Behind HPE's $2 Billion NSA Win

Hewlett Packard Enterprise (NYSE: HPE) has apparently outbid competitors to win a $2 billion, 10-year contract with the U.S. National Security Agency (NSA). Through its GreenLake program, HPE will deliver high-performance computing (HPC) as-a-service to facilitate data analytics and artificial intelligence (AI).

The win is a boon to HPE, particularly given the fierce rivalries that have made U.S. government contracts a battleground for big suppliers. And it speaks to the particular strengths that have made GreenLake the firm’s flagship, with over 1,000 customers and double-digit growth in the most recent quarter.

Superior Marketing

GreenLake is HPE’s most ingenious go-to-market strategy ever. By packaging cloud services with its HPC wares, HPE strengthens its hardware pitch. But GreenLake is also geared to drawing hardware customers to the vendor's pay-as-you-go proprietary cloud services via GreenLake Central. And through the GreenLake-compatible Ezmeral Container Platform, it can tap other clouds in a hybrid environment. It's a multiple win/win for those customers that can afford it.

Another strength is GreenLake’s emphasis on managed, premises-based systems – something the government no doubt finds appealing, given its need for ultimate secrecy. The NSA system, for example, will be hosted by QTS Realty Trust, a real estate investment trust (REIT) that competes with Digital Realty (NYSE: DLR) and Equinix (Nasdaq: EQIX). QTS was recently acquired by Blackstone. In effect, NSA is buying its own managed, on-prem system from HPE.

All of GreenLake’s selling points are summarized in how Justin Hotard, SVP and GM, HPC and Mission Critical Solutions (MSC), described the NSA win in a statement:

“Implementing artificial intelligence, machine learning and analytics capabilities on massive sets of data increasingly requires High Performance Computing (HPC) systems….

By using the HPE GreenLake platform, which delivers secure on-premises solutions as a service, the National Security Agency (NSA) is gaining industry-leading HPC solutions to tackle a range of complex data needs, but with a flexible, as a service experience.”

Of course, IBM (NYSE: IBM) offers similar functionality, as does Amazon Web Services (AWS) and VMware (NYSE: VMW). While it’s not possible to say why HPE won over others, or whether those vendors were even in the running, GreenLake seems to be getting its message across as a viable alternative, particularly for hybrid cloud environments.

Running with AWS

HPE isn’t the only vendor to have recently won big with NSA. Early in August, AWS quietly scored a $10 billion contract with NSA to move a significant portion of intelligence data, presumably contained in the Intelligence Community GovCloud, to its environment. Immediately, however, Microsoft took up arms, filing a complaint with the Government Accountability Office, which is said to be mulling a decision for delivery by October 29.

Ironically, Microsoft was awarded its own $10 billion Pentagon contract in 2019, only to see it canceled in the wake of aggressive Amazon litigation.

If HPE is running data management and analytics for NSA, the question is how that will or will not connect to AWS cloud services. Perhaps the NSA will implement a hybrid HPE/AWS cloud. If it does not, it will still be interesting to see how these contracts are actually implemented – that is, if we are ever “cleared” to find out.