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Microsoft Upsets Amazon to win $10B Pentagon Contract

The Joint Enterprise Defense Initiative (JEDI) cloud-computing project was awarded to Microsoft’s Azure Friday.  The 10-year contract will aid in moving Department of Defense (DoD) data into a secure cloud infrastructure. IBM, Oracle, and Google all competed for the lucrative contract before dropping out at various points over the last year. The result was an upset, as Amazon Web Services was widely speculated to be the winner.  Amazon has provided cloud computing solutions for the Central Intelligence Agency and other government agencies. 

In a statement, Toni Townes-Whitley, Microsoft’s President of US Regulated Industries, said “We are proud that we are an integral partner in DoD’s overall mission cloud strategy. As was articulated throughout the JEDI procurement, the DoD has a singular objective – to deploy the most innovative and secure commercially available technology to satisfy the urgent and critical needs of today’s warfighters.”

The contracting process has not been entirely smooth.  In 2018, Oracle filed a protest with the Government Accountability Office (GAO) challenging the terms of the procurement. The GAO denied that protest. Soon after, Oracle filed suit in Court of Federal Claims, arguing that the single-award, winner-take-all format is contrary to regulations for a contract this size.  They also alleged a conflict of interest emerged when former Amazon employees worked on the DoD side of the contracting process.  While Oracle lost in the Court of Federal Claims, they appealed to the Federal Circuit in August. That case is still pending.

This summer, reports circulated that President Trump wanted to restart or cancel the bidding process.  In August, the Department of Defense delayed awarding the contract, reportedly due to the Trump Administration’s concern that Amazon would win.  President Trump has been publicly critical of Amazon, its CEO Jeff Bezos, and the Washington Post, owned by Bezos. 

“Holding the Line,” a book published this week by a speechwriter for former Secretary of Defense Jim Mattis, reveals that President Trump told Mattis to “screw Amazon” out of the contract.

An Amazon spokesperson told NPR that “We’re surprised about this conclusion. AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion.”

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