Pentagon cancels JEDI contract as Amazon, Microsoft duke it out

The Defense Department has canceled its Joint Enterprise Defense Infrastructure (JEDI) contract after Amazon and Microsoft sparred for years over the $10 billion cloud computing contract.

Ticker	Security	Last	Change	Change %
MSFT	MICROSOFT CORP.	412.87	-1.79	-0.43%
AMZN	AMAZON.COM INC.	198.38	-4.50	-2.22%

The JEDI contract, which aimed to give the military better access to data from remote locations using cloud technology, was initially expected to go to Amazon before the Defense Department decided to give the award to Microsoft in October of 2019, prompting a lawsuit from Amazon.

The DOD said JEDI, initially crafted in 2017, "no longer meets its needs" due to "evolving requirements, increased cloud conversancy, and industry advances" in a statement to FOX Business.

"JEDI was developed at a time when the Department’s needs were different and both the [cloud service provider] technology and our cloud conversancy was less mature," acting DOD Chief Information Officer John Sherman said in a Tuesday statement. 

He added that with the Pentagon's newer initiatives including the Joint All Domain Command and Control (JADC2) and the Artificial Intelligence and Data Acceleration (ADA) initiative, "the evolution of the cloud ecosystem within DOD, and changes in user requirements to leverage multiple cloud environments to execute mission," the department's "landscape has advanced and a new way-ahead is warranted to achieve dominance in both traditional and non-traditional war-fighting domains."

PENTAGON WEIGHS ENDING JEDI CLOUD PROJECT AMID AMAZON COURT FIGHT

Amazon Web Services went to court arguing that the Pentagon's process was flawed and unfair, including that it was improperly influenced by then-President Donald Trump's dislike of Amazon and its then-CEO Jeff Bezos. Bezos also owns The Washington Post, a news outlet often criticized by Trump.

This year, the Pentagon had been hinting that it might scrap the contract, saying in May that it felt compelled to reconsider its options after a federal judge in April rejected a Pentagon move to have key parts of Amazon's lawsuit dismissed.

"We understand the DoD’s rationale, and we support them and every military member who needs the mission-critical 21st century technology JEDI would have provided," Microsoft President of U.S. Regulated Industries Toni Townes-Whitley said in a Tuesday blog post responding to the news. "The DoD faced a difficult choice: Continue with what could be a years-long litigation battle or find another path forward."

GET FOX BUSINESS ON THE GO BY CLICKING HERE 

Townes-Whitley then aimed criticism at Amazon, saying that "when one company can delay, for years, critical technology upgrades for those who defend our nation, the protest process needs reform.

"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," she said. "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."

An AWS spokesperson said the company understands and agrees with the DoD's decision.

"Unfortunately," the spokesperson added, "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."

CLICK HERE TO READ MORE ON FOX BUSINESS

"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," the spokesperson said. "We look forward to continuing to support the DoD’s modernization efforts and building solutions that help accomplish their critical missions."

Rep. Steve Womack, R-Ark., said in a Tuesday statement that "a multi-vendor cloud environment is the best way forward."

"We can’t afford to have any doubts related to the capabilities our warfighters rely on, and restarting the DOD Enterprise Cloud procurement process is the correct decision," he said. "Strong transparency and oversight of this new cloud effort to ensure a competitive process will be critical in the months ahead. The goal remains implementing best-in-class tools that are secure, effective, and of the highest standard."

The Associated Press contributed to this report.