REAN Cloud claims it got no explanation for DOD cloud contract scaleback

The vendor whose $950 million Pentagon cloud migration services contract was rolled back by more than 90 percent found out about the massive reduction in scope not from a Defense Department official, but in the way most people did — in the news.

Needless to say, REAN Cloud LLC isn’t very happy.

The company alleges that the Pentagon didn’t notify it that the nearly billion-dollar contract would be reduced to just $65 million. Instead, the news came from statements in an off-camera Pentagon press conference this week.

DOD still hasn’t reached out about its decision, REAN managing partner Sekhar Puli said.

“REAN Cloud has not been made aware of the basis for the DOD’s recently stated intention to reduce the contract ceiling to $65 million. However, it is clear that many DOD agencies wish to procure these services,” Puli said.

A DOD spokesperson, however, told FedScoop “DOD contacted REAN about this subject before we announced it publicly.”

Under the original deal, REAN was supposed to offer its migration services departmentwide to DOD components and military services after demonstrating a successful prototype last year with the U.S. Transportation Command, helping migrate dozens of its legacy applications to the cloud. REAN worked with the Defense Innovation Unit-Experimental using what’s known as a “production other transaction” contract to perform that earlier work. Now, after the Pentagon reduced the contract, it will be limited only to work that continues with TRANSCOM.

“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,” spokesperson Army Col. Robert Manning said at the press conference.

Puli rebutted that he believes REAN, with its partners, “can service the demands of U.S. military customers through existing or other contract vehicles.”

The narrowing of the contract’s scope isn’t completely out of the blue. It correlates with a protest Oracle filed with the Government Accountability Office in late February, questioning REAN’s connection to Amazon Web Services and the seeming hush-hush nature of the procurement. The Government Accountability Office hasn’t yet decided on the protest and has until May 31 to do so. REAN Cloud is a so-called Amazon Web Services Premier Partner, specializing in migrating legacy systems to AWS, though the company said it’s able to work with other providers as well. It’s also worth noting that REAN claims it could work with Oracle as a cloud provider, moving DOD systems to its cloud.

Puli scoffed at the basis of the Oracle protest, calling it a “threat of legal action and protest by the old guard.”

“[T]he only winners in this delay are those large companies that stand to lose money if the DoD proceeds with innovation,” he said. “In the meantime, the cost of maintaining antiquated government infrastructure has not subsided.”

REAN’s DOD cloud drama comes as the Pentagon this week made large waves in the defense IT contracting community with the release of the draft solicitation for its departmentwide commercial cloud procurement, the Joint Enterprise Department Infrastructure. Many in industry weren’t happy with the department’s decision to enlist a single award for the multi-billion dollar contract, worrying that it would lock the department into working with once cloud provider for a decade, limiting its potential to innovate down the line.