The Pentagon has reportedly slashed a contract worth almost $1 billion that was awarded last month to one of the partners of Amazon.com Inc.’s cloud computing unit.

The Washington Post reported late Monday that the Pentagon has cut the value of the contract with REAN Cloud LLC from its original $950 million to just $65 million, while putting limits on the scope of the work.

The Amazon partner, based in Herndon, Virginia, was awarded the contract last month to help migrate Pentagon data and workloads to an unspecified cloud computing provider. Like many government agencies, the Pentagon is keen to move its computing systems to the cloud as soon as possible in order to speed up innovation and maintain its technological edge over potential rivals such as China.

However, the Post said the Pentagon has now gone back on that deal after facing heavy criticism from other cloud providers, notably Oracle Corp., which said the deal “shows favoritism” to Amazon and its partners. The move comes just two days before the Pentagon is set to host an “industry day” where companies interested in bidding for its cloud contract can meet with government procurement officials in order to pitch their offerings.

Oracle Senior Vice President Ken Glueck told the Post that the Pentagon’s decision to award a contract to REAN suggests that it had already chosen AWS as its cloud computing provider, at least unofficially. Following the REAN contract award, Oracle filed a complaint to the Government Accountability Office, stating that it was “an egregious abuse” of the procurement process that was “shrouded in secrecy.”

REAN has said that the contract did not specify a particular cloud provider and that its work would be compatible with multiple clouds. It is a “premier consulting partner” in AWS’ Partner Network. Amazon itself has made big strides recently in its efforts to procure government contracts, most recently landing the Central Intelligence Agency as a customer.

Holger Mueller, principal analyst and vice president at Constellation Research Inc., said it wasn’t unexpected that Oracle would take exception to the contract award because government work is one of the largest potential growth areas for cloud infrastructure-as-a-service providers. He also pointed out that government contracts have been closely contested in the past, and that will likely be the same going forward.

“It’s no surprise Oracle is arguing here, as it’s known to fight for what it thinks is right, even when the odds are nothing in its favor,” Mueller said. “Just remember the antitrust protest in the PeopleSoft acquisition case. Throw in the fact that Oracle was late to the overall IaaS party, it really has to pay particular attention so that too many big deals don’t slip away.”

Critics have also hammered the Pentagon for the way in which the contract was awarded. The Pentagon’s Defense Innovation Unit Experimental arm awarded the contract under an “other transaction authority,” or OTA, which allows officials to skirt the bureaucratic federal acquisitions process. Critics say a $1 billion award under this authority is “unusually high” because the process is not transparent and is not competitive.

For its part, REAN argued that the contract is “not an Amazon contract” as the wording specifically states that it can work with any provider. “We are not deciding on what cloud the customer should be on,” said REAN co-founder Sekhar Puli. “They can pick any cloud they want, and our platform would support all of that.”

Puli also revealed that he had no idea about the contract being changed until he saw the news in the media. He also hinted at possible legal action, saying the Pentagon isn’t allowed to make changes to the contract after the fact.

“I don’t think they can unilaterally just change anything,” Puli said. “I have a contract that says 950. If that number needs to change that contract needs to be updated.”

SiliconANGLE Media’s video unit, theCUBE, spoke recently to Rean President Sri Vasireddy at the AWS Public Sector 2018 event in Washington, D.C. Vasireddy, who was a principal in business development at AWS from 2010 to 2012, according to his LinkedIn profile, told theCUBE co-host John Furrier that OTA process was “beautiful” because companies often have to spend millions of dollars to write a paper to win such a large deal under the conventional contract process. But he said the OTA process requires that “we prove ourselves” with REAN’s platform. He also said he was told that REAN was competing with 29 companies on the first phase of the contract.

Here’s the full interview with Vasireddy:

Photo: gregwest98/Flickr