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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