The US Department of Defense announced Tuesday the cancellation of a $ 10 billion cloud contract, the subject of a legal dispute involving Amazon and Microsoft. But he also announced a new contract and solicited suggestions from two cloud service providers, which may be rewarded. Transaction JEDI, or Joint Enterprise Defense Infrastructure, has become one of the most complex contracts for the Department of Defense. The Pentagon stated in a press release Tuesday that “due to changing needs, increasing cloud computing capabilities, and industry advancements, the Jedi Cloud contract no longer meets their needs.”
After the news, Microsoft’s share price fell about 0.4%. and Amazon’s stock price rose 3.5% to a 52-week high.
The battle for cloud computing projects does not appear to be completely over. The Pentagon stated in a press release that it still needs enterprise-level cloud capabilities and announced a new multi-vendor contract called Joint Combatant Capability in the Cloud.
The agency said it plans to solicit contract proposals from Amazon and Microsoft, adding that they are the only cloud service provider that can meet its needs. However, it added that it will continue to conduct market research to see if others can meet its specifications as well.
The lucrative JEDI contract aims to modernize the Pentagon’s IT operations to provide up to 10 years of service. Microsoft won a cloud computing contract in 2019, beating market leader Amazon Web Services.
A month later, Amazon’s cloud computing division, AWS, filed a lawsuit in the US Federal Claims Court to protest against JEDI’s decision.
The company argued that President Donald Trump’s bias against Amazon and then-CEO Jeff Bezos influenced the Pentagon’s award of the contract to Microsoft.
Last year, the Pentagon’s inspector general issued a report saying that the award did not appear to have been affected by the White House.
However, the Inspector General stated in the 313-page report issued in April 2020 that throughout the review process, the cooperation of White House officials was limited and it was impossible to complete the assessment of allegations of misconduct.
Microsoft said in a blog post-Tuesday that it understands the Pentagon’s decision to cancel the JEDI contract, but said the legal battle over this indicates a need for reform.
“The 20 months since the Department of Defense selected Microsoft as its JEDI partner has highlighted an issue worthy of concern for policymakers: When a company can postpone key technological updates for several years for those who defend our country, the protest process requires reform,” wrote Toni Townes Whitley, president of Microsoft’s regulated industries in the United States.
Townes-Whitley added that the decision of the Department of Defense “does not change the fact that not once, but twice. After careful review by professional procurement personnel, the Department of Defense decided that Microsoft and our technology can best meet their needs. Needs. It will not change the conclusion of the inspector general of the Department of Defense that there is no evidence that the procurement process has been disrupted. This does not change the fact that the Department of Defense and other federal agencies, in fact, large companies around the world, choose Microsoft to regularly Support their cloud computing and digital transformation needs.”