Microsoft Beats Amazon for Pentagon's $10 Billion Cloud Computing Contract

An Amazon Web Services (AWS) spokesman said the company was "surprised about this conclusion."

Advertisement
By Reuters | Updated: 26 October 2019 10:16 IST
Highlights
  • JEDI contract is a part of Pentagon's broader digital modernisation
  • AWS is considering options for protesting the award
  • Oracle had expressed concerns about the award process in the past
Microsoft Beats Amazon for Pentagon's $10 Billion Cloud Computing Contract

Microsoft shares were up three percent to $144.98 in after-hours trading after the news

Microsoft has won the Pentagon's $10 billion (roughly Rs. 70,840 crores) cloud computing contract, the US Defense Department said on Friday, beating out favourite Amazon.com. The contracting process had long been mired in conflict of interest allegations, even drawing the attention of US President Donald Trump, who has publicly taken swipes at Amazon and its founder Jeff Bezos. Trump in August said his administration was reviewing Amazon's bid after complaints from other companies.

The Joint Enterprise Defense Infrastructure Cloud (JEDI) contract is part of a broader digital modernisation of the Pentagon meant to make it more technologically agile. Specifically, a goal of JEDI is to give the military better access to data and the cloud from battlefields and other remote locations.

Oracle had expressed concerns about the award process for the contract, including the role of a former Amazon employee who worked on the project at the Defense Department but recused himself, then later left the Defense Department and returned to Amazon Web Services.

In a statement, an Amazon Web Services (AWS) spokesman said the company was "surprised about this conclusion."

Advertisement

The company said that a "detailed assessment purely on the comparative offerings" would "clearly lead to a different conclusion," according to the statement.

AWS is considering options for protesting the award, a person familiar with the matter told Reuters.

Advertisement

Although the Pentagon boasts the world's most potent fighting force, its information technology remains woefully inadequate, according to many officials.

Officials have complained of having outdated computer systems and being unable to access files or share information as quickly as they might be able to in the private sector.

Advertisement

"If I am a warfighter, I want as much data as you could possibly give me," Lieutenant General Jack Shanahan, the director of the Joint Artificial Intelligence Center, told reporters in August describing the importance of the contract.

Some companies were concerned that a single award would give the winner an unfair advantage in follow-on work. The Pentagon has said it planned to award future cloud deals to multiple contractors.

This week, US Defense Secretary Mark Esper removed himself from reviewing the deal due to his adult son's employment with one of the original contract applicants, IBM. IBM had previously bid for the contract but had already been eliminated from the competition.

Microsoft said it was working on a comment. IBM and Oracle did not immediately return requests for comment.

In a book slated for publication October 29, retired Navy commander Guy Snodgrass, who served as a speech writer to former Defense Secretary Jim Mattis, said Trump called Mattis and directed him to "screw Amazon" by preventing it from bidding on the JEDI contract, according to an excerpt of the book seen by Reuters ahead of its release.

"We're not going to do that," Mattis later told other Pentagon officials, according to the excerpt. "This will be done by the book, both legally and ethically."

Snodgrass declined to comment pending the release of his book.

In a statement announcing Microsoft as the winner, the Pentagon underscored its view that the competition was conducted fairly and legally.

"All (offers) were treated fairly and evaluated consistently with the solicitation's stated evaluation criteria. Prior to the award, the department conferred with the DOD Inspector General, which informed the decision to proceed," it said.

Microsoft shares were up three percent to $144.98 (roughly Rs. 10,200) in after-hours trading after the news. Amazon shares were down 0.92 percent to $1,745.12 (roughly Rs. 1,23,600).

The Pentagon said it had awarded more than $11 billion across 10 separate cloud contracts over the past two years.

"As we continue to execute the DOD Cloud Strategy, additional contracts are planned for both cloud services and complementary migration and integration solutions necessary to achieve effective cloud adoption," the Pentagon said.

© Thomson Reuters 2019

 

For the latest tech news and reviews, follow Gadgets 360 on X, Facebook, WhatsApp, Threads and Google News. For the latest videos on gadgets and tech, subscribe to our YouTube channel. If you want to know everything about top influencers, follow our in-house Who'sThat360 on Instagram and YouTube.

Advertisement

Related Stories

Popular Mobile Brands
  1. Vivo X200 FE Launched in India With 6,500mAh Battery, Compact Design
  2. iQOO Z10R India Launch Teased; May Get MediaTek Dimensity 7400 SoC
  3. Up to 70 Percent Discount on Headphones During Amazon Prime Day Sale 2025
  4. Vivo X200 FE First Impressions
  5. Vivo X Fold 5 Launched in India With 8.03-Inch Foldable Display
  6. Amazon Prime Day Sale 2025 Highlights: Top Last-Minute Deals on Day 3
  7. Samsung Galaxy F36 5G to Launch Soon in India: Details
  1. Earth’s Spin to Speed Up Briefly, Causing Shorter Days This Summer
  2. James Webb Telescope Spots Rare ‘Cosmic Owl’ Formed by Colliding Galaxies
  3. MIT Develops Low-Resource AI System to Control Soft Robots with Just One Image
  4. Ax-4 Astronauts to Return from ISS with 580 Pounds of Science Cargo
  5. NASA’s Mars Sample Return Mission May Survive with Lockheed Martin’s Low-Cost Proposal
  6. Oru Yemanin Kadhal Kadhai Now Streaming on Aha Tamil: What You Need to Know
  7. Google to Integrate ChromeOS and Android into a Single Platform: Report
  8. OpenAI Says Its Open-Source Reasoning AI Model Is Delayed Indefinitely
  9. iPhone 17 Series Colour Options Spotted via Leaked Lens Protection Covers
  10. Samsung Galaxy F36 5G Confirmed to Launch Soon in India: All Details
Gadgets 360 is available in
Download Our Apps
Available in Hindi
© Copyright Red Pixels Ventures Limited 2025. All rights reserved.