Pentagon Cancels JEDI Contract: Is Amazon the New Frontrunner?

The Pentagon is reportedly canceling a $10 billion cloud computing contract that had been awarded to Microsoft over Amazon during the Trump administration. The Department of Defense released a statement on Tuesday stating that it is canceling the Joint Enterprise Defense Infrastructure contract that had been awarded a number of years ago to Microsoft. It will instead seek new solicitations for an updated Joint Warfighting Cloud Capability contract from Amazon and Microsoft. The JEDI contract would have resulted in Microsoft building a cloud storage system for sensitive military data and technology, such as artificial intelligence, for the Department of Defense and could have resulted in revenue of up to $10 billion over 10 years.

Microsoft was awarded the JEDI contract two years ago over Amazon, which resulted in some controversy as many industry experts saw Amazon as the candidate better suited to win the contract (Amazon Web Services is widely viewed as the market leader in the cloud computing industry). As a result, Amazon subsequently filed a lawsuit with the US Court of Federal Claims to contest the decision made by the DoD, stating that the decision was motivated by the former White House Administration’s dislike of Jeff Bezos - then Amazon CEO and the owner of the Washington Post.

Microsoft recently released a statement via blog post noting that they accept the DoD's reasoning for terminating the contract but defended the company’s technology as being more well positioned for the contract, "The DoD faced a difficult choice: Continue with what could be a years-long litigation battle or find another path forward. The security of the United States is more important than any single contract, and we know that Microsoft will do well when the nation does well," the post said. "Because the security of the United States through the provision of critical technology upgrades is more important that any single contract, we respect and accept DoD's decision to move forward on a different path to secure mission-critical technology."

Back in early 2020, the DoD revealed that they would re-evaluate the decision to give the JEDI contract to Microsoft. As of now, the DoD has stated that it has plans to cancel the contract altogether and will take up new bids for an updated contract. The DoD stated that it made the decision to terminate the contract due to, " evolving requirements, increased cloud conservancy and industry advances.” As a result, the JEDI contract no longer meets the needs of the DoD, according to the statement that was released.

The DoD will also be accepting additional proposals from other Cloud Service Providers that "can also meet the DoD's requirements," the statement read. 

Amazon Web Services also released a statement recently saying that they agreed with the DoD’s decision, but pointed out shortcomings with the original process of awarding the contract, "We understand and agree with the DoD's decision," the statement read. "Unfortunately, the contract award was not based on the merits of the proposals and instead was the result of outside influence that has no place in government procurement."

The Pentagon has said that the vendor for the new contract will have to meet a number of different criteria’s, such as working on all three classification levels (i.e., unclassified, secret and top secret), be available around the world and have top-tier cybersecurity controls.