Microsoft's JEDI cloud contract canceled by Pentagon

After almost two years of legal battles, the Pentagon has scrapped its $10 billion contract with Microsoft.

What you need to know

• The Pentagon has canceled its JEDI contract with Microsoft.
• The contract has been part of a long legal battle since it was awarded in October 2019.
• Amazon argues that the contract was not awarded to Amazon due to President Trump's feelings towards Jeff Bezos.
• The Pentagon will instead pursue a deal with Amazon and Microsoft.

On Tuesday, July 6, 2021, the Pentagon announced its cancelation of the Joint Enterprise Defense Infrastructure (JEDI) cloud contract with Microsoft. The contract was valued at up to $10 billion. In its place, the Pentagon will seek a deal with Microsoft and Amazon, according to a report by the Associated Press.

"With the shifting technology environment, it has become clear that the JEDI Cloud contract, which has long been delayed, no longer meets the requirements to fill the DoD's capability gaps," said the Pentagon.

First awarded in October 2019, The JEDI contract has been part of a lengthy legal battle. Amazon claimed that the Trump administration interfered in the awarding process and has been fighting the verdict for years.

The legal battle was not mentioned specifically by the Pentagon today.

Amazon Web Services was considered a favorite to win the bid, so Microsoft being awarded the contract came as somewhat of a surprise in the industry. Amazon was unhappy with that outcome and claimed foul play.

At one point during the legal saga, Microsoft Communications CVP Frank X. Shaw issued a statement about Microsoft's work to be ready to meet the needs of the Department of Defense (DoD).

In May of this year, reports emerged that the Pentagon was considering scrapping its deal with Microsoft.

Microsoft issued a statement on the Pentagon's decision. Toni Townes-Whitley, President, U.S. Regulated Industries at Microsoft, says in the post:

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. The DoD faced a difficult choice: Continue with what could be a years-long litigation battle or find another path forward. The security of the United States is more important than any single contract, and we know that Microsoft will do well when the nation does well.

Microsoft also states that today's decision does not change how the DoD views Microsoft:

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. 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.