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The Secret Behind Amazon's Domination in Cloud Computing
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The secret behind Amazon's domination in cloud computing [politico.com]:
“Losing JEDI was a black eye for AWS,” said Daniel Ives, a managing director for equity research at Wedbush Securities who focuses on the tech sector. Now, he said, AWS is “doubling down in terms of hiring and their focus is going after federal contracts and agencies.”
Rep. Pramila Jayapal (D-Wash.), vice chair of the House Judiciary Antitrust, Commercial and Administrative Law Subcommittee, said she has watched Amazon’s influence efforts expand since then.
“That $10 billion Pentagon deal has created enormous lobbying efforts from Amazon in all these different ways,” Jayapal said in an interview. In her view, many hires with contracting experience “function as lobbyists” regardless of their actual job titles.
Stone pushed back on Jayapal’s claims, insisting it’s typical for companies that contract with the government to hire people with work experience in the public sector.
“We strongly disagree with this mischaracterization,” said Stone. “Like other companies that support public sector customers, we hire team members with government, military, academia, and nonprofit expertise, but to characterize them as lobbyists is simply not accurate.”
While it isn’t surprising for a company going after government contracts to hire people with that expertise, the AWS hires provide a window into how the company is setting itself up to become essential to government workings for decades to come.
Jeff Hauser, executive director of the Revolving Door Project, a watchdog group that scrutinizes executive branch appointees, said AWS’ hiring is helping it build a“potentially significant and insurmountable advantage in cloud computing.” And that changes the calculation for lawmakers concerned about the company’s power in other areas like online retail and artificial intelligence.
“The more Amazon becomes an unavoidable part of the government, the more difficult it becomes for the government to properly regulate Amazon,” Hauser argued.
The hires’ expertise often speaks directly to contracts AWS is pursuing.
In June 2018, AWS hired Victor Gavin [linkedin.com] away from a top Navy post to head the company’s “federal technology vision” and business development. In the Navy, Gavin had the clunky title of Deputy Assistant Secretary for Command, Control, Communications, Computers, Intelligence, Information Operations and Space. In that role, he was the principal Navy adviser for the acquisition of a number of systems, including enterprise IT, according to his official Navy bio [politico.com].
Less than a year after Gavin left, the Navy awarded a no-bid [federalnewsnetwork.com] $100 million contract to AWS [federalnewsnetwork.com]. And in September 2018, three months after Gavin started, the Defense Department struck a five-year contract worth up to $96 million [defense.gov] between the Navy and CSRA (now part of General Dynamics Information Technology) to broker access to cloud providers, including AWS. Capt. Clay Doss, a Navy spokesperson, said it “doesn’t appear” Gavin was involved in those contracts while at the Navy and that he was “unaware” if Gavin had a hand in them after he left the Pentagon.
Oracle, one of AWS’s fiercest rivals, has separately alleged that Gavin improperly participated [federalnewsnetwork.com] in the JEDI contract after he accepted his job offer from AWS. The Defense Department’s inspector general concluded it could not substantiate those allegations [defense.gov] although it said he “should have used better judgment” to avoid the appearance of a conflict of interest when he decided to attend a strategy meeting on JEDI. (The watchdog report concluded that Gavin’s presence did not affect the contract.)
Except for Eldakdoky, all the AWS hires named in this article either declined to comment or didn’t respond to inquiries.
Federal contractors like AWS and Microsoft must keep strict conflict-of-interest guidelines in mind when they hire former executive branch officials, including mandatory periods before the employees can contact their former agencies. Federal ethics rules often bar such hires from representing a company in its dealings with the government.
“These companies take conflicts of interests very seriously,” saidFranklin Turner, a top procurement lawyer with McCarter & English, adding that a conflict “could derail an entire procurement.”
AWS has “a pretty rigorous firewalling process” to ensure new employees don’t violate those no-contact restrictions, Eldakdoky said. The company’s legal team regularly updates an internal wiki page detailing which recent recruits are blocked from working on particular projects and when they become available.
But once that period ends, those government hires become particularly valuable. Ethics rules allow former officials to advise a private-sector employer on how to get particular government contracts. And it helps immensely that they often know whom to call at their former government agency.
AWS’ Stone said Amazon follows all federal laws related to hiring former government officials, has “a robust process for screening former government employees during the hiring process,” and has “adopted specific policies that reinforce our commitment to complying with conflict of interest and revolving door rules.”
In many cases, tech companies like AWS are gaining government expertise that previously might have gone to traditional defense contractors like Lockheed Martin Corp., Raytheon and Northrop Grumman, said Jack Poulson, executive director of research and advocacy group Tech Inquiry and a former Google research scientist.
“DOD has been expanding the notion of the revolving door from the weapons industry and more and more into the tech industry, especially when it comes to cloud computing,” Poulson said.
AWS’ recruitment has included officials who worked on migrating government information to the cloud. In February, the company hired James “Simo” Simonds [linkedin.com] as an account manager to U.S. Transportation Command, U.S. Strategic Command and the U.S. Air Force’s Air Mobility Command. He had spent more than 15 years working for the Air Force, most recently as senior manager for cloud migration at Air Mobility Command.
Alan Blackburn was chief strategist and senior program manager [linkedin.com] at the Defense Department’s Joint Artificial Intelligence Center before joining AWS in March 2020 to manage a DOD-wide portfolio. Shiv Bhuvanapalliwas a government contractor [linkedin.com] serving as lead architect for the Administrative Office of the U.S. Courts, which supports the judicial branch, six months before he became a senior cloud consultant at AWS in 2018.
Amazon hires former military officials through fellowship programs as well. AWS recently hired Harry Culclasure [linkedin.com], who was the Defense Department’s lead for IT acquisition on a panel focused on reforming DOD’s acquisition policy and a director in the Army’s office overseeing information technology before he became a fellow at AWS through a U.S. Chamber of Commerce Foundation initiative [hiringourheroes.org]. After his fellowship ended and he retired from the Army, Culclasure started as a senior program manager at AWS this past January.
Others helped oversee cloud contracts at military commands. In October 2020, AWS hired senior cloud consultant Greg Burton [linkedin.com], who in 2017 had left his role as the chief of operations for the Army Intelligence and Security Command, where he worked as the contracting officer representative on multimillion-dollar contracts on “Big Data,” according to a LinkedIn recommendation by Sam Choi, a former colleague who also works for AWS.
Choi, now with AWS’ “national security professional services,” previously worked to transition Army intelligence data to “GovCloud infrastructures to save more than $5 million per year,” according to his LinkedIn page [politico.com]. (After POLITICO reached out to him, Choi deleted that line from his LinkedIn [linkedin.com].)
Some of these former officials are still active in conversations with the administration. Mark Schwartz, whom AWS hired [linkedin.com] away from his job as CIO of U.S. Citizenship and Immigration Services in 2017 to become an enterprise strategist, was a member of the Biden transition agency review team [politico.com] for the Office of Management and Budget.
There are no indications any of these employees acted against ethics rules.
And it’s unlikely that the revolving door is going to stop turning any time soon — AWS is able to pay its employees six-figure salaries and stock options that dwarf the salaries of mid-level government employees.
“It’s not that AWS is targeting government personnel,” said AWS’ Eldakdoky, but that people like him find it hard to resist better-paying jobs in the private sector and Amazon’s offers are particularly competitive. Hesaid he got a significant salary boost when he joined AWS and will be able to retire “a lot earlier.”
“At the end of the day, you cannot look that in the eye and turn it down,” he said.
