Pentagon Cancels $10B JEDI Contract Over Amazon & Microsoft Complaints

The US Department of Defense announced it’s calling off the US$10 billion cloud contract that was the subject of a legal battle involving Amazon and Microsoft. But it’s also announcing a new contract and soliciting proposals from both cloud service providers where both will likely clinch a reward.

The JEDI, or Joint Enterprise Defense Infrastructure, deal has become one of the most tangled contracts for the Department of Defense. In a press release Tuesday, the Pentagon said that “due to evolving requirements, increased cloud conversancy, and industry advances, the JEDI Cloud contract no longer meets its needs.”

Shares of Microsoft were down about 0.4% following the news and Amazon shares were up 3.5% after already reaching a 52-week high.

The fight over a cloud computing project does not appear to be completely over yet. The Pentagon stated in the press release that it still needs enterprise-scale cloud capability and announced a new multi-vendor contract known as the Joint Warfighter Cloud Capability.

The agency stated it plans to solicit proposals from both Amazon and Microsoft for the contract, adding that they are the only cloud service providers that can meet its needs. But, it added, it will continue to do market research to see if others could also meet its specifications.

The lucrative JEDI contract was intended to modernize the Pentagon’s IT operations for services rendered over as many as 10 years. Microsoft was awarded the cloud computing contract in 2019, beating out market leader Amazon Web Services.

A month later, Amazon’s cloud computing unit, AWS, filed a lawsuit in the US Court of Federal Claims protesting the JEDI decision.

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