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© Reuters. File photo: On June 14, 2016, the Microsoft logo appeared in Los Angeles, California. REUTERS/Lucy Nicholson
Authors: Diane Bartz and David Shepardson
Washington (Reuters)-The U.S. Department of Defense cancelled its $10 billion JEDI cloud computing project on Tuesday, reversing the Trump-era awards Microsoft Corporation (Nasdaq:) and announced a new contract, which is expected to include its large technology rival Amazon (NASDAQ:).
After Amazon filed a lawsuit to challenge the decision of then President Donald Trump, the contract awarded by the Pentagon at the end of 2019 was shelved.
Trump publicly mocked Jeff Bezos, then Amazon CEO, and criticized the company many times.
Both Microsoft and Amazon’s stock prices hit record highs, the online retailer rose 4.7%, and the software company’s stock price rose one cent.
Amazon said in 2019 that the Pentagon’s decision was full of “serious errors” and believed that it was the result of “improper pressure exerted by Trump”. The company cited a book from 2019 that reported that Trump had instructed the Department of Defense to “screw Amazon” from the JEDI contract https://reut.rs/2V4LqgQ.
Just in September, the Department of Defense re-evaluated the contract proposal and stated that Microsoft’s submission was the best.
Under the leadership of Biden’s new administration, the Pentagon said on Tuesday that Amazon and Microsoft are the only companies that can meet the department’s requirements, but later pointed out that if other cloud providers also meet the government’s standards, they will compete with others in the next three months. Contact the cloud provider.
Other top cloud companies include Oracle Corporation (NYSE:), Alphabet (NASDAQ:) Inc’s Google and IBM (New York Stock Exchange:) Company
The Pentagon hopes to receive the first award for its new Joint Combatant Cloud Computing Capability (JWCC) by April 2022.
John Sherman, the acting chief information officer of the Department of Defense, said he expects both Microsoft and Amazon to be awarded cloud contracts. He said the need is urgent.
“I have to get this now—as soon as possible—hopefully starting in April as soon as possible,” Sherman said.
Microsoft said in a statement that the company is confident of “continuing success as the Department of Defense selects a partner for the new job.” Sherman said that Microsoft can submit a termination bid to recover the cost of abandoned projects.
Amazon Web Services (AWS), Amazon’s cloud computing arm, agreed to the Pentagon’s decision to cancel the contract. Amazon stated that the initial ruling was “not based on the merits of the proposal, but the result of external influence, and it has no place in government procurement.” AWS added that it “looks forward to continuing to support the Department of Defense’s modernization efforts and build solutions that help accomplish its critical tasks.”
In April, a judge refused to dismiss Amazon’s allegations, saying that the Trump administration had intervened in the Pentagon’s ruling against Microsoft in February 2020 after it shelved the Pentagon’s ruling indefinitely.
The now cancelled Joint Enterprise Defense Infrastructure Cloud (JEDI) contract has a budget of $10 billion and is part of the Pentagon’s broader digital modernization, aimed at making it more technically flexible.
“We haven’t estimated it yet, but I won’t lock in the $10 billion figure,” Sherman said.
“The plan may be as early as early 2025 for multi-cloud procurement through full and open competition. However, in the short term, we believe that the direct grant path is absolutely necessary and appropriate to enable us to bring the much-needed cloud capabilities of the enterprise force. “Sherman said.
Republican Senator Chuck Grassley praised the Pentagon’s decision.
Grassley said: “The JEDI contract is affected by potential conflicts of interest, scale, unnecessary delays and its single-winner structure,” he said. The new review process…will provide the program with greater public trust and confidence Opportunity.
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