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The Pentagon in a press release on July 6 stated that “due to evolving requirements, increased cloud conversancy, and industry advances, the JEDI Cloud contract no longer meets its needs.”
The Pentagon announced on July 6 that it is canceling the controversial $10 billion cloud contract which was awarded to Microsoft Corporation (NASDAQ: MSFT) over Amazon.com Inc (NASDAQ: AMZN) during the Trump administration. The Joint Enterprise Defense Infrastructure (JEDI) contract that was previously awarded to Microsoft subsequently led to a series of legal battles between Microsoft and Amazon.
The Department of Defense stated that it is soliciting proposals for a new and updated multivendor contract known as the Joint Warfighting Cloud Capability (JWCC) contract from Amazon and Microsoft which will likely see both companies rewarded. The Pentagon added that Microsoft and Amazon are the only cloud service providers that can meet its needs but will still keep an open mind and continue their market research to see if others could also meet its desired specifications.
According to the Pentagon, the Joint Enterprise Defense Infrastructure deal has become one of the most chaotic contracts for the Department of Defense. The Pentagon in a press release on July 6 stated that “due to evolving requirements, increased cloud conversancy, and industry advances, the JEDI Cloud contract no longer meets its needs.”
The JEDI contract would have seen Microsoft modernize the Pentagon’s IT operations by building a cloud storage system for sensitive military data and technology, including artificial intelligence for the United States Department of Defense, and could have raked in revenue of over $10 billion across 10 years.
Microsoft winning the JEDI contract over Amazon led to some controversy as many industry experts believed Amazon was the stronger and better candidate at that time to win the contract. Amazon’s cloud computing unite, AWS, later filed a suit with the US Court of Federal Claims protesting the JEDI decision. The company claimed the decision was politically motivated as former President Donald Trump influenced the outcome of the contract simply because he disliked Jeff Bezos, then Amazon CEO and owner of the Washington Post.
The inspector general of the Pentagon released a report last year claiming that the award was not influenced by any official from the White House. The inspector general however noted in the 313-page report published in April 2020 that, he had limited cooperation from officials in the White House throughout its review and could not complete its full assessment of allegations of ethical misconduct as a result of that.
The Department of Defense in March 2020 revealed that it wished to re-evaluate its decision to award the contract to Microsoft before announcing plans to cancel it altogether and solicit bids for a new contract from both companies. Shares of Microsoft took a 0.4% hit following the announcement whiles Amazon’s stock was up 3.5% after already reaching a 52-week high.