The US Defense Department is canceling a $10 billion cloud computing contract that Amazon and Microsoft have been fighting over in court.
“The Department has determined that, due to evolving requirements, increased cloud conversancy, and industry advances, the JEDI Cloud contract no longer meets its needs,” the Pentagon told PCMag in a statement.
Instead, the Defense Department is going to solicit both companies for proposals on a new "multi-cloud/multi-vendor" contract called the Joint Warfighter Cloud Capability. The Pentagon expects only Amazon and Microsoft will possess the capabilities to meet the US military’s cloud computing needs, although the procurement process could open to other vendors, pending guidance from market research.
The announcement ends the testy legal saga around the original JEDI contract, which stood for Joint Enterprise Defense Infrastructure. In 2019, the Pentagon awarded the contract to Microsoft, giving the company a huge win in the cloud computing market. However, Amazon challenged the decision in court on claims then-President Donald Trump allegedly manipulated the tendering process to slight Amazon founder Jeff Bezos.
The legal battle has caused work on the JEDI contract to stall. As a result, it seems the Pentagon decided to axe the project for a compromise solution. The Defense Department also points out the technical specifications for the original JEDI contract are now outdated.
"JEDI was developed at a time when the Department’s needs were different and both the CSPs (communication service providers) technology and our cloud conversancy was less mature," Acting DoD Chief Information Officer John Sherman wrote in the statement.
In response to the news, Microsoft said "we understand the DoD’s rationale,” and added it supported the decision.
“The DoD faced a difficult choice: Continue with what could be a years-long litigation battle or find another path forward,” the company wrote in a statement. “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.”
Still, Microsoft’s statement also criticizes Amazon for preventing the Pentagon from upgrading the US military’s IT infrastructure. “When one company can delay, for years, critical technology upgrades for those who defend our nation, the protest process needs reform,” Redmond wrote.
Amazon did not immediately respond to a request for comment.