Plug Pulled on $10 Billion Cloud Contract for Pentagon

The cancellation puts an end to a long bidding war between Microsoft and Amazon that ran headlong into a political vendetta. 

WASHINGTON (CN) — The Department of Defense will scrap plans to build its own internal cloud computing platform, the agency said Tuesday, marking the end of the Joint Enterprise Defense Infrastructure (JEDI) contract war. 

The JEDI system, if developed, would have stored vast amounts of classified data and enabled the U.S. military to use artificial intelligence to advance its war capabilities. But Defense officials announced early Tuesday that they were no longer pursuing the JEDI cloud contract because the plan conceived in fall 2017 had become obsolete. 

"JEDI was developed at a time when the department’s needs were different and both the [Cloud Service Providers] technology and our cloud conversancy was less mature,” John Sherman, acting chief information officer of the Department of Defense, said in a statement.  

In light of new initiatives, “the evolution of the cloud ecosystem within DoD, and changes in user requirements to leverage multiple cloud environments to execute mission,” he said, “our landscape has advanced and a new way-ahead is warranted to achieve dominance in both traditional and non-traditional warfighting domains.” 

The contract triggered a bidding war between Amazon and Microsoft, which became heavily politicized as former President Donald Trump tweeted and spoke prolifically about his personal resentments against Amazon owner Jeff Bezos, the richest man in the world and owner of The Washington Post. 

When Amazon stood as a frontrunner for the program in August 2019, Trump used the premise of favoritism toward the e-commerce giant to put the contract on hold. Microsoft officially won the contract in October, triggering a federal complaint by Amazon challenging that award. 

“DoD’s substantial and pervasive errors are hard to understand and impossible to assess separate and apart from the president’s repeatedly expressed determination to, in the words of the president himself, ‘screw Amazon,’” the company said in its complaint. “The question is whether the president of the United States should be allowed to use the budget of DoD to pursue his own personal and political ends.” 

From February to March 2020, a federal judge first blocked the Pentagon from going forward with the contract while the case was being considered then entered a preliminary injunction after finding that the Pentagon incorrectly evaluated pricing from the competing Microsoft and Amazon bids.

The Defense Department inspector general released a 211-page report in April that defended the award to Microsoft. but the project barely moved forward, with Microsoft getting paid only $1 million as of this morning. 

Defense officials said Tuesday that it would replace the JEDI contract with a new one, called Joint Warfighter Cloud Capability (JWCC). Amazon and Microsoft are currently the only eligible bidders, but the agency hopes to award the contract to multiple vendors. 

Microsoft expressed optimism about its chance at the contract. "It's clear that the DoD trusts Microsoft and our technology, and we're confident that we'll continue to be successful as the DoD selects partners for new work," the company wrote in a Tuesday blog post. "Their decision today 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."

During a teleconference with reporters, Sherman said he plans to call executives from five U.S.-based cloud computer companies to see whether the agency might allow them to bid. 

“We’re going to engage all of them directly, including Google, Oracle and IBM,” he said. “We want to fully hear their companies’ capabilities, and we’re going to be asking for artifacts and engagement to ensure that if they’re able to mee the level we need, that we get all that information and keep that door open through October.” 

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