Google Is Bidding for a Pentagon Contract Worth More Than $2 Billion

Change in the enterprise, space has arrived. Aivars Lode avantce

Google Is Bidding for a Pentagon Contract Worth More Than $2 Billion

By Alistair Barr and Rolfe Winkler

January 16, 2015 

Consulting firm PwC and Google announced a partnership in late 2014 to pursue large enterprise IT customers. In early January, Google joined PwC to bid for a Defense Department contract worth more than $2 billion.

PricewaterhouseCoopers and Google

Google is using a new partnership with consulting giant PricewaterhouseCoopers and some of its $60 billion in cash to pursue more government and corporate-technology customers.

Google for Work, which sells office-productivity software and cloud-computing services, struck a partnership late last year with PwC,  the first fruits of which emerged Thursday. PwC said Google is part of a group bidding for a contract worth more than $2 billion to update the U.S. Department of Defense’s electronic-health-records system.

PwC, Google and their partners are competing against established enterprise-technology providers including Hewlett Packard, IBM and Computer Sciences, according to FCW, a government-tech-news website.

A Department of Defense spokeswoman said the winner will be chosen by the end of June. She declined further comment. A Google spokeswoman declined to comment.

A PwC spokeswoman said Google’s tools could improve the security and speed of the health records system and lower costs.

“This is probably the clearest example of why Google made such a big deal about its relationship with PwC and vice versa,” said T.J. Keitt, an analyst at Forrester Research. “They came together to be in the running for these types of deals.”

The bid is the latest example of consumer Internet companies muscling in on complex government technology projects historically handled by companies like IBM. Amazon’s cloud computing business beat IBM, Microsoft, AT&T and one other firm for a $600 million contract with the Central Intelligence Agency in 2013.

Also Thursday, Google and online lender Lending Club unveiled a partnership to offer low-interest loans to companies that resell its “Google Apps for Work” products, like Gmail and Google Docs.

Some resellers need help because they often lay out money to win customers, while revenue for subscriptions to Google’s apps comes in over time.

That creates a “cash flow trough” in the first year, said Darren Bibby, an analyst at research firm IDC. Help getting through that period “could be amazing” for resellers, he said.

Lending Club will process the two-year loans, but the money will come from Google. Borrowers will pay 5% in the first year; in year two, the rate will vary based on a partner’s performance.

The program offers a new use for some of Google’s cash, which exceeded $60 billion at the end of September. It’s also a way for Google to help its partners sell more of its software and services.

Other large tech companies like IBM and Hewlett-Packard provide financing to partners that help sell their products. However, this financing typically focuses on helping customers pay for computer hardware and software licenses upfront.