US Department of Defense cancels controversial $10bn JEDI cloud contract with Microsoft

Amazon said that it had been unfairly prevented by the DoD from winning the contract due to political pressure from Donald Trump

The US Department of Defense (DoD) announced on Tuesday that it has cancelled the Joint Enterprise Defense Infrastructure (JEDI) cloud contract 'due to evolving requirements, increased cloud conversancy, and industry advances'.

The $10 billion cloud computing contract was awarded to Microsoft in 2019, but the decision was later challenged in the court by Amazon.

The DoD started the JEDI project as part of a broader digital transformation process of the Pentagon, involving a general-purpose cloud service for the US military. Amazon was long seen as the favourite for the deal until Microsoft emerged as the winner in October 2019.

"JEDI was developed at a time when the Department's needs were different and both the CSPs technology and our cloud conversancy was less mature," said John Sherman, acting DoD Chief Information Officer.

"In light of new initiatives like JADC2 and AI and Data Acceleration (ADA) … our landscape has advanced and a new way-ahead is warranted to achieve dominance in both traditional and non-traditional warfighting domains," he added.

The DoD is now starting a new procurement process that will be open to bidding from multiple companies.

The Department said that Amazon and Microsoft are the only two vendors capable of meeting the Pentagon's cloud requirements, although it added that it would continue market research to see if other companies could fulfil the Pentagon requirements.

In a blog post, Toni Townes-Whitley, president of US regulated industries at Microsoft, said that the company respects the DoD's decision to "move forward on a different path to secure mission-critical technology".

She also accused Amazon of delaying critical technology upgrades for the country.

"The security of the United States is more important than any single contract, and we know that Microsoft will do well when the nation does well," she added.

"It's clear 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 DoD's decision to award the JEDI contract to Microsoft in 2019 came as a big surprise to Amazon, which was considered the favourite for the deal.

After the contract winner was announced, Amazon alleged that it was unfairly prevented by the DoD from winning the contract due to political pressure from President Trump.

In October 2019, a report published in military-focused website Task & Purpose, based on a biography of then-Secretary of Defense James Mattis, claimed that President Trump had instructed Mattis to "screw Amazon" out of the contract.

The next month, Amazon filed a lawsuit in the US Court of Federal Claims, challenging the DoD's decision. The company argued that President Trump had influenced the bidding process because of his dispute with Jeff Bezos, the owner of Amazon and The Washington Post. The newspaper had aggressively covered the Trump administration earlier, and President Trump referred to it as the "Amazon Washington Post".

Amazon told the Court that it planned to use two video clips of the comments of President Trump about the contract to make a case of interference. In one video cited by Amazon, a Fox News host urged Trump to keep the Pentagon from awarding the deal to Amazon.

In January 2020, Amazon applied to the court to stop Microsoft from working on the project until its validity was tested in the court.

The company also argued in the court that the JEDI tender was undermined by evaluation errors, although DoD stated in October 2020 that it had "completed its comprehensive re-evaluation of the JEDI Cloud proposals" and "determined that Microsoft's proposal continued to represent the best value to the Government".

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."

"Our commitment to supporting our nation's military and ensuring that our warfighters and defense partners have access to the best technology at the best price is stronger than ever. We look forward to continuing to support the DoD's modernization efforts and building solutions that help accomplish their critical missions."

Update: This story has been updated to include the statement from Amazon spokesperson.