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Amazon, Citrix, Nutanix Up In Arms Over VMware's Proposed $1.6 Billion DoD Licensing Contract

Several cloud vendors are formally protesting VMware's proposed $1.6 billion, 5-year enterprise licensing agreement with the Department of Defense, seeking a chance to compete for the deal.

Amazon Web Services, Citrix Systems and startup Nutanix are formally protesting VMware's proposed five-year, $1.6 billion enterprise licensing agreement with the Defense Information Systems Agency (DISA), a branch of the Department Of Defense.

VMware's proposed ELA is a joint agreement that covers the Army, Navy, Air Force, DISA and other DoD agencies. It seeks to combine support for more than 2 million VMware licenses and cut the administrative costs for 9,270 individual VMware procurement transactions over the previous five years, according to a DISA document outlining the scope of the ELA.

Not only would VMware's proposed ELA be easier for DISA to manage, it would also be good for taxpayers, since the agency wouldn't have to employ as many people to keep track of all the different agreements.

However, in addition to renewing maintenance and support for existing deployed licenses, VMware's ELA also covers the purchasing of new licenses, as well as cloud services, sources familiar with the contract terms told CRN.

DISA issued a request for proposals on Feb. 9 and set a deadline of Feb. 23. But last week, DISA pushed back the deadline indefinitely to handle the large number of questions it fielded during the RFP period.

[Related: VMware Gets FedRAMP Certification, Sets Sights On Government Agencies Hungry For Hybrid Clouds]

According to a report Monday from Nextgov, AWS, Citrix and Nutanix filed formal bid protests on Feb. 19 with the Government Accountability Office (GAO), on the grounds that VMware's proposed ELA goes beyond the scope of a typical enterprise software licensing and support agreement.

Minburn Technology Group, a Great Falls, Va.-based Microsoft partner that sells enterprise licensing agreements to federal government agencies, is also protesting VMware's ELA.

What really has the vendors up in arms is that DISA wants to make VMware its exclusive -- or "single source" -- provider for the services for the duration of the contract. Typically, these sorts of government contracts are open for any company to bid on, but DISA is proposing that the process be skipped in this case.

DISA, in the document, notes that VMWare software has been "fully implemented and integrated into DoD's architecture" for more than 11 years. In order to comply with agency regulations, DISA said it needs to keep all this software updated to protect against security threats.

"In order to ensure the DoD's secured network is not compromised, it is mission critical for VMware software licenses to be kept current with the latest available updates, which is available only through VMware software support," reads the DISA document.

Only VMware and its authorized reseller partners can perform this work, DISA says in the document.

AWS, VMware, Nutanix and Minburn Technology Group declined comment. Citrix didn't respond to requests for comment.

NEXT: Why Other Cloud Vendors Aren't Happy About This


Other cloud infrastructure vendors that would be interested in submitting their own proposals are none too pleased that VMware is including cloud services in its ELA proposal.

"What has everyone frustrated is the part about cloud services, which are, for the most part, brand new," one source familiar with the matter told CRN on Monday. "The government has basically said we have determined that VMware is the only organization that can justify delivering cloud services."

"It's a complex deal -- this is not a plain vanilla enterprise maintenance contract, the scope goes way beyond that. There needs to be fair and open competition where everyone gets a chance to participate," said the source, who spoke on condition of anonymity.

VMware's vCloud Air public cloud received certification from the U.S. Government's Federal Risk and Authorization Management Program (FedRAMP) in early February. FedRAMP is required for all vendors that want to sell cloud services to government agencies, and Microsoft and AWS also have it.

The sources told CRN they're expecting DISA to respond to the uproar by re-evaluating the part of VMware's ELA that covers cloud services. The GAO is expected to issue a ruling on the vendors' protests on June 1.

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