Congress to Agencies: Prioritize Commercial Data Center Solutions, Including Colo and Hybrid

In the new Federal Data Center Enhancement Act, Congress directs agencies to leverage commercial colocation, interconnection and hybrid cloud as alternatives to federal data centers

Jim Gwiazda
David Young
Congress to Agencies: Prioritize Commercial Data Center Solutions, Including Colo and Hybrid

In an important shift away from previous cloud-first or cloud-only strategies, Congress recently directed federal agencies to leverage the entire waterfront of commercial data center solutions to meet their data center mission needs. This direction appears in the Federal Data Center Enhancement Act of 2023, part of the National Defense Authorization Act (NDAA) for Fiscal Year 2024.

The Act makes many important updates to the expired Federal Data Center Optimization Initiative. This includes doubling down on previous impactful federal data center consolidation efforts, calling for new reporting requirements on sustainability, security, and reliability, and for the first time, giving agencies the flexibility to choose the best commercial data center solution for a given need.

New act recognizes that cloud isn’t always the answer

While all the modernization components in the Act are important, the directive for agency heads to “prioritize and, to the greatest extent possible, leverage commercial data center solutions, including hybrid cloud, multi-cloud, co-location, interconnection, or cloud computing…rather than acquiring, overseeing, or managing [federal government] data center infrastructure” is particularly impactful.[1]

Earlier drafts of the Act referred only to “commercial cloud environments” as the preferred alternative to federally owned-and-operated data centers.[2] This change may appear subtle, but it has big implications. In making this change, Congress has acknowledged that single cloud is not a one-size-fits-all solution for an agency’s myriad needs. It’s acted to provide critically needed flexibility so that agencies can best match unique and evolving mission requirements with optimal commercial data center solutions.  

Like any data center solution, single cloud has its benefits and its risks. One risk comes in the form of high data egress fees. When it becomes too expensive and time consuming to move data away from a cloud provider, agencies will be less likely to do so, resulting in vendor lock-in. Even when moving a workload to colocation or into a different cloud is the best move strategically, the agency might decide it’s not worth the cost or time.

In the Act, Congress has provided agencies with the flexibility to choose commercial data center solutions that can entirely avoid data egress fees—such as colocation—or mitigate them—such as hybrid or multicloud architectures, paired with interconnection.

The drumbeat toward flexibility continues to grow

Congress’s move away from single-cloud solutions and toward flexibility is not without precedent. It’s increasingly recognized that other solutions, such as hybrid multicloud for federal agencies, can offer better outcomes.

Back in 2022, the Department of Defense announced it would work with Microsoft, Amazon Web Services, Google and Oracle as part of its Joint Warfighting Cloud Capability (JWCC) initiative. This marked a dramatic shift away from the $10 billion single-cloud contract the DoD had pursued previously.[3] The fiscal year 2023 NDAA praised the move, saying that “A multicloud approach aligns better with the Department’s mission and offers many benefits”.[4]

Also, Cloud Smart, the current Federal Cloud Computing Strategy, acknowledges the benefits of hybrid and multicloud arrangements.[5]

Learn how Equinix can help simplify IT modernization

We applaud Congress for passing the Federal Data Center Enhancement Act and we look forward to working with our agency customers as they choose the best commercial data center solutions for their needs.

Equinix has the resources and global presence to help agencies deploy hybrid infrastructure and achieve IT modernization goals. We offer an extensive network of vendor-neutral colocation data centers, allowing you to quickly stand up a digital presence in any location that matters to your mission. We’re also the global leader in interconnection solutions, meaning that we can help you move data quickly and securely across your hybrid multicloud environment.

Our portfolio of digital services makes it easy to deploy infrastructure on demand to support a variety of hybrid multicloud use cases. For instance, Equinix Fabric®, our software-defined interconnection solution, can help you quickly and easily connect to different clouds or to your own infrastructure in different locations.

The solution includes Equinix Fabric Cloud Router, a new built-in capability designed specifically to simplify multicloud networking. Fabric Cloud Router can help you route traffic directly from one cloud to another, rather than requiring you to hairpin traffic through your nearest data center first. This can significantly reduce network latency and eliminate the need to deploy physical routers in multiple locations.

The Federal Data Center Enhancement Act includes language directing the Office of Management and Budget and the General Services Administration to set new standards for sustainability, security and reliability. Equinix also stands ready to help agencies address these priorities mentioned in the Federal Data Center Enhancement Act:

  • Sustainability: Equinix was the first digital infrastructure company to commit to achieving 100% renewable energy coverage by 2030. Most recently, we achieved 96% renewables coverage during 2022.
  • Security: Equinix data centers are certified to comply with many of the security controls and standards that federal agencies are concerned with. This includes FISMA High certification across all our U.S. data centers.
  • Reliability: Equinix data centers offer operational uptime of 99.9999%, a rate that’s unmatched in the industry.

The IDC MarketScape: Worldwide Datacenter Services 2023 Vendor Assessment[6] examines the critical role that colocation and interconnection providers like Equinix play in helping customers—both public and private sector—thrive in the digital era. The IDC MarketScape recognizes Equinix as a Leader in worldwide data center services, saying:

“Equinix has demonstrated that it’s a safe and reliable bet as a strategic partner for your future digital infrastructure journey.”

Read the IDC MarketScape report to learn more.


[1] National Defense Authorization Act for Fiscal Year 2024, December 2023.

[2] S.933 – Federal Data Center Enhancement Act of 2023, reported to U.S. Senate on April 27, 2023.

[3] Jason Miller, DoD ends cloud contracting saga with four awards, Federal News Network, December 7, 2022.

[4] Report of the Committee on Armed Services of the House of Representatives on H.R. 7900: National Defense Authorization Act for Fiscal Year 2023

[5] From Cloud First to Cloud Smart

[6] Courtney Munroe and Avinash Naga, IDC MarketScape: Worldwide Datacenter Services 2023 Vendor Assessment, IDC, Doc # US49435022e, October 2023.

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Jim Gwiazda Vice President, Public Sector Sales
David Young Public Policy Senior Manager
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