Microsoft Wins $10 Billion Pentagon Contract

Posted on October 26, 2019 by Paul Thurrott in Amazon, Cloud, Microsoft with 84 Comments

Microsoft has beaten Amazon AWS and secured a controversial $10 billion contract with the Pentagon to modernize its systems.

“Microsoft Corporation … has been awarded a firm-fixed-price, indefinite-delivery/indefinite-quantity contract with a ceiling value of $10,000,000,000 over a period of 10 years, if all options are exercised,” a U.S. Department of Defense statement reads. “The JEDI Cloud contract will provide enterprise-level, commercial Infrastructure as a Service (IaaS) and Platform as a Service (PaaS) to support Department of Defense business and mission operations … The expected completion date is Oct. 24, 2029, if all options are exercised.”

At one point, Amazon, Google, IBM, Microsoft, and Oracle were all considering bids for the 10-year Joint Enterprise Defense Infrastructure (JEDI) contract, with the goal of modernizing the military’s dated cloud computing systems. But Google dropped out of the running because supporting the military with AI was in violation of its corporate principles. And in April, the Pentagon announced that only Amazon and Microsoft met its technical requirements.

Amazon has long been the favorite choice to win this contract, and many expected the Pentagon to split it between multiple companies. But Amazon has come under fire from the erratic U.S. president, apparently because CEO Jeff Bezos owns The Washington Post, and he has threatened to intervene in the contract choice. It’s not clear if that happened, but Amazon said it was “surprised” by the defeat since “a detailed assessment purely on the comparative offerings [would] clearly lead to a different conclusion.” Sources tell Reuters that Amazon is considering protesting Microsoft’s award of this contract.

Amazon is the dominant player in cloud computing with an estimated 45 percent marketshare, compared to about 25 percent for Microsoft, which has been scrambling in recent years to match the capabilities offered by AWS.

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Comments (84)

84 responses to “Microsoft Wins $10 Billion Pentagon Contract”

  1. Avatar

    codymesh

    This is crazy, who on earth awards $10 Billion - with a [email protected]#$%ing capital B - to just one company? America is crazy, man


    Splitting up the contract into different stages with different contracts - eg. one for platform, another for infrastructure, another for support - or call for a tender for an agnostic systems design, and then award different contracts for different parts of system to use different vendors.


    But I guess all that is too much work.

    • Avatar

      mikiem

      In reply to codymesh:

      I don't think it's the amount of work personally, but the lack of expertise necessary to do that work... The US gov is woefully behind with pretty much anything IT.

    • Avatar

      anoldamigauser

      In reply to codymesh:

      In the scheme of the DoD budget, a $10 billion contract over ten years is a rounding error.

      Awarding the contract to one firm removes issues of system incompatibility, and gives you one throat to choke when there are problems. Given the way government contracts are usually specified, this seems to be a nugget of sanity.

    • Avatar

      Winner

      In reply to codymesh:

      This is crazy, who on earth awards $10 Billion - with a [email protected]#$%ing capital B - to just one company? America is crazy, man

      Perhaps that's how Putin wanted it. Only need to break in once.

    • Avatar

      Calibr21

      In reply to codymesh:


      It’s a firm fixed price contract. This means Microsoft has agreed to provide certain capabilities at X dollars and can’t change the price. And due to the competitive nature of the contract, the Pentagon probably got a great price. What is often the case with long term competitive contracts like this, is Microsoft may actually be losing money on services now in hopes of efficiency gains in the future. IE they may say they will provide email for $5 per user when right now it actually costs Microsoft $7, but MS knows in 3 years it will only cost them $3.


      Firm fixed price shifts the risk from the government to the company providing the contract and is actually better for tax payers because the govt knows how much its spending at the start. No ballooning unexpected costs (see the James Webb telescope for an example).


      It’s also indefinite quantity indefinite delivery. This means if the pentagon decides they only want 3 billion in cloud capability then that’s it, they only pay Microsoft 3 billion dollars.


      Microsoft did not outright win 10 billion dollars.

      • Avatar

        codymesh

        In reply to Calibr21:

        thanks for the elaboration. I understand that Microsoft didn't just get 10 Billion handed over, but I was under the impression that both businesses and governments would have liked shorter term contracts with room for more frequent negotiations rather than to be locked up in very long-term commitments


        projecting for 10 years is extremely difficult to get right. They're making a huge bet

    • Avatar

      mrkirbs

      In reply to codymesh:

      Breaking everything up into a million subcomponents is the normal way government and military procurement is done in this country. I would argue this has done very little to control costs or improve efficiency

  2. Avatar

    waethorn

    Don't worry about having to unfriend Microsoft over their war stance, Democrat-voters: the Pentagon just declared that "Climate Change" threatens national security.


    No, I'm not even kidding.

  3. Avatar

    saint4eva

    "Amazon has long been the favorite choice to win this contract" - based on what parameters? Just accept it that Microsoft is doing well. Many of you are coming up with some laughable excuses why Microsoft won, and Amazon lost the contract. One of them must surely win the contract, and Microsoft won.


    Congratulations, Microsoft.

  4. Avatar

    mike2thel73

    "But Amazon has come under fire from the erratic U.S. president"


    Paul keep your opinions about Trump to yourself.


    It's no secret you're a liberal and that's fine with me. We all can't be perfect; however, one more personal sny remark about him and I'm going to stop reading your webpage and stop watching your podcasts.


    I never liked Barack Obama but I always kept my mouth quiet and ate Crow for 8 years.


    Just like with the rest of the media, stop your complaining. 2016 was 3 years ago. Get over it.

  5. Avatar

    awright18

    I'd really like to see this whitepaper "a detailed assessment purely on the comparative offerings [would] clearly lead to a different conclusion" The number of offerings in both cloud vendors is very large and growing and trying to keep up with that is very difficult. I would imagine there are a handful of services that will be relied upon heavily. I'm also guessing there is some type of Office 365 for Government that might be in the mix here as well, which amazon clearly doesn't have. Good luck to Microsoft. I'm sure both companies will be doing fine well into the future.

    • Avatar

      Stooks

      In reply to awright18:

      Microsoft already has huge US government Office365 contracts.


      The department of Interior just dumped G suit in September for Office 365 moving 85,000 users over to Office 365. Also over the summer the US military chose Office 365 over G suit which is millions of seats.

  6. Avatar

    StevenLayton

    If the Pentagon Jedi project fails for whatever reason, and they have to start the project again from scratch, would it be called "Return of the Jedi"?

  7. Avatar

    saint4eva

    Google pulled out because it could not meet the requirement - this is not selling of users' data

  8. Avatar

    wright_is

    Haben't some of the people who proposed JEDI since moved to work at Amazon? Or was it Google? And they were therefore kicked out of the running.

  9. Avatar

    Stooks

    Trump 2020!!! :)


    I have no doubt politics played a role in this, but honestly it always does and has for a very long time in all government contracts.


    Personally I am not a fan of Amazon and this ok by me.

  10. Avatar

    wosully

    Google dropped out of the running because supporting the military with AI was in violation of its corporate principles. But the free speech Google enjoys that was provided to them by the US military allows them this right. Easy to have "principals" when others provide your safety.

    • Avatar

      Sprtfan

      In reply to wosully:

      The second half of the statement made by Google when they pulled out of the running for the contract was


      "And second, we determined that there were portions of the contract that were out of scope with our current government certifications." I think this was the real reason they dropped out and had nothing to do with principals.

  11. Avatar

    ghostrider

    Nobody, just nobody puts all their eggs in one basket like that. A contract of that size to ONE company - pure suicide. When it all goes wrong, or Azure goes down (which it tends to - often), or they have performance issues or a multitude of other potential problems, let alone security - how many hackers would like to take down the Pentagon by hacking Azure!, then heads will roll. I've no doubt, whether it be Azure or AWS, a lot of concessions were made, palms were greased and backs were scratched. If the Pentagon had to look at cloud, just use it for DR, load balancing or moving some less critical services out. At the very least, multi-cloud would likely offer more resilience and performance.

    I'm sure Champagne corks are popping round Redmond, but this truly is one of the dumbest decisions I've ever heard.

  12. Avatar

    terry jones

    Why does clicking on your Reuters link launch a popup box asking me if I want to open Microsoft Edge?


    I'll pick what browser I'll use, thank you very much.


    And I know it's a stretch, but could you try and keep the snide political remarks out of your articles? I know it's hard for you to accept, but not everybody here is a Boston liberal.


    It interrupts the flow of the article, and detracts from your credibility.



  13. Avatar

    scj123

    Google has principles?

  14. Avatar

    Thom77

    I'm sure that the Military Industrial Complex picks who wins their contracts, not a President. Hell, President Trump cant even pull out 28 troops from Syria without all hell breaks loose and sob stories of Kurds who nobody knew existed 1 week ago. Obama ran on an anti-war platform, and bombed seven different countries as President. Something tells me the Pentagon calls the shots, not a President.


    And I can imagine the fact that Amazon is ALREADY contracted with the CIA played some part in the decision.


    The real question now is how this decision snowballs down to other services, like Bing. When will Microsoft get a call from the DoD to censor search results? Amazon stopped hosting the Wikileaks site at the behest of the CIA, oops I mean "Federal Government". What will Microsoft cave to? Will RT now have a warning label on search results in Bing that they are state run media (like Youtube does), while CNN, MSNBC, ABC news, NBC News, and FOX (controlled opposition) keep hiring former spooks as "analysts".


    And does Microsoft's business contracts with Israel pose a security risk or a conflict of interest?


    If Corporations hold the governments data .... whose really in control?

  15. Avatar

    Divodd

    Blood of many will be on Microsoft's hands - a shame

  16. Avatar

    brettscoast

    Good post Paul. This is a massive win for Microsoft any way you look at it. I didn't realise that Amazon had such a percentage lead over Microsoft in cloud market share. I would have thought splitting the contract between the two made more sense to the Pentagon giving them more flexibility and options going forward

  17. Avatar

    Sprtfan

    Google dropped out of the running because supporting the military with AI was in violation of its corporate principles.


    The second half of the statement made by Google when they pulled out of the running for the contract was


    "And second, we determined that there were portions of the contract that were out of scope with our current government certifications."


    I think if they thought they had a chance, they would have tried. They knew they didn't and this gave them a chance to appease some vocal employee's.

    • Avatar

      darrellprichard

      In reply to Sprtfan:


      100% agreed. If Google had the necessary certs in place, "corporate principals" be damned - they would have fought tooth and nail for the contract. This just puts them that much further back behind Amazon and Microsoft as a cloud provider. On the other hand, this win will have a halo effect for MS.

  18. Avatar

    pargon

    Paul is deleting comments now that don't line up with his political agenda he's constantly pushing? Gee, wonder which side he's on. /sarcasm Maybe if he left his opinion out of every article, commentators would too.

    • Avatar

      Stooks

      In reply to Pargon:

      He has a long history of deleting them especially when called out. Thin skinned. If you dont like being called out stick to the tech/facts and keep the snide and political BS out of the conversation.


      He used to make political comments on Windows weekly but I think Leo is shutting that down. I know Jeff Jarvis on their Google show has TDS big time and when he tries to go political they shut him down now. He used to rant on so much I would shut it off. I even dumped my sub to that show because of it.

    • Avatar

      red.radar

      In reply to Pargon:

      He’s probably trying keep the narrative about technology and keep the cesspool of political trolls away. He can keep deleting and I support. I come here for technology news and purposefully avoid the digital activists at just about every other publication.


      I have seen good publications get ruined because the admins wouldn’t monitor the content of their comments and keep discussions productive.




      • Avatar

        pargon

        In reply to red.radar:

        No he's not trying to keep politics out. He genuinely believes that his opinion is the only one that matters and everyone is phobic of whatever minority is on the agenda that day. He is a hate filled person and now censoring those that respond to his politics, which he is sure to include in almost every single piece he writes these days.


        This should be a tech site, not what it's turning into lately.

        • Avatar

          Greg Green

          In reply to Pargon:

          I was with you til you wrote hate filled.


          That was absurd.

          • Avatar

            pargon

            In reply to Greg Green:

            He hates trump. I never hated Obama, I disagreed with his policies. Paul is constantly looking for a reason to bring trump into everything and bash him, and half the country that supports Trump for that matter. If that's not hate I don't know what is. Also, his recent trashing of Dona Sarkar. The left promotes hate everyday and Paul is showing his feelings more and more.

            • Avatar

              anoldamigauser

              In reply to Pargon:

              Actually, slightly less than half the country voted for Trump, but the US does not have a "one person, one vote" system. My guess is that he has lost only a small percentage of that support, but it is still less than half the population.

              As to the "left" promoting hate everyday, I would say that the divisiveness is evenly split; though judging by the comments here, it is the "right" that has a slight lead in less than civil discourse.

              I agree with you about his comments regarding Dona. I personally know several dyslexic people and know how hard it is to work through, especially because there are no outward signs indicating that you require assistance. I am also old enough to remember when it was not commonly tested for.

            • Avatar

              Greg Green

              In reply to Pargon:

              Hating Trump and hate filled are two different things. Hating something does not make you hate filled. Hating everything is about the only thing that makes you hate filled. Paul does not hate everything.

            • Avatar

              Sprtfan

              In reply to Pargon:

              I'm going with that you don't know what hate is. Calling someone erratic does not equal hate. This all seems like a huge over reaction.

              • Avatar

                pargon

                In reply to Sprtfan:

                Hate is the Left's stance on everything now days. It's really nuts what they've turned into in just 4 years lol. Paul gets triggered all the time and hates on anyone who has a pro American view. He really should be on CNN. Paul seems like a nice guy to his friends and family but he hates half the country and his politics seem to blind him of the fact that they are people and his own countrymen.


                I never reacted to "erratic". I merely said Trump is not being erratic with regards to Amazon. He's been very consistently against them screwing over tax payers because USPS doesn't charge enough. Bezos who hates Trump and uses his new paper against trump has built a trillion dollars business off USPS not charging enough. Trump's stance has not changed on that.


                He absolutely is erratic in many regards. Paul's comment was merely a political attack and not necessary in his article.

                • Avatar

                  Sprtfan

                  In reply to Pargon:

                  Paul gets triggered all the time and hates on anyone who has a pro American view


                  Paul is the one getting triggered? I'm hoping you can see the hypocrisy in that. I also think you are confused on what being pro American is. Blindly agreeing with a politician because you belong to the same party is not what being pro American is.

                • Avatar

                  pargon

                  In reply to Sprtfan:

                  Trump was not a Republican or a Democrat. He basically destroyed the Republican party and created a new one with the same name. I don't blindly agree with him. Plenty of things that I disagree with. But that's besides my point. Paul is quick to call anyone that doesn't agree with US policy closely watching China and Huawei as "Xenophobic". I forgot that we're supposed to love giving our data to a company whose communist dictatorship has a 100 year plan for world dominance and is buying up land and debt in the US like crazy. Paul is so out of touch with mainstream America.


                  He gets triggered by someone without a "real disability"? WTF? If any republican ever said anything like that they would be hung out to dry. Yet that's perfectly acceptable coming from the left. It's a game of "who can be the most outraged today?" lol.


                  The democrat party is imploding and being led by a bunch of socialist morons like AOC, 3 Mansion Sanders and Creepy Joe. It's really a thing of beauty to watch. Can't wait to see Paul's reaction when Trump wins in a landslide.


                  This thread keeps getting better and better.

        • Avatar

          miamimauler

          In reply to Pargon:

          Paul is a loving husband and father. To call him hate filled is ridiculous.


          As I stated he shouldn't add his political stance if he doesn't want push back but to call him hate filled is going way over the line Pargon.

      • Avatar

        miamimauler

        In reply to red.radar:

        In general I agree except if Paul is going to throw deliberately incendiary comments in such as "But Amazon has come under fire from the erratic U.S. president" then Paul has to expect push back.


        Again, I agree with you but Paul can't have it both ways. If he doesn't want comments objecting to his political statements he shouldn't put them in the articles.


        Do you not believe that to be a reasonable argument?

        • Avatar

          wright_is

          In reply to miamimauler:
          In general I agree except if Paul is going to throw deliberately incendiary comments in such as "But Amazon has come under fire from the erratic U.S. president"

          Have you read Trumps Twitter feed or seen his public addresses? They are erratic. That isn't personal opinion or incendiary. (This is as a non-partisan, non-US observer.)

      • Avatar

        markld

        In reply to red.radar:

        I agree with you, I'm coming to this site for tech not political trolling.

        I enjoy this site because the discourse is usually civil, too.

        Paul is free to have his opinion on President Trump, by commenting otherwise wouldn't change his opinion.

        I really like his opinions on tech, but, I don't care what he thinks about the President.

        If he asked readers to express what they thought about his opinions on Trump, it would be an endless stream of grammatical diarrhea. But he is not, he is coming from a technology not political POV.

        Thank you for your comments.

        • Avatar

          wright_is

          In reply to Markld:
          Paul is free to have his opinion on President Trump, by commenting otherwise wouldn't change his opinion.

          And in this instance, he restricted himself to reporting what Trump himself has said, without, as far as I can see, putting his personal rhetoric on the story.

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