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Pentagon cancels $10 billion JEDI cloud contract

Microsoft said its previous legal dispute with Amazon illustrated the need for policy change

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The Pentagon has canceled its $10 billion JEDI (Joint Enterprise Defense Infrastructure) cloud contract with Microsoft. 

The cloud contract was intended to provide the U.S. military with better access to AI processing, data storage, machine learning, and other technology when working in remote locations. Microsoft, Amazon, IBM, and Oracle all placed bids on the project, and Amazon and Microsoft ended up in a legal battle over it. 

Now, the Department of Defense has announced that it’s calling off the contract. The agency cited shifting needs as its main reason for canceling it. 

“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,” the Pentagon said in a statement on Tuesday.

Soliciting proposals for new contract 

The Pentagon said that “due to evolving requirements, increased cloud conversancy, and industry advances, the JEDI Cloud contract no longer meets its needs.”

Concurrently, federal officials announced a new multi-vendor contract known as the Joint Warfighter Cloud Capability. The agency said it plans to solicit proposals from both Amazon and Microsoft for the contract since they’re currently the only companies that provide cloud services that are in line with its needs. 

The agency said whichever company it selects for the new contract will have to meet criteria including being available on a global level, having top tier cybersecurity controls, and being able to work on all three classification levels (i.e. unclassified, secret, and top secret).

Microsoft issues statement

In a blog post on Tuesday, Microsoft said it understood the rationale behind canceling the JEDI project. However, the company said the years-long legal feud that transpired under it showed the need for change.

“The 20 months since DoD selected Microsoft as its JEDI partner highlights issues that warrant the attention of policymakers: when one company can delay, for years, critical technology upgrades for those who defend our nation, the protest process needs reform,” wrote Toni Townes-Whitley, president of U.S. regulated industries at Microsoft.

The agency’s decision “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. It doesn’t change the DoD Inspector General’s finding that there was no evidence of interference in the procurement process. And it doesn’t change the fact that the DoD and other federal agencies – indeed, large enterprises worldwide – select Microsoft to support their cloud computing and digital transformation needs on a regular basis,” Townes-Whitley said.

The tech giant concluded that it remains ready and able to support the DoD in its mission. 

“What matters now is the way forward, as the DoD has a critical unmet need to bring the power of cloud and AI to our men and women in uniform, modernizing technology infrastructure and platform services technology,” Microsoft stated. “We stand ready to support the DoD as they work through their next steps and its new cloud computing solicitation plans.” 

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