U.S. DoD scraps the $10 billion JEDI contract awarded to Microsoft [Update]

Back in October 2019, Microsoft was awarded the $10 billion United States Department of Defense’s (DoD) JEDI (Joint Enterprise Defense Infrastructure) contract after the company affirmed that it was not going to step down from the bidding process amidst protests. However, not all was smooth as Amazon – a company that was in the running for the contract – filed a lawsuit in November 2019 to challenge the contract.

The DoD then re-evaluated the contract by inviting fresh bids in March 2020, before finally declaring in September of that year that the Redmond company will retain the contract. However, the legal challenges have since continued, with the likes of Oracle joining the list of companies bothered by the deal. Today, the DoD announced that it is canceling the JEDI contract completely, citing “evolving requirements, increased cloud conversancy, and industry advances”. John Sherman, acting DoD Chief Information Officer, added in a statement:

"JEDI was developed at a time when the Department’s needs were different and both the CSPs technology and our cloud conversancy was less mature. In light of new initiatives like JADC2 and AI and Data Acceleration (ADA), the evolution of the cloud ecosystem within DoD, and changes in user requirements to leverage multiple cloud environments to execute mission, our landscape has advanced and a new way-ahead is warranted to achieve dominance in both traditional and non-traditional warfighting domains,"

The JEDI contract has been constantly litigated since it was initially awarded to Microsoft, with challengers citing political influence. With the contract now shelved, the DoD announced that it will go ahead with a new cloud project termed Joint Warfighter Cloud Capability (JWCC), which it calls a multi-cloud/multi-vendor Indefinite Delivery-Indefinite Quantity (IDIQ) contract.

While the exact financial specifics are not known, proposals for the multibillion-dollar contract will be sourced from both Microsoft and Amazon, which are considered by the DoD as the “only Cloud Service Providers (CSPs) capable of meeting the Department’s requirements”. However, it does add in its press release that it will “immediately engage with [the] industry” to research and determine if other cloud service providers can meet the requirements.

In response to the decision, Microsoft’s President for U.S. Regulated Industries, Toni Townes-Whitley, released a public statement that the company understands the DoD’s rationale, adding that the department faced the option to either “Continue with what could be a years-long litigation battle or find another path forward”. However, Townes-Whitley also mentioned the need for attention from policymakers, saying:

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. Amazon filed its protest in November 2019 and its case was expected to take at least another year to litigate and yield a decision, with potential appeals afterward.

The executive says that the firm is “ready to support the DoD as they work through their next steps and its new cloud computing solicitation plans”. CNBC reports that the department expects to “open a broader competition as soon as 2025”. With the JEDI contract itself now scrapped, it is also not clear what the implications of Oracle’s petitions to Supreme Court are.

Source: U.S. Department of Defense via CNBC

Update: An Amazon Web Services (AWS) spokesperson has also reached out with a statement regarding the cancelation of the contract. Here is what they have to say:

“We understand and agree with the DoD’s decision. Unfortunately, the contract award was not based on the merits of the proposals and instead was the result of outside influence that has no place in government procurement. Our commitment to supporting our nation’s military and ensuring that our warfighters and defense partners have access to the best technology at the best price is stronger than ever. We look forward to continuing to support the DoD’s modernization efforts and building solutions that help accomplish their critical missions.”