Pentagon signs $10 Billion Cloud Computing Contract with Microsoft.

microsoft cloud pentagon contract 2019

On Friday, October 25, the US Department of Defense announced that Microsoft had won the Pentagon’s large cloud computing contract for the Joint Enterprise Defense Infrastructure (JEDI) project.

Under the terms of this agreement, the Pentagon is intended to invest $10 billion in the development of cloud infrastructure and the launch of various services, including IaaS (infrastructure as a service) and PaaS (platform as a service) solutions that will help the agency to analyze and process large amounts of confidential military data.

According to the Defense Department, the project is expected to catalyze the digital transformation of American military technology. In particular, transferring computing power and storage to the cloud will improve data security and accelerate real-time sharing of information across the stakeholders.

Supposedly, the project will involve the deployment of cloud services spanning 3.4 million users and 4 million devices. It is expected to be finalized by 2029.

The outset of the competition for the contract included four of the largest cloud service providers - Microsoft, Amazon, IBM, and Oracle - with Amazon being considered the front runner as it had previously fulfilled contracts with the CIA and other federal agencies.

Another potential offeror - Google - withdrew from consideration having to take into account its employees’ strong feelings against contracting with the military. Interestingly, other companies also saw employee efforts to express concerns over the ties with the defense but those were left unattended.

IBM and Oracle were eliminated from the race following their campaigns over the Pentagon’s decision to choose just one cloud provider for the project. Oracle immediately filed a lawsuit intending to challenge its disqualification and is now awaiting a decision. Microsoft and Amazon were to carry on with the contest.

To Amazon’s bad luck, its press center and founder Jeff Bezos personally had episodes of speaking unflatteringly about President Donald Trump, who in his turn chose to engage in public criticism of the Pentagon’s potential contract with Amazon for the JEDI program.

In the end, regardless of what the underlying reasons might be, Microsoft has been selected the winner for the project. The base contract period is 2 years with a $1 million guarantee. During this period, an estimated $210 million will be allocated for the project needs. The Department of Defense promised it would review contract performance step by step before enacting any of the suggested solutions. 

According to Amazon Web Services’ statement, the company was “surprised about this conclusion” of the competition. They believe that “a detailed assessment purely on the comparative offerings” would “clearly lead to a different conclusion,'' citing the company’s spokesman.

Following a short pause in communications, Microsoft issued a statement in which it thanked the Department of Defense for its trust in the company’s services and expressed hopes for a long-lasting partnership. 

In the meantime, the Wedbush Securities’ analyst Daniel Ives says that within the last year Microsoft has made considerable advancements in technology development managing to significantly bridge the gap between Amazon Web Services and other computing technology providers. According to the expert, in this light, Amazon’s statements regarding the inconsistencies in the conclusion of the competition don’t look well-founded anymore. 


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