Pentagon awards $10bn cloud computing deal to Microsoft, snubbing Amazon

Joanna Estrada
March 18, 2020

The U.S. Department of Defense today announced that Microsoft has won its Joint Enterprise Defense Infrastructure (JEDI) cloud contract, worth up to $10 billion over a period of 10 years.

Analysts say that awarding such contracts to a single company gives the victor an unfair advantage in follow-on work.

The contract was awarded by the Washington Headquarters Services and is a firm-fixed price, indefinite-delivery/indefinite-quantity contract.

Industry analysts predicted that Amazon Web Services was the frontrunner to win the contract, although others have said that Microsoft Azure has grown quickly as well and invested significant resources in improving its government cloud. That perception proved incorrect, however.

An Amazon spokesperson said the company was "surprised about this conclusion", and sounds like they're not ready to give up quite yet, with multiple reports of possible legal action forthcoming.

Esper was selected by US President Donald Trump, who has lashed out at Amazon and company founder Jeff Bezos, who owns The Washington Post. While it's not clear if the rancor between the two billionaires affected the JEDI contract, a number of experts suggested it might skew the outcome.

IBM and Oracle, which were eliminated from the race, had previously filed protests about the JEDI bidding process.

The timing is curious, however, coming just days after Defence Secretary Mark Esper unexpectedly removed himself from the review process after months of involvement, on the grounds that one of his sons worked for IBM - one of the other original applicants.

The 10-year contract for the Joint Enterprise Defense Infrastructure program, better known as JEDI, ultimately will see all military branches sharing information in one system that can be scoured in real time with the help of artificial intelligence.

While the size of the project evoked interest from the technology giants in the United States - with Oracle, IBM and Google also joining Microsoft and Amazon in the bidding process spanning almost two years - employees of some of these organisations raised objections to helping defence forces become more lethal. He said other companies told him that the contract "wasn't competitively bid". The tech giant past year decided not to renew a Pentagon project called Maven after thousands of its employees signed a petition demanding "a clear policy stating that neither Google nor its contractors will ever build warfare technology".

According to a July report from the research firm Gartner, Amazon holds nearly 48% of the market for public cloud computing, followed by Microsoft in second place with close to 16%. He also revealed that he believes Amazon will challenge the decision in court, but that Microsoft will prevail. President Brad Smith wrote last fall that Microsoft has long supplied technology to the military and would continue to do so, despite pushback from employees.

An Amazon Web Services spokesperson says the company is "surprised about this conclusion".

Other reports by Click Lancashire

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