Pentagon cancels controversial $10bn cloud contract

7 Jul 2021

Image: © Austin/Stock.adobe.com

The US Department of Defense’s JEDI cloud contract was awarded to Microsoft in 2019, but that decision was challenged by Amazon.

The Pentagon has pulled the plug on a contested $10bn cloud computing contract.

The US Department of Defense’s JEDI, or Joint Enterprise Defense Infrastructure, was a contract to completely revamp its computer systems and move to the cloud in what would be a complicated and highly sensitive operation.

The contract was awarded to Microsoft almost two years ago but Amazon contested that decision, claiming bias against the company.

Now the US government is scrapping the contract and starting over.

“With the shifting technology environment, it has become clear that the JEDI cloud contract, which has long been delayed, no longer meets the requirements to fill the DoD’s capability gaps,” the Department of Defense said in a statement.

It said that “due to evolving requirements, increased cloud conservancy and industry advances, the JEDI cloud contract no longer meets its needs”.

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Share prices in both Microsoft and Amazon were down following the announcement.

In a statement, Microsoft said the fact that Amazon was able to hold up JEDI through its opposition meant that the contract bidding and opposition process needed to be changed.

“The 20 months since DoD selected Microsoft as its JEDI partner highlights issues that warrant the attention of policymakers. When one company can delay, for years, critical technology upgrades for those who defend our nation, the protest process needs reform,” Toni Townes-Whitley, president of US regulated industries at Microsoft, said.

The Department of Defense is opening a fresh contract that will be open to bidding from multiple vendors. It noted that Microsoft and Amazon are the only two companies capable of meeting the Pentagon’s cloud needs, but said it would do market research to see if other cloud service providers could also meet the requirements.

After the original bidding process, Amazon took legal action against the government. It alleged that the Trump administration had influenced the decision given the former president’s gripes with Jeff Bezos and the company. A Pentagon report in April last year said otherwise.

Now, under the Biden administration, the bidding for the Pentagon’s new contract won’t be coloured by the Bezos-Trump tiff.

Jonathan Keane is a freelance business and technology journalist based in Dublin

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