which will be much less likely to draw protests from other companies.