August 1, 2021

Billion dollar cloud contract: Pentagon cancels deal with Microsoft

Billion dollar cloud contract
Pentagon cancels deal with Microsoft

Two years ago Microsoft secured a multi-billion dollar contract from the Pentagon. The company is to build a cloud system for the US armed forces. But now the Pentagon is surprisingly backing down. This opens up a new opportunity for Microsoft’s competitor Amazon.

The US Department of Defense cancels a ten billion dollar contract with the IT company Microsoft for which the Internet giant Amazon had also applied. The project to build a cloud system called Jedi no longer meets the needs of the ministry, said the Pentagon.

“Given the changing technology environment, it has become clear that the Jedi cloud contract, which has been long delayed, is no longer sufficient to fill the Department of Defense’s capability gaps,” the ministry said. Now there should be a new tender. Amazon and Microsoft are favorites; however, possible offers from other companies would also be taken into account.

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The Jedi project, which cost the equivalent of 8.4 billion euros, was about setting up a cloud system with which information from all branches of the armed forces can be exchanged in one system using artificial intelligence. The ten-year contract went to Microsoft in October 2019, even though Amazon was the favorite. Amazon has a lot of experience with cloud systems. The company has already equipped other US agencies with systems, including the CIA.

Amazon went to court against the award to Microsoft. The company accused the administration of then President Donald Trump of influencing it in order to harm its “political enemy”, Amazon founder Jeff Bezos. The richest person in the world also owns the Washington Post, which often reports critical of Trump.

In February 2020, a federal judge ordered the contract awarded to Microsoft to be temporarily put on hold. The Pentagon then requested a four-month delay to re-examine the award of the contract. In September, the Department of Defense finally announced that it would hold on to Microsoft. But now followed the announcement to cancel the contract.