Pentagon cancels $ 10 billion JEDI contract awarded to Microsoft on Amazon

The department announced on Tuesday that it was canceling the JEDI (Joint Enterprise Defense Infrastructure) contract that had previously been awarded to Microsoft. Instead, it will seek new solicitations for an updated Joint Combat Cloud Capacity (JWCC) contract from Amazon and Microsoft.

The JEDI contract would have led Microsoft to build a cloud storage system for sensitive military data and technologies, such as artificial intelligence, for the Department of Defense and could have generated revenues of up to $ 10 billion over 10 years. .

Microsoft won the JEDI contract in 2019 against Amazon, which sparked some controversy, surprising many industry experts who saw Amazon as the strongest candidate to win the contract. Amazon Web Services is widely regarded as the market leader in cloud computing.

Amazon filed a lawsuit with the U.S. Federal Claims Court challenging the ruling, arguing it was politically motivated by former President Donald Trump’s dislike of Amazon CEO Jeff Bezos and the Washington Post, which Bezos owns.

In March 2020, the department indicated that it wanted to reassess its decision to award the contract to Microsoft. Now the Defense Ministry plans to cancel it altogether and solicit bids for a new, updated contract from Microsoft and Amazon.

The Defense Ministry said it decided to cancel the contract “due to changing requirements, increased cloud retention and industry advances,” in a press release. As a result, the JEDI contract “no longer meets its needs,” the statement said.

The department will seek proposals from Microsoft and Amazon Web Services and will also accept proposals from other cloud service providers who “may also meet DoD requirements,” the statement said.

In a blog post on Tuesday, Microsoft said it understood DoD’s rationale for canceling the contract and championed its technology as best suited for the job.

“The DoD faced a tough choice: either pursue what could be a multi-year legal battle or find another way forward. The security of the United States is more important than any single contract, and we know 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 than any single contract, we respect and accept the DoD’s decision to move forward on a different path to secure critical technology, ”the statement added.

In a statement, Amazon Web Services said it agreed with the decision, but noted concerns about the initial contract award process.

“We understand and agree with the DoD’s decision,” a spokesperson said in the statement. “Unfortunately, the award of the contract was not based on the merits of the proposals and was rather the result of outside influence that has no place in public procurement.”

Amazon was widely seen as the frontrunner to win the Pentagon contract before Trump promised to “watch carefully” the deal.

As part of its lawsuit filed with the United States Federal Claims Court to challenge the ruling, Amazon accused Trump of launching “repeated public and behind-the-scenes attacks” on the company during a formal protest .

In this legal battle, Amazon sought permission to obtain testimony from Trump and former Defense Secretary Mark Esper to substantiate its claim that it lost the cloud contract due to political interference.

“President Trump has repeatedly demonstrated his willingness to use his position as President and Commander-in-Chief to interfere with government functions – including federal government procurement – to advance his personal agenda,” Amazon said in a statement. communicated in February. “The question is whether the President of the United States should be allowed to use the DoD budget for his own personal and political ends.”

CNN’s Clare Duffy contributed to this report.

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