The Pentagon announced Tuesday that it is canceling its $10 billion JEDI cloud contract with Microsoft, which had been the subject of a legal battleinvolving Amazon and Microsoft. However, the Defense Department is announcing a new contract and requesting proposals from both cloud service providers, as it considers “sharing” the contract among both.
See also: Wyden: Pentagon is monitoring citizens without warrants
The JEDI, or Joint Enterprise Defense Infrastructure, contract had become one of the most “confusing” contracts for the Department of Defense. The Pentagon said yesterday: “Due to new requirements and developments in the cloud industry, the JEDI Cloud contract no longer meets the needs of the Department.”
Microsoft shares fell about 0.4% after the announcement of the contract cancellation, while Amazon's rose significantly.
The Pentagon has announced a new multi-vendor contract, known as the Joint Warfighter Cloud Capability.
The Pentagon plans to solicit proposals from both Amazon and Microsoft for the contract, adding that they are the only cloud service providers that can meet its needs. However, it will continue to conduct market research to see if there are other providers that could also meet its specifications.
The JEDI cloud contract, signed between the US government and Microsoft in 2019, aimed to modernize the Pentagon's IT operations. The project was awarded to Microsoft, while Amazon Web Services was also in contention.
A month later, Amazon Web Services filed a lawsuit in a US court over the JEDI cloud contract. The company claimed that it lost the project due to interference from then-President Donald Trump, who was biased against Amazon and then-CEO Jeff Bezos.
Last year, the Pentagon's inspector general released a report saying the contract did not appear to have been influenced by the White House. However, he said his cooperation with White House officials throughout its review was limited, and, as a result, he was unable to complete his assessment.
Microsoft said in a blog post that it understands the Pentagon's decision to cancel the JEDI contract (as there was a delay), but said that the legal battle over this issue led to the need to change the contract.
See also: Why did Microsoft give $30,000 to a 20-year-old self-taught hacker?
Toni Townes-Whitley said the Department’s decision “does not change the fact that not once, but twice, after careful professional review, the Department of Defense decided that Microsoft and our technology best met its needs. It does not change the Department’s Inspector General’s finding that there was no evidence of interference in the procurement process. And it does not change the fact that the Department and other federal agencies – indeed, large enterprises around the world – choose Microsoft to meet their cloud computing and digital transformation needs.”
On the other hand, an AWS spokesperson said: “We understand and agree with the Department of Defense’s decision. Unfortunately, the award of the contract was not based on the merits of the proposals and was instead the result of external influence that has no place in public procurement.”
See also: Amazon Flex Drivers: Layoffs are done through algorithms
The Pentagon told reporters that the legal battle between the Department of Defense, Amazon and Microsoft was not necessarily the main reason for canceling the JEDI cloud contract and changing its approach. The Pentagon has assessed the changes that have occurred since the contract with Microsoft was signed and found that its needs have also changed.
“Our new needs were our primary driver in this,” said the Department of Defense’s deputy chief information officer, John Sherman, about the decision to cancel the JEDI cloud contract with Microsoft.
The Pentagon said the cloud vendor for the new contract will have to meet several criteria. It expects the new contract to last up to five years.
Source: CNBC
