Microsoft and the USDA: May the best incumbent win

Microsoft execs have been crowing about the company's big cloud win this week with the United States Department of Agriculture (USDA), via which the organization will be moving 120,000 users to the Microsoft's hosted e-mail, collaboration and conferencing products.

What wasn't clear from early reports was why the USDA went with Microsoft -- beyond the appeal of Microsoft's hosted application suite.

It turns out that many of the 21 different e-mail systems installed throughout the agency that will be consolidated under the new contract were from Microsoft. And it's often easier and less costly not to switch horses when doing an upgrade.

Here's the USDA's full statement about the bidding process around the contract, from Chris Smith, Chief Information Officer, USDA:

"Twenty four months ago, USDA embarked on a consolidation of our email systems across the Department to an internally hosted exchange solution, referred to as Enterprise Messaging Services (EMS). During that same time we did extensive market research to include face to face meetings with Microsoft and Google and pricing was publicly available. We continued monitoring the cloud space as we progressed with our on-premise solution. Last spring we had 50% of our users in the on-premise solution and were committed to building out the rest of the premise solution or considering leveraging a cloud solution. Since we had a large investment in Microsoft Exchange, Outlook and SharePoint (our EMS standard), we had an opportunity to parlay this investment into the cloud solution. We had been watching the messaging and collaborations cloud space for maturation around cost and service levels and felt that we were in the right spot at the right time to leverage our consolidation of our existing infrastructure and licenses to make the shift now." (Emphasis mine.)

Microsoft execs said they beat out Google and IBM for the contract (which Bloomberg said will be administered by Dell, and will cost the USDA $8 per user per mailbox, for a savings of $6 million next year).

A Google spokesperson said Google "was not given the opportunity to bid for USDA’s business."

A Microsoft spokesperson countered, saying there was "a bid process that went through normal General Services Administration (GSA )schedule channels, etc. The USDA indicated they looked at several vendors over the course of the last year or so, when the exploration of cloud productivity options began."

There was also a hint in a Microsoft blog post about the USDA win that Google's inability to offer an offline solution affected the outcome of the bid. I asked both Google and a USDA spokesperson about this but received no word back from either as to whether Google's continuing lack of offline support mattered.

An IBM spokesperson made it sound as if IBM decided against bidding on the deal, given the USDA's requirement for Federal Information Security Management Act (FISMA) compliance. A spokesperson said that "IBM has chosen to not address FISMA compliance requirements and instead is focused on commercial requirements addressing cross-company collaboration with a focus on security and enterprise integration."

By the way, Microsoft does not yet have FISMA certification for its Business Productivity Online Suite (BPOS) of cloud applications. That sounds like something the Softies are anticipating they'll have by the time Office 365, BPOS' successor, rolls out in 2011. However, the Global Foundation Services infrastructure on which BPOS and Office 365 is hosted recently got the FISMA nod. A Microsoft spokesperson said FISMA certification of the hosted e-mail and other apps was not a USDA requirement for this contract (which makes IBM's comment rather odd and confusing....)

Bottom line: It's not illegal and it's not immoral. But it's a fact of life that incumbents are tough to unseat. And for Microsoft, that's good news, as a number of its business and government customers begin making the move to the cloud.