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Pentagon kills Microsoft’s $10B JEDI cloud contract, says tech is now outdated

Published: July 7, 2021
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Source: ars technica

Following years of controversy and intrigue, the Pentagon canceled its JEDI cloud computing contract with Microsoft today.

Microsoft was awarded the contract in October 2019, but work stalled as Amazon, the other finalist, mounted a legal challenge. Now, the Department of Defense has scrapped the entire project, saying that it’s out of date.

“The Department has determined that, due to evolving requirements, increased cloud conversancy, and industry advances, the JEDI Cloud contract no longer meets its needs,” a Pentagon spokesperson said in a statement.

The deal, which was to be worth up to $10 billion over 10 years, was a significant though contested win for Microsoft that would have given its cloud division a healthy boost in revenue and market share. Late last year, Microsoft Azure held 20 percent of the market, trailing Amazon’s AWS’ 31 percent.

In JEDI’s place, the Pentagon said it will be soliciting proposals for a new contract, the Joint Warfighter Cloud Capability, from both Microsoft and Amazon. Oracle, IBM, and Google submitted JEDI bids as well, though Google withdrew its bid under pressure from employees. The Pentagon says it will continue its research to see whether other companies can compete, but it insists that only Microsoft and Amazon are sophisticated enough to meet its requirements.

The new contract represents a victory for Amazon, which launched its legal challenge a month after the Pentagon awarded the contract for JEDI, which stands for Joint Enterprise Defense Infrastructure. The company filed suit in the US Court of Federal Claims, alleging that former President Donald Trump tipped the scales in favor of Microsoft because of his animus toward Amazon’s then-CEO Jeff Bezos.

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