JWCC Azure Il 4-6 JEFO_Redacted.pdf

CUI//SP-PROCURE

Justification for an Exception to Fair Opportunity (JEFO) Under FAR 16.505(b)(2)

1. Contracting Activity: U.S. Army Contracting Command – Rock Island (ACC-RI), Rock Island Arsenal, Rock Island, IL 61299-8000.

2. Description of Action: Enterprise Cloud Management Agency (ECMA) requests a Firm-Fixed-Price (FFP) task order (TO) with Microsoft Azure to procure cloud compute and storage services at Impact Levels (ILs) 4, 5 and 6 (Secret), where the unit prices are fixed, but consumption (service usage) may vary. ACC-RI will execute this action against Joint Warfighting Cloud Capability (JWCC) multiple-award Indefinite Delivery, Indefinite Quantity (IDIQ) contract, HC1050- 23-D-0003, which the Defense Information Systems Agency, Defense Information Technology Contracting Organization (DITCO) awarded to Microsoft. The JWCC IDIQ is the Department of Defense (DoD) enterprise-level contract vehicle, which allows the DoD to acquire commercial cloud offerings directly at all classification levels. This action will allow the Army to utilize the IL 4, 5, and 6 Azure clouds.

ACC-RI intends to award one TO in , with a Period of Performance (PoP) beginning , and ending , that includes a

Multiple fund types may be used; however, Operations and Maintenance, Army funds will be the primary funding type. An Acquisition Plan is not required in accordance with Defense Federal Acquisition Regulation Supplement (DFARS) 207.103(e) because this acquisition is included in the program-level acquisition plan approved by DITCO’s Senior Procurement Executive on .

3. Description of Supplies/Services: Cloud computing allows Mission Owners (MOs) to store data and develop applications that communicate with other applications in real time and are readily accessible. Cloud computing contracts free the Government from the burdensome costs associated with developing, maintaining, and updating the hardware and software infrastructure necessary to accomplish this mission. These scalable solutions enable MOs to rapidly adapt to mission parameters in a cost-effective manner.

a. Existing Customers/Applications:

ECMA currently provides Azure cloud compute and storage services within IL 4, 5, and 6 to customers/applications under the Cloud Account Management Optimization (CAMO) Other Transaction Agreement (OTA), to include unclassified (IL 4 and 5) applications, and classified (IL 6) applications. However, on , the DoD Chief Information Officer (CIO) issued a memorandum, entitled “Department of Defense Joint Warfighting Cloud Capability and Next Steps to Rationalize Cloud Use Across the Department of Defense,” which mandated the use of the JWCC contract vehicle for IL 6, and encouraged the use of the JWCC contract vehicle for other Military Department requirements for cloud capabilities and services (See https://dodcio.defense.gov/ Portals/0/Documents/Library/NextStepRationalizeCloudUse.pdf). As a result, ECMA is now required to contractually move the classified (IL 6) customers/applications from the CAMO OTA to the JWCC contract vehicle, and has determined that moving the unclassified (IL 4 and 5) customers/applications from the CAMO OTA to the same JWCC contract vehicle is in the Army’s best interest since the CAMO OTA is currently scheduled to end on , and Azure is the only Cloud Service Provider (CSP) that can provide the services required to support the Azure-designed applications.

Because Azure was one of the early CSPs approved for use at IL 4, 5, and 6, Army MOs leveraged the Azure cloud native and proprietary technologies and services for application hosting and development. Therefore, continuing to support the Army applications currently in Azure IL 4, 5, and 6 requires the continued acquisition and use of Azure services, to include the continued acquisition and use of Azure cloud native and cloud-supported technologies and services.

b. Future Customers/Applications:

Army engineers anticipate that, as applications continue to migrate to the cloud, additional workloads will require the acquisition and use of Azure compute and storage services.

For example, applications with strong ties to services, data, or capabilities already in one of the existing Azure workloads will have technical and architectural dependencies on the Azure IL 4, 5, and 6 ecosystems that may necessitate the acquisition and use of Azure compute and storage services. In addition, there will be ECMA workloads that must leverage Azure due to the unique capabilities offered by Microsoft, as well as the foundational architecture of the system/application. For example, Active Directory, SharePoint, PowerBI, and other Microsoft proprietary offerings have critical dependencies on Microsoft-only technologies and require Azure compute and storage services when moving to or expanding within the cloud.

ECMA estimates that up to IL 4 and 5 customers/applications, and up to IL 6 customers/applications, will be added to the TO during the life of the TO. This estimate is based on ECMA/CAMO user data for the past , and a comparison of Azure usage by Agencies with a similar size, scope and mission. Before the Government decides to add any new customers/applications to this TO, however, the Government will determine which CSP is the most advantageous CSP (i.e., best suited) for that application through an application assessment process, such as the application assessment process in the Enterprise Application Modernization and Migration (EAMM) contract. Under this contract, the EAMM vendor analyzes each application/workload based on several factors, to include the proprietary technologies and services each CSP provides. The vendor will propose one or more potential cloud-centric, modernized architectures for the Government to review, in detail, based on the proprietary technologies and services each CSP provides. The vendor will also execute the final system design based on the Government’s technical direction and the Government’s choice of the CSP and architecture/design that provides the Government optimal functionality for that particular application/workload.

The existing IL 4, 5, and 6 Azure cloud native and proprietary technologies and services being used by ECMA and the existing customers/applications were developed initially for commercial customers, entirely at Microsoft’s expense. Subsequently, ECMA and the MOs that leveraged Azure IL 4, 5 and 6 invested in engineering, developing, deploying, and continually enhancing their applications within Azure, and have used Azure cloud native and proprietary technologies and services to support those applications.

The existing customers/applications must continue to operate in the Azure IL 4, 5, and cloud environments because no other CSP can support the current configuration of these applications without extensive reconfiguration. Due to the complexity of the applications, the specificity of the current operational environment, and the expenditures to date for the design, engineering, configuration, authorization, and deployment of the applications, it would be cost prohibitive for the Government to redesign, re-engineer, re-configure, reauthorize, and redeploy the applications in another CSP. Migrating these applications to another CSP would also fundamentally change the way each application works, as well as its architecture, dataflows, and more. To migrate these applications from Azure to another CSP would require several just to analyze and re-design the application; several more to build the application in the new CSP; and several more of running the application in parallel in both CSPs to ensure a smooth transition. This cost in idle time alone would make the migration incredibly expensive, and the financial costs of paying for the required reengineering and redesign is unlikely to have been included within any of the MOs’ current budgets. In addition, moving existing applications to a different CSP would require substantial additional time and resources to train staff how to operate the applications in a new CSP due to their highly specialized nature and the difference between the CSPs, which is not a one-time cost and would be required every time these applications moved to another CSP.

b. Future Customers/Applications:

Future IL 4, 5, and 6 workloads that the Government determines require the acquisition and use of Azure cloud native and proprietary technologies and services to provide optimal functionality following an EAMM or a similar assessment will also be required to operate in Azure IL 4, 5, and 6 cloud environments because no other CSP can support the Government-directed design for these applications / workloads without extensive reconfiguration. In addition, any applications that rely heavily on Microsoft-based technologies, such as Active Directory, SharePoint, PowerBI, etc., will be required to operate in Azure IL 4, 5 and 6 cloud environments to provide a stable and appropriate environment in which to operate without the need for massive refactoring.

6. Efforts to Obtain Competition: The JWCC IDIQs were established after substantial Market Research and awarded to the four contractors deemed capable of meeting the requirements and schedule. The DoD CIO’s mandate to use the JWCC contract for IL6.

Azure is the only JWCC awardee capable of providing the required services to operate the existing applications and up to an estimated future applications ( IL 4 and 5, and IL 6) that the Government determines require the use of Azure cloud native and proprietary technologies and services, as well as IL 4, 5, and 6 cloud environments, to provide optimal functionality (i.e., are best suited for Azure) without extensive reconfiguration. Therefore, fair opportunity is not practical. A synopsis of the proposed contract action will not be posted pursuant to FAR 5.202(a)(6) because the proposed contract action is an order placed under subpart 16.5.

a. Effective competition. Given the fact that Microsoft is the only CSP capable of providing the supplies or services required at the level of quality required because the supplies or services ordered are unique or highly specialized, effective competition is not applicable.

b. Subcontracting competition. This acquisition does not provide any subcontracting possibilities. Therefore, subcontracting competition is not applicable. This effort is for the purchase of Azure cloud compute and storage services for IL 4, 5, and 6, which is billed on a consumption basis. There is no labor being funded under this effort.

7. Actions to Increase Competition: For future acquisitions, the Government intends to continue to leverage and comply with DoD-mandated contract sources, while conducting market research and assessments of CSPs’ emerging technologies and IL 4, 5, and 6 capabilities to increase competition to the maximum practicable extent.

8. Market Research: ACC-RI and ECMA conducted market research in March 2024, by reviewing the capabilities of the JWCC contract holders. The JWCC contracts were established as a multiple-award IDIQ in 2022, with awards to Amazon Web Services (AWS), Azure, Google, and Oracle. All four CSPs provide unclassified cloud services, but only two, AWS and Azure, provide cloud services at IL 6. Therefore, Google and Oracle cannot meet the Government’s requirement for IL 6 services.

While both AWS and Azure provide cloud services at IL 6, and all four CSPs provide cloud services at IL 4 and 5, each CSP has spent millions of dollars developing their own proprietary services within the cloud, and those services are not interchangeable.

Therefore, Azure is the only source capable of providing all the required cloud services at IL 4, 5 and 6 for the applications/customers covered by this justification.

Because ECMA is required to use the JWCC contract vehicle for cloud computing capabilities and services at IL 6, there are only JWCC contract holders capable of providing the required services at IL 6, and those services are not interchangeable, Azure is the only source capable of meeting the IL 6 requirements for the existing classified applications. In addition, because the existing unclassified applications were designed and tailored to use Azure cloud native and proprietary capabilities, Azure is the only source capable of meeting the IL 4 and 5 requirements for those applications, as well as any future Azure-designed applications, without substantial modification, cost, and time.

Therefore, Azure is the only source capable of providing the unique global mission sets required to support the existing customers/applications and any future Azure-designed applications 24x7x365 with no impact to critical Army mission capabilities.

9. Other Facts:

a. Procurement History

(1) Contracts or Agreements: CAMO OTA W52P1J1995023 / W52P1J2194009, W519TC2392015; Awarded 03 March 2021

(2) Competitive Status: Competed.

(3) Other than full and open competition authority: Not applicable.

(4) Previous justification’s intended action to increase competition and results:

Not applicable.

(5) Explanation of the changed circumstances causing this action to now limit the sources: On 31 July 2023, the DoD CIO issued a memorandum, entitled “Department of Defense Joint Warfighting Cloud Capability and Next Steps to Rationalize Cloud Use Across the Department of Defense,” mandating the use of the JWCC contract vehicle for

IL 6 and encouraging the use of the JWCC contract vehicle for other Military Department requirements for cloud capabilities and services. As a result, ECMA is now required to contractually move the 19 classified (IL 6) customers/applications from the CAMO OTA to the JWCC contract. In addition, ECMA has determined that it is in the Army’s best interest to move the 93 unclassified (IL 4 and 5) customers/applications from the CAMO OTA to the JWCC contract at the same time since the CAMO OTA is currently scheduled to end on 2 March 2025, and Azure is the only CSP that can provide the services required to support Azure-designed applications because Azure capabilities are unique (i.e., proprietary) and highly specialized. This includes future applications that the Government determines require the use of Azure cloud native and proprietary technologies and services, as well as Azure IL 4, 5, and 6 cloud environments, to provide optimal functionality (i.e., are best-suited for Azure), and for which the Government has directed an Azure-based design.

(6) Explanation of unusual patterns revealed by the history, e.g., several consecutive, urgent buys: None.

(7) Previous justification’s circumstances justifying the procurement and whether there have been any significant changes: Not applicable.

b. Other facts.

(1) This TO will operate in parallel with other sole-source TOs awarded to other

CSPs because the existing IL 4, 5, and 6-certified CSPs are not equivalent, despite the common misconception that CSPs are interchangeable and workloads can be moved seamlessly between clouds. Each CSP has spent hundreds of millions of dollars on the research and development of their proprietary solutions and technologies, which provide superior performance and security within their niches, but are not interchangeable.

Therefore, existing applications that were designed and tailored to use the capabilities of a particular CSP will generally be required to use that CSP’s cloud compute and storage services to enable the applications to function without the need to redesign, re-engineer, re-configure, reauthorize, and redeploy them in another CSP. Additionally, because each CSP provides different capabilities and benefits from a cost, technical, and security standpoint, MOs will have to assess their applications before those applications are modernized and migrated to the cloud to determine which CSP provides the optimal solution. In some cases, that CSP will be Azure, and the application will be included in this TO. In other cases, that CSP will be AWS, Google, or Oracle and the application will be added to the sole-source TO awarded to that CSP.

(2) The JWCC basic contracts, section H, include terms and conditions associated with Government data and intellectual property, to include applicable rights, titles, and interests. Further, this section H and associated clauses within the basic contract section I provide the limitations on access to, and use and disclosure of, Government data and Government-related data. The contracts also include terms and conditions associated with License Agreements and Service Level Agreements.