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AWS vs. VMware in Pentagon virtualization contract

AWS called shenanigans on the renewal of a VMware virtualization license agreement at the Pentagon, pointing to the deal's anti-compete nature.

Running on Amazon Web Services is touted as a markedly different way of doing business; instead of buying software and capacity upfront, companies pay as they go, and pay for what they use. But the further down the road you get, the more you see AWS acting like any other enterprise IT vendor.

Last week, AWS, among other companies, successfully interfered with a lucrative renewal of a VMware Enterprise License Agreement (ELA) at the Pentagon for existing virtualization software. VMware, the story goes, was all set to renew a five-year, $1.6 billion (yes, billion) contract for service and support of existing VMware licenses at the Army, Navy and Air Force. However, VMware competitors -- AWS, along with Citrix, Nutanix and Minburn Technology Group -- complained so loudly to the Government Office of Accountability about the anti-competitive nature of this deal that the Defense Information Security Agency, or DISA,  cancelled the bid.

The fire behind the AWS vs. VMware battle

It's hard to fathom, however, how any of the plaintiffs could be called upon to support VMware licenses. Nutanix resells VMware virtualization as part of its hyperconverged infrastructure, hardly putting the company in a position to support an environment as large as the Pentagon. Citrix offers XenSource server virtualization software, but using that would mean the government would have to swap out VMware licenses. Minburn Technology, meanwhile, is a government contractor that partners with Microsoft -- not VMware. And then there's AWS, which doesn't sell anything on-premises, much less enterprise software. The question then becomes, why did it raise such a fuss?

There's speculation that AWS objected to language in the contract that would have allowed VMware to offer cloud services as an extension of the ELA. VMware, thus far, has yet to set the world afire with its vCloud Air public cloud service, but its enterprise customers have always been its ace in the hole. If VMware can convert them to vCloud Air, that could minimize AWS' public cloud reign. Conversely, if AWS can get in the way of those deals, that could speed things up in its favor.

Or maybe this is just how things work with government deals, said Carl Brooks, IT analyst at The 451 Group. "IBM and HP had strenuous objections over the bid process when AWS landed its private cloud project with the CIA, and managed to delay the deal by a year or so," Brooks said in an email. "This kind of cut and thrust seems to be about par for government deals."

Given the size of the potential federal cloud market, it was probably right to do so.

"[Former federal chief information officer] Vivek Kundra said that 'federal cloud' spending could reach $20 billion, out of the $80 billion the fed currently spends," Brooks pointed out. "Given the amount of money involved and the available target market in the fed, I'd be surprised if Amazon didn't come out guns blazing."

But just because AWS appears to have won the AWS vs. VMware battle regarding the Pentagon contract, it hasn't yet won the war. In February, VMware's vCloud Government Service received the Provisional Authority to Operate, or ATO, through the U.S. Government's Federal Risk and Authorization Management Program, or FedRAMP -- a must for any government deal. And never underestimate the power of high friends in low places (low friends in high places?); this February, the White House named Tony Scott as the new Federal CIO. Scott's last job was at -- wait for it -- VMware.

Alex Barrett is editor in chief of Modern Infrastructure. Write to her at [email protected]. 

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