Microsoft Wins Pentagon’s $10 Billion JEDI Contract, Thwarting Amazon

The Military Industrial Complex

Source: MSN Money

The Department of Defense on Friday awarded a $10 billion technology contract to Microsoft over Amazon in a contest that was closely watched after President Trump ramped up his criticism of Amazon’s founder, Jeff Bezos, and said he might intervene.

The 10-year contract for the Joint Enterprise Defense Infrastructure, known as JEDI, had set off a showdown among Amazon, Microsoft, IBM, Oracle and Google for the right to transform the military’s cloud computing systems. The acrimonious process involved intense lobbying efforts and legal challenges among the rivals.

The contract has an outsize importance because it is central to the Pentagon’s efforts to modernize its technology. Much of the military operates on 1980s and 1990s computer systems, and the Defense Department has spent billions of dollars trying to make them talk to one another.

The decision was a surprise because Amazon had been considered the front-runner, in part because it had built cloud services for the Central Intelligence Agency. But that was before Mr. Trump became publicly hostile to Mr. Bezos, who also owns The Washington Post. The president often refers to the newspaper as the “Amazon Washington Post” and has accused it of spreading “fake news.”

In public, Mr. Trump said there were other “great companies” that should have a chance at the contract. But a speechwriter for former Defense Secretary Jim Mattis says in a book scheduled for publication next week that Mr. Trump had wanted to foil Amazon and give the contract to another company.

The issue quickly became radioactive at the Pentagon. The new defense secretary, Mark T. Esper, at first said he wanted to take several months to review the issue and then, a few days ago, recused himself from the bidding. He said he could not participate because his son worked for IBM, one of the competitors for the contract.

As recently as this month, the betting was that Microsoft would, at most, get only part of the contract and that the Pentagon would use multiple suppliers for its cloud services, as do many private companies. Microsoft was considered in the lead for other government cloud programs, including an intelligence contract; only recently has Microsoft opened enough classified server facilities to be able to handle data on the scale of the Pentagon contract.

“The acquisition process was conducted in accordance with applicable laws and regulations,” the Defense Department said in a statement on Friday. “All offerors were treated fairly and evaluated consistently with the solicitation’s stated evaluation criteria.”

Microsoft did not immediately have a comment. Amazon, which calls its cloud platform Amazon Web Services, or AWS, said in a statement that it was surprised by the decision.

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