The Pentagon May Cancel Microsoft’s JEDI Contract

Posted on May 10, 2021 by Paul Thurrott in Amazon, Microsoft with 57 Comments

The Pentagon may pull the plug on Microsoft’s $10 billion Joint Enterprise Defense Infrastructure (JEDI) contract thanks to incessant litigation from Amazon, which feels it was slighted for political reasons.

“We’re going to have to assess where we are with regard to the ongoing litigation around JEDI and determine what the best path forward is for the department,” Deputy Defense Secretary Kathleen Hicks said, noting that the department was now reviewing the award.

The JEDI contract is mired in political troubles triggered by the controversial previous White House administration, which had a personal agenda against Jeff Bezos because the Amazon founder and CEO also owns The Washington Post, a publication that was highly critical of the ex-president during his contentious time in office. Bezos and Amazon have long claimed that they had the better bid and lost the contract only because of political reasons.

In September 2020, the U.S. Department of Defense announced that it was moving forward with Microsoft as the winner of its JEDI contract. But a federal judge in April refused a Pentagon request to dismiss Amazon’s lawsuits, leading to the current review, which could be problematic for Microsoft.

Aside from the political angle, there are serious questions about the Pentagon awarding such an important and long-term contract to a single outside company, and it seems like splitting the award between multiple participants would be more prudent for many reasons.

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Comments (57)

57 responses to “The Pentagon May Cancel Microsoft’s JEDI Contract”

  1. wright_is

    I'd take all the toys home with me and make my own cloud...

  2. waethorn

    Both companies are awful and undermine American sovereignty when it suits them so either one makes good bedfellows with the current administration. Amazon is probably seen as more friendly to China though, since most of the crap sold on there is the same counterfeit AliExpress crap you see on

    • ebraiter

      The usual rule: If it seems to cheap then it is.

      Like I don't buy anything from the Russian Federation on eBay because every from them seems to be available [where not available elsewhere] and in different packaging.

    • bluvg

      Oh goodness gracious. Right, that's the aim of all the above. Then they drink their favorite puppy blood & stem-cell cocktail and wipe their behinds with torn bits of the Constitution. The irony is this type of zero-sum thinking garbage is one of the biggest threats to the US.

    • cnc123

      undermine American sovereignty when it suits them so either one makes good bedfellows with the current administration.

      Maybe you hadn't heard that those folks were gone on January 20. Nobody has invaded the Capitol for a solid four months!

  3. crunchyfrog

    Ten billion seems like chump change for these two companies to fight over. I have not followed this with much interest but what's really in it for these guys to duke it out over? Bragging rights?

    • ebraiter

      $10 billion is peanuts compared to the DoD yearly budget.

    • ken10

      I agree with Paul. This lays the foundation for add on opportunities.

    • cnc123

      I pay taxes and care how they spend $10 billion. I don't care which one gets it, or whether it's both. I just want the process to be fair and transparent.

      • darkgrayknight

        This is the sad part of government contracts, they are hardly ever transparent and not particularly fair either. When they require "small companies" to do bids, large companies use the smaller companies they bought to bid on projects. So while "small companies" are competing, they are still large companies (which have more resources than real small companies).

    • Paul Thurrott

      I think part of it is just the "in" with the DOD; this could lead to other things, I guess.
  4. ebraiter

    Nobody should be surprised that it could come to this. After all the last dictator disliked anything owned by Bezos. It was easily going to be in the courts after the dictator was toppled in the coup [ :-)] last November.

    • lwetzel

      The executive order is the NORM. Has been for a while. Congress can't seem to manage to make legislation so that allows the use of executive orders.

    • bluvg

      That would likely be difficult to prove given the questionable record-keeping practices at the time, but he most definitely knew: the Pentagon only put the project on hold after he cited critics accusing favoritism of Amazon (which the Pentagon at the time denied as "poorly-informed" and "manipulative"), and directed then-new SecDef Esper to review.

      I think both sides would support law regarding curbing abuse of executive orders. It would be great if they could also agree that incitement to overthrow the govt, trying to coerce election officials into changing results, and constantly sowing doubt of certified election results should be disqualifying and must be held to account.

      • lvthunder

        That's our system though. You have to prove that the government acted improperly when contesting a contract given to a competitor. If you can't then gear up and put together a better proposal then last time.

        I'm not even going to respond to your last paragraph because I'm not going to change your mind on what happened and you aren't going to change mine.

        • bluvg

          I'm more than willing to change my mind in the face of clear evidence. As you mention about courts, there have been dozens of opportunities to present clear evidence and prove their case. They've done neither.

  5. Daekar

    If you can't compete, litigate. Especially if you can swing it so that no evidence of your claims need be provided.

    I honestly don't know why this is such a big deal. Wouldn't 1 billion equate to a rounding error in the quarterly earnings for Amazon?

    • Paul Thurrott

      Sure. But if you were the victim of fraud, litigation is also the answer. According to Amazon, they had the more competitive bid by far. Let them prove it either way.
      • t-b.c

        I agree, Amazon should have a forum to try and prove its case. That said, the government could end the dispute today by showing both bids. Transparency wouldn't require months of litigation and would resolve the issue immediately.

  6. andyhi

    It’s perfectly clear the decision to cancel the contract is politically motivated.

  7. ghostrider

    Corporate America is alive and well. If someone doesn't like a decision, they sue - nothing changes really. Amazon and MS slugging it out to get a few pennies from the US government in the hope it leads to bigger things. My question is, with how fragile these cloud systems can be, why on earth would anyone put ALL their oranges in one basket? Surely you'd plan some resilience with cross vendor contracts? Every single big decision in the US is either about politics or money - America Inc, what a great company!

  8. youwerewarned

    It's perfectly clear EVERYTHING in D.C. is politically-motivated.

    That surprises people?

  9. anoldamigauser

    A $10 billion dollar over ten years is really just a pimple on the butt of the revenues of either Microsoft or Amazon, and an even smaller bit of the Pentagon budget over that timeframe. That it has caused this much controversy is ridiculous.

    If Amazon is truly concerned with the safety of the troops and the defense of the nation, they should just walk away instead of filing whinging lawsuits. The Pentagon can either proceed with the contract because it was truly important, or forget about it because it was a boondoggle. Microsoft should just go on with business, assuming this contract will not start anytime soon.

    Just one more mess left by the former social media influencer and insurrectionist.

  10. thejoefin

    Microsoft should sue to stop the Pentagon from ending the contract because of all the suing going on. haha just kidding!

    Seriously though, the Pentagon should focus on making all of their services cloud agnostic instead of awarding massive contracts to a single company.

    • Paul Thurrott

      Yep. I never understood the one vendor thing. This is too big for that.
    • hrlngrv

      Cynicism: ever seen the movie The Pentagon Wars? Ever heard of The Iron Triangle? Huge contracts exist in no small part to indebt the contractor to the military personnel who helped them land the contract. In turn, those military personnel tend to retire from the military to cushy jobs with those contractors.

      Perhaps most Pentagon staff O-4s to O-7s would prefer to work for MSFT than Amazon after retiring from the military.

  11. LT1 Z51

    Jeff Bezos is a giant man baby. So is Elon Musk, so is Mark Zuckerburg, so are most of these so called "entrepreneurs." I never got why people look up to these guys, they are mean bullies who take advantage of people to get their way. They are the definition of bad behavior. And in fact the only differnece between then and a crazy guy talking to a congregation of rats under a bridge is that they had at least ONE good idea which made money. I feel the same way about Jobs and Gates in the 1980's at least those two got humbled at various points in their careers, the new set of guys need that, to be humbled.

  12. darrellprichard

    Bezos is also protesting Blue Origin losing the HLS NASA contract to SpaceX. Anyone seeing a pattern here?

  13. gregsedwards

    Sorry, but what's the point of having a contract, then? I mean, I agree that the award might have been politically motivated, and I get that Amazon has the right to appeal that decision, but really, just cancelling that contract and starting over seems equally unfair to the vendor who was awarded it.

    • lvthunder

      Just ask the XL Pipeline people if you can trust the government. Or the people with contracts to build the border wall. I think though with the border wall contractors they are still getting paid. They are just getting paid not to work.

      Also, we have no idea if the contract award was politically motivated or not. That is something Amazon has to prove in court.

    • Paul Thurrott

      If the contract was awarded because of literal corruption, then it should be invalidated.
      • gregsedwards

        Agreed, but it seems like that should be the purview of the appeal process to determine, not simply for the DoD to up and cancel it just because Amazon is being a squeaky wheel.

      • lvthunder

        Sure, but that needs to be proven first. Preferably in court.

        • bkkcanuck

          No, the courts are there when a corrupt contract was awarded and the government department is not following it's own rules... If an internal process has found that the contract was not put up for tender in a legal way they should cancel the contract with an explanation why. If Microsoft feels that the contract was awarded legally and the government was not living up to it's end of the contract Microsoft still has the option to take the government to court. I have no doubt the contract was corruptly awarded (not Microsoft's corruption but President Trump - who has a personal animosity to Bezos and pretty much said as much during his time in office...). The tender process by the government has to be awarded in a fair evaluation of all tenders.

  14. glenn8878

    We all know how these litigations work. Didn't Boeing sue to cancel the contract for refueling airplanes? Airbus lost big. Blaming the political motivations of Amazon not getting the contract is not looking at how litigation works. This just shows how much power these tech giants have. They have unlimited resources to sue anyone to oblivion including the government. So Amazon will win precisely because it has too much power. Don't you think this power should be pulled back? Besides, Amazon along with other tech giants have censored an elected President for dubious reasons. It is them who are engaging in politics.

    • lvthunder

      It's not just the DOD they are going after either. They are going after NASA as well. There should be consequences if they can't prove their case in court.

  15. codymesh

    award multiple tenders to both companies, what is this single contract nonsense

  16. bluvg

    Microsoft might be better off just to walk away anyway. Getting themselves involved closely with a country's military is not just another industry vertical.

    • hrlngrv

      In some ways MSFT is already perfectly suited to working with the military. MSFT's corporate communications are already a highly refined form of disinformation.

    • jdawgnoonan

      Ha, Microsoft has worked so closely with the Military for my 21 years of service that I am would have been surprised if any other company had a real chance based on past performance. Microsoft would be throwing away a lot of revenue that they have been getting for decades if they backed away from the military.

      • bluvg

        Fair point. I was thinking less in terms of selling licensed software and more about employing cloud resources and AI for things that might raise some ethical issues, if that's relevant.

        • jdawgnoonan

          We have had so many contracts with Microsoft for Exchange support, SharePoint support, and other types of support that were somewhat "Cloud" related (cloud is often a buzz word these days). There have been lots of Microsoft employees working full-time for DoD for years. It has always been my understanding that DoD has a pretty decent sized office on the Microsoft campus, but that could be rumor, but I doubt it is.

  17. navarac

    Shouldn't put this type of contract in the hands of 1 company anyway - eggs in baskets comes to mind.

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