This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

The Big What If: Amazon and Blue Origin Disrupt the Federal Contract Market?

By:

CFA, Chief Investment Strategist

This post was written with contributions from Charlotte Irwin. Charlotte is a Research Strategist in the ETF and Mutual Fund Research Team.

When Amazon isn’t processing your orders for a new phone case and groceries, it’s busy pursuing billion-dollar federal contracts in cloud computing. Amazon founder Jeff Bezos is also after aerospace contracts for his privately held Blue Origin, a rocket manufacturer and suborbital spaceflight company. This month, both companies will be involved in rulings that could disrupt the federal contract market.

Amazon primed

At the end of October, the US Department of Defense (DoD) announced the winner of one of the most coveted technology contracts in US history — the Joint Enterprise Defense Infrastructure (JEDI). Following months of legal and political controversies, the 10-year, $10 billion contract to establish the Pentagon’s cloud computing systems was awarded to Microsoft. The decision not to go with Amazon, whose cloud business leads the industry with 48% market share and has already built out services for the CIA, seems questionable to many. President Trump had, after all, publicly opposed granting the contract to a company controlled by his political nemesis Bezos. Given the scale of the contract, and the high likelihood that it could lead to future federal business, it is possible that Amazon will challenge the ruling in the coming weeks.

This won’t be the only battle a Bezos-owned business faces over a government contract this November. Blue Origin lodged a protest with the Government Accountability Office (GAO) in August arguing that the current bidding process for next-generation rocket development favors incumbents and perpetuates a duopoly in the sector. The GAO’s response is due by November 20, and a ruling in Blue Origin’s favor could go a long way in signaling the government’s openness to nontraditional — and often non-publicly traded — bidders.

Click Here for the Full Article

Originally Posted on November 15, 2019 – The Big What If: Amazon and Blue Origin Disrupt the Federal Contract Market?

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from State Street Global Advisors and is being posted with permission from State Street Global Advisors. The views expressed in this material are solely those of the author and/or State Street Global Advisors and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

trading top