Air Force makes $1B award to migrate email to the cloud; Navy delays NGEN recompete

In what may be the largest contract for cloud services in the federal government’s history, the Air Force has made a $1 billion, five-year award to three companies to move its email systems to the cloud, the winning bidders announced Wednesday.

Dell EMC, General Dynamics and Microsoft will share in the contract award, which will provide services to 776,000 users, mostly in the Air Force, but also in the Defense Logistics Agency and the Army Corps of Engineers. The Air Force plans to migrate all of those users to the new platform, dubbed Cloud Hosted Enterprise Services (CHES), within one year.

In addition to email, implemented through Microsoft’s Office 365 product, the contract calls for “information, communications, collaboration services, office productivity and records management,” the companies said.

The Air Force made the award as a task order under a multiple-award contract administered by the General Services Administration. Neither the initial request for quotations nor the statement of work is publicly available. Air Force Space Command, which is managing the project, did not immediately respond to a request for an interview.

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The contract is a major expansion of a previous pilot program for cloud services the Air Force launched in 2015, called Collaboration Pathfinder. The service began accelerating its cloud email migrations this year, expanding the service to 10 Air Force bases and 68,000 users and expanding the sizes of their inboxes from 100 megabytes to 100 gigabytes per user.

“The CHES contract extends the ability of the Air Force to collaborate across the enterprise,” Leigh Madden, the general manager for Microsoft’s Defense unit, said in a statement. “We aren’t just delivering a secure productivity solution, we’re freeing up resources, so our airmen can focus on mission-critical tasks.”

The same three vendors managed Collaboration Pathfinder under a previous $296 million contract. And in August, the Air Force made a sole-source award to continue using another vendor that had begun installing server infrastructure to support the Office 365 migration at Air Force Area Processing Centers (APCs).

In its justification for the sole-source award, officials wrote that the company, NES Associates, was the only responsible source that could provide the integration services the Air Force needs for CHES and that the server stacks it is installing at five separate APCs “must exist” to support the Air Force’s use of the cloud services under CHES.

The five-year commitment and the scale of the contract appeared to further foreclose any near-term possibility that each of the military services would migrate to a single, shared email platform, a course of action that had, at one time, been mandated by DoD’s chief information officer.

The vast majority of the Army’s users and some Defense agencies are served by the Defense Enterprise Email, a private cloud-based system managed by the Defense Information Systems Agency. The Air Force, at one point in 2012, had pledged to use the same system. The Navy, meanwhile, continues to deliver email services through its much broader Next Generation Enterprise Network (NGEN) contract with HP.

In related news, the Navy announced Wednesday that it would be delaying the recompetition of the NGEN contract, which is, by far, the largest IT outsourcing program in the federal government.

The Navy had planned to make new awards to manage its Navy-Marine Corps Intranet by June 2018. The revised schedule pushes the date back to late 2018. The change, officials said, was made to allow more time to communicate with potential bidders, including through weekly conference calls and one-on-one meetings.

NGEN is currently managed under a single $3.5 billion, five-year contract the Navy awarded HP in 2013. Under the recompetition, officials expect to break it into at least two separate contracts — one to deliver end-user hardware and another for “service management, integration and transport.”