Pentagon to rebid JEDI cloud contract at center of Microsoft-Amazon dispute


FILE PHOTO: A Microsoft logo is seen in Los Angeles, California, U.S. June 14, 2016. REUTERS/Lucy Nicholson

July 6, 2021

WASHINGTON (Reuters) – The U.S. Defense Department canceled its $10 billion JEDI cloud-computing project on Tuesday and will seeks bids on a new contract, saying in a statement that tech giants Microsoft Corp and are the only providers “capable of meeting the department’s requirements.”

Microsoft shares dipped a little more than 1% after the news while Amazon’s stock rose more than 3%.

The now-cancelled Joint Enterprise Defense Infrastructure Cloud (JEDI) contract was budgeted for as much as $10 billion and was part of a broader digital modernization of the Pentagon aimed at making it more technologically agile.

The contract was awarded to Microsoft in 2019, but Amazon quickly filed a lawsuit to object. Amazon, which was seen as a front-runner to win the project, has argued the contract process reflected undue influence from former President Donald Trump.

While president, Trump publicly derided then-Amazon CEO Jeff Bezos and repeatedly criticized the company. A U.S. Court of Federal Claims judge in April refused to dismiss Amazon’s claims.

In addition to cancelling the JEDI contract, the department said it would have a new bidding process for what it described as a multi-cloud multi-vendor program.

“The Department intends to seek proposals from a limited number of sources, namely the Microsoft Corporation (Microsoft) and Amazon Web Services (AWS), as available market research indicates that these two vendors are the only Cloud Service Providers (CSPs) capable of meeting the Department’s requirements,” the department said.

(Reporting by Diane Bartz and David Shepardson; Editing by Lisa Shumaker)

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