Pentagon Cancels Huge JEDI Cloud Contract Amazon and Microsoft Were Vying to Land

Both Amazon and Microsoft have been left disappointed by a decision from the Pentagon, who has decided to cancel a $10 billion JEDI cloud contract that both companies had been competing for.

The Department of Defense revealed on Tuesday that it has called off the contract but fortunately, it would be launching a new multivendor cloud computing contract.

Both Amazon and Microsoft would be solicited for proposals. The Pentagon said in a press release that it still needs enterprise-scale cloud capability and announced a new multivendor contract known as the Joint Warfighter Cloud Capability.

The cancelled JEDI, also known as the Joint Enterprise Defense Infrastructure deal was one of the most tangled contracts for the DOD.

Microsoft was awarded the cloud computing contract back in 2019, beating out market leader Amazon Web Services.

A month later, Amazon’s cloud computing unit, AWS, filed a lawsuit in the U.S. Court of Federal Claims protesting the JEDI decision.

The Pentagon said that the cancellation was “due to evolving requirements, increased cloud conversancy, and industry advances, the JEDI Cloud contract no longer meets its needs.”

Amazon shares were up over 3% on the news while Microsoft was down about 0.4%.

The Pentagon also said that it will continue to do market research to see if others could also meet its specifications.

Microsoft said in a blog post Tuesday it understands the Pentagon’s decision to cancel the JEDI contract, but said the legal fight over it shows that there needs to be reform.

“The 20 months since DoD selected Microsoft as its JEDI partner highlights issues that warrant the attention of policymakers: when one company can delay, for years, critical technology upgrades for those who defend our nation, the protest process needs reform,” wrote Toni Townes-Whitley, president of U.S. regulated industries at Microsoft.

Townes-Whitley also said that the decision “doesn’t change the fact that not once, but twice, after careful review by professional procurement staff, the DoD decided that Microsoft and our technology best met their needs. It doesn’t change the DoD Inspector General’s finding that there was no evidence of interference in the procurement process. And it doesn’t change the fact that the DoD and other federal agencies – indeed, large enterprises worldwide – select Microsoft to support their cloud computing and digital transformation needs on a regular basis.”

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

“The mission needs have been our primary driver on this,” said DOD Acting Chief Information Officer John Sherman.

Disclaimer: We have no position in any of the companies mentioned and have not been compensated for this article.