group Practice Assignment

Humanities

Arizona State University

Question Description

Hi everyone i'm working with group project and this is my part is Government contracting so my classmate have done them part and i want you to do the Government contracting i want you to do 4pages use the same resorce they use no outside resource and use your won word no plagiarism,Also check Grammar and spelling just do 4 pages as you see in the file attach the topic and everything you need to know about it

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Amazon vs. Microsoft for the JEDI Contract 1 Amazon’s Loss of the Military’s Cloud Computing Contract to Microsoft and its Battle with the Administration through the Courts to get it Back Table of Contents CHAPTER 1 Introduction 3 CHAPTER 2: Overview of Politics and Government Contracts 4 Overview of government in US and government contracts 4 Overview of Political Situation as it Relates to Case 7 CHAPTER 3: Industry overview: 10 Amazon vs. Microsoft for the JEDI Contract Cloud computing: Competitors/Michael Porter’s 5 forces 2 10 Rivalry among Existing Competitors 10 Threat of New Entrants 10 Bargaining Power of Suppliers 11 Bargaining Power of Buyers 11 Threat of Substitutes 12 CHAPTER 4: Company overview: Washington Post and Amazon’s relationship (why Trump does not like Bezos/Why Amazon lost out) CHAPTER 5: Description of strategic problem and analysis: 12 12 14 Market players 14 Non-market players 15 4 I’s Analysis 16 Issue 16 Interest 16 Institution 17 Information 17 Bibliography 20 CHAPTER 1 Introduction As more businesses keep adopting more cloud services with the rise in the use of cloud computing services, they are mostly doing so from multiple providers. Currently, the dominant Amazon vs. Microsoft for the JEDI Contract 3 provider of cloud services is Amazon Web Services, but its closest competitor, Microsoft, has recently gained in popularity as a preferable cloud services supplier that it is gaining market share steadily against Amazon and Google, the biggest competitors. The battle between Amazon and Microsoft, the two largest players in the supply of cloud services, recently took a turn when, in 2019, Microsoft was awarded a $10 billion technology contract by the US government. The government’s Department of Defense on October, 2019, awarded Microsoft the 10-year contract for the Joint Enterprise Defense Infrastructure, which is better known as JEDI, over other major 1 tech companies as Amazon, Google, IBM, and Oracle. The JEDI contract is meant to develop and transform the country’s military’s cloud computing systems. The contract being awarded to Microsoft raised questions because Amazon had been the front-runner to win it, pushing Amazon to protest it claiming that it had been an unfair process and that there was interference from US President Trump in the bidding process for he currently has a feud with Amazon’s Chief Executive Officer, Jeff Bezos for various reasons. In February 2020, the work on the $10 billion cloud-computing contract by Microsoft was brought to a halt by an order by the federal court 2 judge, Patricia E. Campbell- Smith, in Washington. It followed the lawsuit that Amazon filed with the Court of Federal Claims. The controversy that has dogged the JEDI contract took a new turn when, on April 15, 2020, the Department of Defense (DoD) released its findings on the 3 contract that was awarded to Microsoft over Amazon. The issues raised by Amazon and the 1 Kate Conger, David E. Sanger and Scott Shane, “Microsoft wins Pentagon’s $10 Billion JEDI Contract, Thwarting Amazon,” ​New York Times​, October 25, 2019, [https://www.nytimes.com/2019/10/25/technology/dod-jedi-contract.html] accessed April 2020. 2 Kate Conger, “Judge Halts Work on Microsoft’s JEDI Contract, a Victory for Amazon,” ​New York Times​, February 13, 2020, [https://www.nytimes.com/2020/02/13/technology/amazon-jedi-pentagon-contract-microsoft.html] accessed April 2020. 3 Jared Serbu, “Pentagon IG Review finds DoD improperly disclosed JEDI Information to AWS” Federal News Network, April 15, Amazon vs. Microsoft for the JEDI Contract 4 analysis of the contract in this paper show how politics may affect the awarding of contracts by the government. CHAPTER 2: Overview of Politics and Government Contracts Overview of government in US and government contracts Every year, the government of the United States awards hundreds of billions of dollars in federal contracts to those individuals and businesses that meet the proper guidelines and needs of federal agencies such as the military among others. The government awards small, medium, and also large businesses with the goal to award at least 23 percent of all their prime contract dollars 4 to small businesses through the US Small Business Administration (SBA). Large businesses participate in the federal contracting process, and all they need is to meet the government’s specific requirements per contract. Businesses access such resources as the Contract Opportunities Search Tool on beta.SAM.gov., the government’s official federal contracting opportunities database. They can be part of the General Services Administration (GSA) Schedules Program. Additionally, firms can get access to contracts through a number of agencies 5 across the USA such as the Offices of Small and Disadvantaged Business Utilization. The government website provides a list of 8 steps firms should go through while seeking access to the listed and available contracts. Among the steps are using the U.S. General Services Administration Vendor Toolbox to determine whether the company is a good fit to proceed with federal contracting. The step that follows has them research their contract’s products and/or services’ pricing within the government. The government then requires the interested parties to 2020,[​https://federalnewsnetwork.com/defense-main/2020/04/pentagon-ig-review-finds-dod-improperly-disclosed-j edi-information-to-aws/​], Accessed April 2020. 4 United States Congress, ​Financial services and general government appropriations for 2016: hearings before a subcommittee of the Committee on Appropriations, House of Representatives, One Hundred Fourteenth Congress, first session. ​(Washington: U.S. Government Publishing Office, 2015). 5 United States Government, “How to Become a Federal Government Contractor,” https://www.usa.gov/become-government-contractor​, accessed April 2020. Amazon vs. Microsoft for the JEDI Contract 5 ensure that they have met all legal guidelines and regulations for federal contractors with assistance by the SBA or Procurement Center Representatives. A business plan should then be created by the interested party detailing their marketing plan, details about staffing for the contract. The business plan should be followed by acquiring the North American Industry Classification System (NAICS) code for a firm’s specific industry. The next step is determining how eligible the business is for the given contracts and/or additional special labels. Once this is complete, the firm then needs to register for a nine-digit Data Universal Numbering System (DUNS) code for the government to track a firm’s credit record. The final step is registering in the System for Award Management (SAM) for the easy storage of a business’ information. The government has made it clear that once registration and preparation for federal contracting is done, the firm should then search for and respond to the available contracting opportunities, searching for this with the Contract Opportunities Search Tool on the beta.SAM.gov site. If the contract submission by a firm is successful, it should then respond to the solicitation correctly and on time. At this step the offer has been submitted, and all the business has to do is wait for about 1 – 4 months for it to be reviewed and awarded based on, as it is noted on the website with the specifications, how responsible and responsive the business is, how technically acceptable a proposal submitted by a firm is, the firm’s past performance record and references, and the proposal’s pricing and terms. Looking at this process demonstrates just how involved the government is in the bid solicitation and acceptance of proposals to contract. New firms have it little harder than those which already have been contracted by the government in the past. The government prefers the more experienced firms which are already working with it. This could explain why for a firm Amazon vs. Microsoft for the JEDI Contract like Microsoft, winning contracts is easier than for its competitors. For the last two decades, the US Department of Defense has been using Microsoft’s Windows XP since it debuted in 2001 that it was hard for it to abandon the operating system when the tech company announced that it 6 was ending support for it and its updates. There were so many factors to be considered when Microsoft made the announcement that all users had to upgrade to Windows 10, such as the fact that the majority of the Pentagon’s computers had mission-critical functions that it had to defy the straightforward upgrades. Pentagon has even awarded Microsoft with contracts to support their specialized systems that have been running on Windows XP, Windows 2003, among other legacy Microsoft products and services. Procurement rules, be it for weapons systems or I.T. systems such as the JEDI one state that the project has to be tendered out to numerous bidders prior to the best bid getting selected. Firms get to lower their bids, sometimes even having to sacrifice their profits to break through and to get through to the government contracts which can set them up for long-term business relationships with it. Companies need a lot of patience when making bids for government contracts because the process takes a few months every year. Additionally, as some research of government contracts has shown, getting access to the federal procurement market sometimes depends on the system’s transparency just as it depends on trade agreements which open it. Firms need to even consider subcontracting to prime contractors such as Microsoft and IBM when it comes to experience. Other times see them join an open indefinite delivery/indefinite-quantity contract (IDIQ) before forging ahead to the more specialized 6 Jeremy Hsu, “Why the Military can’t Quit Windows XP, Slate, June 04, 2018, [https://slate.com/technology/2018/06/why-the-military-cant-quit-windows-xp.html] accessed April 2020. 6 Amazon vs. Microsoft for the JEDI Contract 7 7 contracting vehicles. It takes several contracts to establish franchises that can be considered stable and lucrative enough in the federal market that the government favors a firm as a repeat player. The various statutes, regulations, and databases by the government enhance transparency of the process of contracting. Overview of Political Situation as it Relates to Case Even if it has not had much effect when it has really seemed to matter, there is a certainty that politics plays a significant role in the awarding of federal contracts. In a research by Ferris, Houston and Javakhadze on federal contracts and its relationship with political connections, they established using their main measure of political connection that it is not only statistically 8 significant but also positively correlated to a firm receiving a federal contract. Factors such as measures and levels of political contributions raise the probability of a firm or individual receiving federal contracts. The firm which is more politically connected is more likely to receive contracting terms that are more favorable too. More so, the higher and better the political contributions by a firm or individual, the more attractive the contract tends to be for them. There are firms that pay professional lobbyists and engage their services in the political process to seek greater influence over the federal contracting process. The higher the contributions to PACS by firms and individuals, the better the lobbying and contracting. Certain firms even hire former federal employees to make their PAC contributions and lobbying so good that they can end up winning government contracts over other bidders, some of which may be bigger and more 7 Christopher Yukins, “The US Federal Procurement System: An Introduction,” 2017 ‘[https://scholarship.law.gwu.edu/cgi/viewcontent.cgi?article=2569&context=faculty_publications] accessed April 2020. 8 Stephen P. Ferris, Reza Houston and David Javakhadze,” It is a Sweetheart of a Deal: Political Connections and Corporate-Federal Contracting,” Financial Review, 54, no. 1 (2019): 57-84, via Wiley Online Library, accessed April 2020. Amazon vs. Microsoft for the JEDI Contract 8 9 experienced. The negotiation skills and managerial teams’ power matters to firms bidding for federal contracts. However, as the research by Ferris, Houston and Javakhadze shows, even when firms which make more contributions to the politicians they favor, they receive more contracts but the process depicts that they receive more contracts rather than just favorable ones, 10 which the researchers refer to the ‘sweetheart’ effect on contracting. The firms connected to the winning party and the party in power have been found to experience an increase in the number and/or favorability of contracts whenever control of the 11 House or Senate changes and the vice versa holds. When the largest bidders to government contracts and the most preferable companies make their bids for federal contracts, they go through an evaluation process to determine their security practices, scale, compliances, principles, and whether they have followed the right steps and processes set by, for example, the DoD to be approved. In 2018, when the JEDI project was announced, the companies which showed the greatest interest include some of the largest tech companies in the USA as Microsoft, 12 Amazon, Google, Oracel, IBM, and Hitachi Data Systems through REAN Cloud. Issues such as the 2018 protests by Google employees against possible claims of conflict between the tech 13 company’s corporate values and the contract made it drop out. By then, the influence of politics 9 Pat Akey, “Valuing changes in political networks: Evidence from campaign contributions to close congressional elections." ​The Review of Financial Studies​ 28, no. 11 (2015): 3188-3223, via Oxford Academic, accessed April 2020 10 Ibid (8) 11 Eitan Goldman, Jorg Rocholl and Jongil So, “Politically connected boards of directors and the allocation of procurement contracts." ​Review of Finance​ 17, no. 5 (2013): 1617-1648, via SSRN, accessed April 2020. 12 Ron Miller, “The high-stakes battle for the Pentagon’s winner-take-all cloud contract​,” TechCrunch​, April 6, 2018,[​https://techcrunch.com/2018/04/06/the-high-stakes-battle-for-the-pentagons-winner-take-all-cloud-contract/​] accessed April 2020. 13 Rosalie Chan, “Google drops out of contention for a $10 billion defense contract because it could conflict with its corporate values,” ​Business Insider,​ October 8, 2018,[ https://www.businessinsider.de/international/google-drops-out-of-10-billion-jedi-contract-bid-2018-10/?r=US&IR= T​] accessed April 2020. Amazon vs. Microsoft for the JEDI Contract 9 and lobbying was minimal to the granting of the federal contract to develop the DoD’s cloud computing project. Amazon was clearly the front-runner because it was then the best provider of cloud computing services. It was even awarded the contract for a while before Oracle contested it claiming that there was a conflict of interest between an Amazon employee who was then in the DoD and the contract under the National Defense Authorization Act over IDIQ contracts. The contract award was, as a result, put on hold. Still, political lobbying and its influence was minimal. It was not until August 2019 that President Donald Trump raised claims of favoritism towards Amazon by the DoD in the awarding of the contract. Politics and their influence towards the contracting process made the DoD have to investigate these complaints of favoritism, further making it harder for Amazon to be awarded the contract. It was not until October 2019 that the DoD made the announcement that it had awarded the JEDI Contract to Microsoft. Jeff Bezos, Amazon’s CEO and owner, in December indicated that there was no fair play during the process and that it was President Trump’s dislike for him and a newspaper which he owns, the Washington Post, which is very critical of his presidency, which influenced the awarding of the 14 contract to Microsoft. The claims were followed by a lawsuit filed by Amazon with the Court of Federal Claims on November 2019. The work Microsoft was doing was halted by federal Judge Campbell-Smith in February 2020 as a result of the lawsuit by Amazon just as it was about to go live. The claims Amazon made were used to explain why the court halted the 15 contract’s performance. Eventually, it was clear that it was politics which failed to favor Amazon, more so because the party in power under President Trump had influence over the 14 15 Ibid (1) Ibid (2) Amazon vs. Microsoft for the JEDI Contract 10 federal contracting process simply because Amazon, which owns the Washington Post and which is owned by Bezos, was critical of the President since he won the 2016 presidential elections. CHAPTER 3: Industry overview: Cloud computing: Competitors/Michael Porter’s 5 forces The analysis of the cloud computing industry is necessary and relevant to the discussion of the process of awarding the JEDI contract. There are quite a number of players in the industry and the analysis of their level of competition matters to show who would be best fit to be awarded the contract by the DoD. Rivalry among Existing Competitors The top five providers of cloud infrastructure account for approximately 80% of the 16 global market according to a report by Gartner. Factors such as the breadth plus depth of a provider’s services across compute, database, analytics, storage, networking, mobile, developer tools, IoT, management tools, security and enterprise applications matter, and AWS’ developer functionality which it gets from the breadth of its services makes it preferable over the rest. Customers also tend to stick with their long-standing vendors giving Microsoft the upper hand because they need all their enterprise computing from enterprise software, productivity, and flexible cloud computing resources for developers in one place. Machine learning matters too. The rivalry, therefore, is a strong force. Threat of New Entrants Cloud computing has grown in size over the last two decades, introducing new entrants to the market. Competition is so stiff that companies tend to diversify their cloud services and 16 Jeb Su, “Amazon owns nearly half of the public-cloud Infrastructure Market worth over $32 Billion: Report,” Forbes,​ August 2, 2019,[ https://www.forbes.com/sites/jeanbaptiste/2019/08/02/amazon-owns-nearly-half-of-the-public-cloud-infrastructuremarket-worth-over-32-billion-report/#2217edad29e0b​] accessed April 2020. Amazon vs. Microsoft for the JEDI Contract 11 products so much that new entrants are almost blocked from entering. Entering the market requires large costs, and the biggest competitors in IaaS provision have large fixed costs, thus fewer entrants. While the industry has minimal barriers to entry such as costs considerations, it reduces them to new start-up companies because it is a low expense industry, and which requires expertise to win contracts and succeed. Other influential market entry factors include government policy, switching costs, and brand identity, with the largest providers often occupying the greatest market share simply because of their brand identity. Bargaining Power of Suppliers Suppliers have a limited bargaining power with the largest buyers for their fear that their increasing of prices will force some of these customers to switch to their competitors for the industry has low switching costs. The only major supplies for cloud companies are electricity, therefore, higher costs of electricity can affect the industry. This is a moderate force because most suppliers of servers for the IaaS segment which ...
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