Bombshell: Pentagon Picks Microsoft Over Amazon For $10B JEDI Cloud Deal

The U.S. Department of Defense on Friday said it chose Microsoft over Amazon for a giant cloud computing contract worth up to $10 billion.

The contract, known as JEDI and worth up to $10 billion, was the subject of much controversy and a major lawsuit by Oracle, which accused the Pentagon of favoring Amazon Web Services in the procurement process.

CRN has reached out to Microsoft and Amazon for comment.

The Pentagon heralded the contract award as a “step forward” in its cloud strategy.

“Today the Department of Defense has taken another step forward in the implementation of our Cloud Strategy with the award of an enterprise general-purpose cloud contract to Microsoft,” the Pentagon said in a statement. “This continues our strategy of a multi-vendor, multi-cloud environment as the department’s needs are diverse and cannot be met by any single supplier.”

"The National Defense Strategy dictates that we must improve the speed and effectiveness with which we develop and deploy modernized technical capabilities to our women and men in uniform," DOD Chief Information Officer Dana Deasy said in a statement. "The DOD Digital Modernization Strategy was created to support this imperative. This award is an important step in execution of the Digital Modernization Strategy."

The Defense Department said the base contract period is two years with a $1 million guarantee. The department also said it “projects that user adoption will drive an estimated $210 million of spending during the two-year base period. The DOD will rigorously review contract performance prior to the exercise of any options.”

A vendor selection had been anticipated for August, but political machinations stalled the award, despite eagerness of military officials to begin their digital transformation.

As the decision approach, President Donald Trump waded into the controversy, telling reporters at the White House that complaints from companies with unsuccessful bids had convinced him to intervene in the process.

"Some of the greatest companies in the world are complaining about it," the president said during a sit-down with the prime minister of the Netherlands, specifically citing Microsoft, Oracle and IBM.

Two weeks later, a final decision had been put on hold by then-recently confirmed defense secretary Mark Esper, who instead implemented a review of the military's process for procuring the project.

Just days ago, Esper stepped aside from the contracting process, citing a conflict as his son worked as a consultant for IBM—a company that had originally bid for the contract, but had not made the shortlist.

The politically motivated delays rankled Pentagon CIO Dana Deasy, who has since left that position.

"If JEDI gets delayed, who suffers in all this is the warfighter because there is active sets of programs that several of the combatant commands right now are depending on when that contract gets released," Deasy said.

Further holdups will make it so those divisions within the armed forces have to go build independent cloud solutions—a model that "does not serve the department's interests well, it does not serve the warfighter well."

Microsoft competed for the lucrative award over the protest of some of its own employees.

An open letter published last October by "employees of Microsoft" asked the cloud giant to abstain from bidding for ethical reasons involving the application of artificial intelligence.

Because the contract was massive in scope and shrouded in secrecy, they said, it was nearly impossible to know "what we as workers would be building."