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Embattled $10 billion JEDI cloud contract canceled by US Department of Defense

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It wasn’t a good day for Microsoft Azure as the Department of Defense canceled its bitterly contested $10 billion JEDI contract. Amazon and Microsoft had fought for it.

Image: Jean Lee/Shutterstock

What a day! No sooner had Amazon Web Services chief Andy Jassy taken over as Amazon’s CEO from founder Jeff Bezos than the news hit that the U.S. Department of Defense had canceled its $10 billion Joint Enterprise Defense Infrastructure (JEDI) cloud solicitation. Still, it was a worse day for Microsoft Azure. Microsoft had been the “winner” of the JEDI cloud contract

The DOD has announced that “due to evolving requirements, increased cloud conversancy and industry advances, the JEDI Cloud contract no longer meets its needs.” Sources in DOD circles added that the long, bitter fight between AWS and Microsoft over the contract had become more expensive and trouble than it was worth.

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As soon as Microsoft won the contract in 2019—much to the surprise of most people who’d assumed AWS was a shoo-in—AWS sued the DOD for awarding JEDI to Microsoft because “Numerous aspects of the JEDI evaluation process contained clear deficiencies, errors and unmistakable bias—and it’s important that these matters be examined and rectified.”

Later, AWS added that then-President Donald Trump had unfairly influenced the contract award. Trump hated Amazon and Bezos. Trump had openly disdained Amazon and Bezos, who also owns The Washington Post. This made it difficult for the Pentagon to make decisions “without fear of reprisal,” AWS claimed. 

The point of JEDI was to upgrade legacy DOD systems with newer cloud services. Specifically, the JEDI Cloud was to provide “enterprise-level, commercial Infrastructure as a Service and Platform as a Service cloud offerings to the DOD and its mission partners.”

Despite the lawsuit, in September 2020, the DOD announced it would stick to its guns and award the JEDI contract to Microsoft. AWS responded by calling the DOD decision “politically corrupted” by Trump. The resulting legal battle slowed the contract down to a snail’s pace. 

Such battles over federal contracts, whether they’re huge like JEDI or tiny sub-million dollar deals, are commonplace. They’re part and parcel of how federal IT deals are made. 

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Still, in this go-around, John Sherman, acting DOD chief information officer, said in a statement, “JEDI was developed at a time when the Department’s needs were different and both the CSPs [Cloud Service Providers] technology and our cloud conversancy was less mature. In light of new initiatives…  the evolution of the cloud ecosystem within DOD, and changes in user requirements to leverage multiple cloud environments to execute mission, our landscape has advanced and a new way-ahead is warranted to achieve dominance in both traditional and non-traditional warfighting domains.” 

Microsoft made the best it could of the news saying “the security of the United States is more important than any single contract.” But, they weren’t happy about it. Toni Townes-Whitley, Microsoft’s president of the U.S. Regulated Industries division, wrote: 

“The 20 months since DOD selected Microsoft as its JEDI partner highlights issues that warrant the attention of policymakers: when one company can delay, for years, critical technology upgrades for those who defend our nation, the protest process needs reform.  Amazon filed its protest in November 2019, and its case was expected to take at least another year to litigate and yield a decision, with potential appeals afterward.”

Looking ahead, the DOD admits that it will need more cloud capacity than it has. To address these needs, it’s pursuing yet another cloud contract: The less Star Wars-named, Joint Warfighter Cloud Capability (JWCC) as a multicloud/multi-vendor contract. 

But, the corporate contract battles aren’t over yet. The DOD announced that it would be seeking cloud proposals from only two companies. The businesses? Microsoft and AWS. The fun just doesn’t stop! 

The DOD claims that “market research indicates that these two vendors are the only CSPs capable of meeting the Department’s requirements.” Google, IBM and Oracle all may have something to say about that assumption.

John Sherman, DOD acting CIO said he expects JWCC contracts to be awarded in early 2022, and deployments to be rolled out in 2025. As a former Beltway Bandit, I fully expect far more years will go by before JWCC contracts are awarded and successfully deployed.

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