Oracle_Redacted.pdf

CUI//SP-PROCURE

Control Number: 24-054

CUI//SP-PROCURE

Department of the Army Justification for an Exception to Fair Opportunity 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: The Headquarters, Department of the Army, Enterprise Cloud Management Agency (ECMA) requests a Firm-Fixed-Price (FFP) task order (TO) with Oracle America, Inc. (Oracle) 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. This requirement includes Oracle professional support services for existing and future ECMA cArmy IL 4, 5, and 6 Mission Owners (MOs). ACC-RI will execute this action against Joint Warfighting Cloud Capability (JWCC) multiple-award Indefinite Delivery, Indefinite Quantity (IDIQ) Contract HC1050-23-D-0004, which the Defense Information Systems Agency Defense Information Technology Contracting Organization (DITCO) awarded to Oracle. 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 Oracle clouds.

ACC-RI intends to award one TO in , with a Period of Performance (PoP) beginning , 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 (IAW) Defense Federal Acquisition Regulation Supplement 207.103(e) because this acquisition is included in the program-level acquisition plan approved by DITCO�s Senior Procurement Executive on 23 November 2022.

3. Description of Supplies/Services: Cloud computing allows 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 changes in mission parameters in a cost-effective manner.

Professional services supporting the Oracle cloud will provide for direct engagement between ECMA, MOs and Oracle consultants, who will support the Army with customized advice, designs, and solutions.

On 31 July 2023, the DoD Chief Information Officer (CIO) issued a memorandum, subject:

�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 NextStepRationalizeCloudUse.pdf(defense.gov). As a result, ECMA is now required to purchase classified (IL 6) compute and storage services from the JWCC contract vehicle, and has determined that moving all existing Oracle customers/applications and capabilities from the CAMO OTA to a combined JWCC TO that includes future Oracle IL 4, 5, and 6 requirements is in the Army�s best interest since the CAMO OTA is currently scheduled to end on , and Oracle is the only Cloud Service Provider (CSP) that can provide the services required to support the Oracle-designed applications.

Existing Customers/Applications:

ECMA currently provides Oracle cloud compute and storage services within IL 4 and 5 to customers/applications under the Cloud Account Management Optimization (CAMO) Other Transaction Agreement (OTA). Continuing to support the Army applications currently in Oracle IL 4 and 5 requires the continued acquisition and use of Oracle services, to include the continued acquisition and use of Oracle cloud native and cloud-supported technologies and services.

Future Customers/Applications:

ECMA established the Army�s cloud ecosystem, known as cARMY, to provides common cloud shared services, global connectivity and required cybersecurity services for all Army applications, systems and data hosted in the cloud. Oracle is already approved for use at IL 4 and 5, and the Government anticipates that Oracle will be one of the CSPs approved for use at IL 6 by the time of TO award. Therefore, Army MOs will be able to leverage the Oracle cloud native and proprietary technologies and services for application hosting and development.

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

For example, applications with strong ties to services, data, or capabilities already in existing Oracle workloads will have technical and architectural dependencies on the Oracle IL 4, 5, and 6 ecosystems that may necessitate the acquisition and use of Oracle compute and storage services. In addition, there will be ECMA workloads that must leverage Oracle due to the unique capabilities offered by Oracle, as well as the foundational architecture of the system/application. For example, Real Application Clusters capabilities, Cache Fusion, and other Oracle proprietary offerings have critical dependencies on Oracle-only technologies and require Oracle 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 Oracle 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;

proposes potential cloud-centric, modernized architectures for the Government to review, in detail, based on the proprietary technologies and services each CSP provides; and executes 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.

Independent Government Estimate (IGE):

The IGE, developed by ECMA, is based on a historical analysis of the CloudTracker data under the CAMO OTA for the existing customers/applications in Oracle IL 4 and 5, combined with an ECMA planning factor of new IL 4 and 5 applications migrating to the cloud . Of the new applications per year, CloudTracker data suggests that of them will migrate to Oracle. This assumption is derived from relative market positions of Amazon Web Services (AWS) and Oracle. Therefore, the IGE assumes applications at the beginning of the PoP, and applications at the end of the PoP. For Oracle IL 6 applications, ECMA used the CloudTracker data to determine that approximately Oracle IL 6 application will be added each r. Therefore, the IGE assumes no Oracle IL 6 applications at the beginning of the PoP, and applications at the end of the PoP. Additionally, the IGE assumes a discount of by Oracle, which is consistent with the discount received on the JWCC IDIQ. Finally, as allowed by the JWCC Acquisition Plan and resulting IDIQs, an optional surge Contract Line Item Number (CLIN) of is included in anticipation of the likely growth in the requirements, such as increased cloud compute and storage requirements for new and/or existing applications due to expected increases in the application user base and/or the required expansion of services to additional warfighting zones.

4. Authority Cited: 10 United States Code (USC) § 3406(c)(2), as implemented in FAR 16.505(b)(2)(i)(B), Only one awardee is 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.

5. Reason for Authority Cited:

Existing Customers/Applications:

ECMA must continue to sustain the operations of the applications currently hosted in

Oracle�s IL 4 and 5 environments under the CAMO OTA that support a variety of Army missions. These no-fail missions include three programs, including the United States Army Corps of Engineers (USACE) Project Management Automated Information System, which provides program and project management tools for planning, executing, and reporting projects for USACE, and the Idaho Army National Guard and National Guard Bureau Enterprise Information Environment Mission Area applications, which provide the foundational IT capabilities that support and enable Army Guard warfighting, business, and Defense Intelligence Mission Areas and network-centric operations.

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

The three existing customers/applications must continue to operate in the Oracle IL 4 and 5 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 Oracle to another CSP would require several months just to analyze and re-design the application; several more months to build the application in the new CSP; and several more months of running the application in parallel in both CSPs to ensure a smooth transition. This cost in idle time alone (e.g., code freeze during the transition) would make the migration incredibly expensive, and the financial costs of paying for the required reengineering and redesign are 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.

Future Customers/Applications:

Future IL 4, 5, and 6 workloads that the Government determines require the acquisition and use of Oracle 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 Oracle 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 Oracle-based technologies will have a stable and appropriate environment in which to operate without the need for massive refactoring.

If this TO is not awarded, future IL 4, 5, and 6 workloads that the Government determines require the use of Oracle cloud native and proprietary technologies and services, as well as Oracle IL 4, 5 and 6 cloud environments, to provide optimal functionality (i.e., best suited for Oracle), and for which the Government directs an Oracle-based design, will be severely handicapped before they even start the process to migrate to the cloud because the Government will be forced to revise the initial design to work with another CSP. This will not only result in a duplication of the costs to design the application,

6. Efforts to Obtain Competition: The JWCC IDIQs were established after substantial market research and awarded to the contractors deemed capable of meeting the requirements and schedule. Given the DoD CIO�s mandate to use the JWCC contract for IL 6, and the fact that Oracle is the only JWCC awardee capable of providing the required services to operate the existing Oracle-designed applications and up to an estimated future applications (15 IL 4 and 5, and 4 IL 6) that the Government determines require the use of Oracle 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 Oracle) without extensive reconfiguration, 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 Oracle 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 will have minimal subcontracting possibilities. The services provided under this effort will include Oracle Professional Services, which are proprietary in nature, in that they must come from Oracle or an Oracle-certified partner with very specific qualifications to meet Oracle standards. The work may be competed between multiple subcontractors; however, the competition will be limited to the specific pool of vendors with the appropriate Oracle certifications and Government / DoD clearances needed to perform the work.

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 AWS, Microsoft Azure, Google, and Oracle.

While both AWS and Azure currently provide cloud services at IL 6, Google and Oracle are expected to provide IL 6 services by the time of TO award, and all four JWCC CSPs provide cloud services at IL 4 and 5, each CSP has spent millions of dollars developing their own proprietary technologies and services within the cloud, and those services are not interchangeable. Therefore, Oracle is the only source capable of providing all the required cloud services at IL 4, 5 and 6 for the Oracle-designed applications covered by this justification.

ECMA is required to use the JWCC contract vehicle for cloud computing capabilities and services at IL 6. Therefore, even though the Government anticipates that all four JWCC contract holders will be capable of providing the required services at IL 6 by the time of TO award, Oracle is the only source capable of meeting the requirements for the four projected Oracle-designed classified applications because the CSPs� services are not interchangeable. In addition, because the three existing IL 4 and 5 applications were designed and tailored to use Oracle cloud native and proprietary capabilities, Oracle is the only source capable of meeting the IL 4 and 5 requirements for those applications, as well as the 15 projected Oracle-designed applications, without substantial modification, cost, and time. Therefore, Oracle is the only source capable of providing the unique global mission sets required to support the existing three customers/applications and any future Oracle-designed applications 24x7x365 with no impact to critical Army mission capabilities.

9. Other Facts:

a. Procurement History

(1) Contracts or Agreements:

CAMO OTA W52P1J1995023

Awarded 3 March 2021 Prototype TO W52P1J2194009 Production TO W519TC2392015

(2) Competitive Status: Competed.

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

(4) Previous justification�s intended actions 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 use the JWCC contract for the four projected classified (IL 6) applications. In addition, ECMA has determined that it is in the Army�s best interest to move existing and projected Oracle-designed IL 4 and 5 applications from the CAMO OTA to the same JWCC contract since the CAMO OTA is currently scheduled to end on 2 March 2025, and Oracle is the only CSP that can provide the services required to support Oracle-designed applications because Oracle capabilities are unique (i.e., proprietary) and highly specialized.

(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 JWCC 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 Oracle, and the application will be included in this TO. In other cases, that CSP will be AWS, Azure, or Google and the application will be added to the sole-source TO awarded to that CSP.

(2) The JWCC IDIQs include terms and conditions associated with Government data and intellectual property, to include applicable rights, titles, and interests in Section H. In addition to Section H and applicable clauses within Section I, the contract provides the limitations on access to, and use and disclosure of, Government data and Government-related data. The contracts also include industry-standard commercial terms and conditions associated with License Agreements and Service Level Agreements.

Approval

Based on the foregoing justification, I hereby approve the procurement of Oracle cloud compute and storage services for Impact Levels 4, 5, and 6 under the Joint Warfighting Cloud Capability contract. The total estimated dollar value of this action is $222,535,332.00, and it will be awarded on an other than full and open basis pursuant to the authority of 10 United States Code (USC) § 3406(c)(2), as implemented in FAR 16.505(b)(2)(i)(B), subject to availability of funds, and provided that the services and supplies herein described have otherwise been authorized for acquisition.

Date: DOUGLAS R. BUSH

Senior Procurement Executive