Pentagon picks Microsoft over Amazon for JEDI cloud contract

By Justin Doubleday / October 25, 2019 at 7:31 PM

The Defense Department has awarded Microsoft the long-awaited, multibillion-dollar Joint Enterprise Defense Infrastructure cloud services contract, the Pentagon announced tonight, as DOD picked Microsoft Azure over Amazon Web Services.

The JEDI contract has a ceiling of 10 years and a maximum value of $10 billion. Under the terms of the deal, Microsoft will be responsible for providing a global cloud infrastructure to U.S. military entities across the globe, including in remote areas at the "tactical edge."

"The National Defense Strategy dictates that we must improve the speed and effectiveness with which we develop and deploy modernized technical capabilities to our women and men in uniform," DOD Chief Information Officer Dana Deasy said in a statement. "The DOD Digital Modernization Strategy was created to support this imperative. This award is an important step in execution of the Digital Modernization Strategy."

The base contract period is two years with a $1 million guarantee, according to DOD, which added: "The department projects that user adoption will drive an estimated $210 million of spending during the two-year base period. The DOD will rigorously review contract performance prior to the exercise of any options."

The award to Microsoft comes after many months of speculation and rumors swirling around whether Amazon was the presumed winner.

"We're surprised about this conclusion," an AWS spokesman wrote in an email to Inside Defense. "AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion. We remain deeply committed to continuing to innovate for the new digital battlefield where security, efficiency, resiliency, and scalability of resources can be the difference between success and failure."

AWS did not immediately say whether the company would protest the decision.

In 2017, then-Defense Secretary Mattis returned from a trip to the West Coast -- including visits to Amazon and Google headquarters, respectively -- and directed DOD officials to accelerate the adoption of commercial cloud services. The initiative produced the JEDI program, intended to provide an enterprise cloud services option for users across the department at all levels of classification.

Amazon's frontrunner status in the program was spurred by the company's lead in the commercial cloud marketplace and experience providing secure cloud services to the CIA, as well as rumors and lawsuits based on conflict-of-interest allegations. The Pentagon's decision to choose just one cloud provider for the enterprise program also proved contentious.

Shortly after DOD released the JEDI request for proposals in October 2018, Oracle America protested the RFP, first with the Government Accountability Office and then in the Court of Federal Claims. Oracle argued DOD had illegally chosen a single-source strategy and alleged various DOD officials had improper business connections with AWS while working on the program.

However, both GAO and the court shot down Oracle's cases.

"The acquisition process was conducted in accordance with applicable laws and regulations," a DOD spokesman said. "The process cleared review by the GAO and Court of Federal Claims. At the outset the competition included four different offerors. All offerors were treated fairly and evaluated consistently with the solicitation's stated evaluation criteria."

After the Court of Federal Claims dismissed Oracle's case, DOD officials expected to award the JEDI contract by August. But Defense Secretary Mark Esper further delayed the contract when he launched a review of JEDI shortly after being sworn in, following concerns about the program from lawmakers and even President Trump himself.

"Great companies are complaining about it," Trump said of the JEDI program in July, listing both Microsoft and Oracle as examples of such companies. Trump also has a long-running feud with Amazon CEO Jeff Bezos.

Meanwhile, the DOD inspector general’s office has been reviewing DOD's handling of the JEDI cloud acquisition since August. Dwrena Allen, a spokeswoman for the DOD IG, said the office is "close to completing the review of the JEDI cloud acquisition" and has not found anything to prevent the award.

"The DOD has consulted the DOD OIG, and we have shared our views on the JEDI acquisition and provided information on the status of our review," Allen said. "To date, we have not found evidence that we believe would prevent the DOD from making a decision about the award of the contract."

She said the office hopes to complete its report by the end of November and release it publicly "to the maximum extent possible."

While some lawmakers raised concerns about the acquisition strategy, others have urged the Pentagon to carry on with the contract, arguing the delays have put DOD behind China in the competition over technologies like AI.

"We're way behind that," House Armed Services Committee Ranking Member Mac Thornberry (R-TX) told reporters earlier this week, before the award was made. "What we're doing is we're just trying to have a cloud from which we can operate, which is just essential for all sorts of systems and business practices that are trying to make the department not just more efficient, but just move faster. We get all bogged down in protests."

House Armed Services intelligence, emerging threats and capabilities subcommittee Chairman JIm Langevin (D-RI) applauded DOD for awarding the contract.

"Advanced general-purpose cloud is the industry norm, and it's past time the Department of Defense had access to these capabilities," Langevin said in a statement. "I congratulate DOD CIO Dana Deasy for seeing the JEDI award through. I look forward to continuing to use my position in Congress to increase access to next generation technologies that support our warfighters."

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