Pentagon Cancels Microsoft’s $10 Billion JEDI Contract

Posted on July 6, 2021 by Paul Thurrott in Cloud, Microsoft with 49 Comments

The US Department of Defense said today that it was canceling Microsoft’s award of the Joint Enterprise Defense Infrastructure (JEDI) contract, which was valued at $10 billion over five years. It will now undergo a new procurement process.

“With the shifting technology environment, it has become clear that the JEDI cloud contract, which has long been delayed, no longer meets the requirements to fill the DoD’s capability gaps,” a Defense Department statement explains. “The project, known as the Joint Enterprise Defense Infrastructure and intended as a sole-source contract, had been fiercely disputed from the start.”

This has been a long and rocky road.

In a stunning upset, Microsoft won the JEDI contract in April 2020, beating out heavily-favored Amazon, which complained incessantly that the award was politically motivated, often with amusing results. But the firm kept pushing, even after the DoD announced in September 2020 that it would move forward with Microsoft as the contract winner. By early 2021, it was clear that a new presidential administration might reverse course instead of facing years of litigation by Amazon, and the DoD indicated in May that it was reevaluating the contract.

According to Microsoft, this process needs reform, and “one company”—Amazon—should not be allowed to “delay, for years, critical technology upgrades for those who defend our nation.”

“It’s clear the DoD trusts Microsoft and our technology, and we’re confident that we’ll continue to be successful as the DoD selects partners for new work,” Microsoft’s Toni Townes-Whitley writes. “Their decision today doesn’t change the fact that not once, but twice, after careful review by professional procurement staff, the DoD decided that Microsoft and our technology best met their needs.”

But it does change the fact that Microsoft won the lucrative and high-profile JEDI contract. And while it’s reasonable to believe that the software giant might play some role in a future award, it’s perhaps more obvious that a contract this important needs multiple players.

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Comments (49)

49 responses to “Pentagon Cancels Microsoft’s $10 Billion JEDI Contract”

  1. scottcc

    It's silly that the largest and most powerful government in the world relies so heavily on third parties like Microsoft for national security-level data storage and computing infrastructure. Like, what exactly ARE you doing with trillions of dollars each decade, DoD? Buying endless rockets and airplanes designed decades ago, just to stockpile them? The US govt should have its own *nix variant used solely for DoD and govt everything. There should be NO RELIANCE on Microsoft/Google/Oracle/etc., PERIOD. Not for the TRILLIONS they steal from taxpayers decade after decade.

    As Bob and Bob from Office Space would say: "What would you DO here?"

    • behindmyscreen

      This is what happens when you tell the government to stop wasting money and let the private sector handle stuff.

      • waethorn

        The government doesn't do IT. So they have to farm it out.

        Besides, government will separate you from as much of your money as possible whether they go capitalist or socialist anyway.

        • behindmyscreen

          Private business will separate you from as much of your money as possible.

          • Greg Green

            With private business you have the option not to participate. Smart shoppers know that.

            • waethorn

              Only if it's a free market. If it's a private company that the government chooses due to a tendering process with no public input, it's the same as when the government does it themselves.

      • scottcc

        But the private sector in terms of computing really has no reason to exist. I mean, no one can just make a generic OS out of thin air if the govt gets tired of Microsoft or Oracle or Redhat...I mean, the US had the capability to make an OS starting back in the 60s when *nix variants started appearing, and they apparently did nothing. The US govt also doesn't own a single [real] chip fab or production line to make anything of use/for, say, a non-Android/Apple smartphone exclusively for Govt. use. The govt. screwed up for decades and wasted trillions on nothing, really. And it's due to sheer incompetence at the politician and military level. For example, in the political realm, we have US politicians who genuinely believe Guam will sink if too many people get on it. Look it up. In the military realm, a big reason the US cyber security efforts are so awful is that the military outright rejects anyone who has smoked pot. Have you seen the average hacker/self taught/young-person-hacker types? Good job instantly alienating tons of talent due to some arbitrary rule (and no, I don't smoke pot/never have smoked pot - I'm just pointing out the idiocy of the military's stance on basic hiring practices).

        • waethorn

          Unix was created at AT&T Bell Labs. And it started in late '69, wasn't finished until the 70's. Most of the variants up until the late 80's were still based on Unix code released under various license models. MINIX and Linux didn't come out until after those. SGI IRIX was built using UNIX System V code.

        • scottcc

          "But the private sector in terms of computing really has no reason to exist." <-- I mean when involved in govt. matters. Obviously Microsoft/Apple/etc. can exist for consumers.

          • bettyblue

            100% this. That and Bezos was 1000% against the former administration as well. So its a "Win Win" for both the current administration and Bezos.

            I am sooooooo glad I do not use Amazon ANYTHING anymore.

            • behindmyscreen

              I guarantee you use their computer cycles.

              • bettyblue

                Sure, but not by choice. It's the back end of something I use like Netflix or whatever. I personally do not buy anything from Amazon. All local or directly from the manufacture.

                I know at work, in my industry (retail), we are flat out banned from using AWS. We use Azure big time because of the industry alliances.

        • bobnetgeek

          This is not the case in Federal agencies trying to hire tech talent--they accept the Pot smokers as long as they disclose it on their polygraphs. This was a conscious variance on policy for the reasons you describe.

      • thretosix

        This is so true. When I was in the Navy you would constantly see things like paying $50 for a $10 wrench. It's why these companies do everything they can for a government contract.

        • naro

          We had a steel chair (the most uncomfortable thing you've ever sat on) that bolts to the deck in the reactor control room on my submarine that is legit $8k if you ever needed to replace it. 4 of those in the room.

          We were also trained on fixing electronics equipment. But instead of letting me do my job and solder on a new 10¢ capacitor to a circuit board.... we'd buy a "new" board for $30k, send the broken one back to the company....they'd fix it for 10¢ and add it back into the inventory of the supply system for us to buy again for $30k when eventually a component fails.

          And it's not like we couldn't test the equipment to make sure it worked properly after we fixed it. We had 20 hours of verifications to do to make sure it worked after replacing the old board with the "new" board. My division would literally all be awake until it was done and tested matter how long it took.

    • Stokkolm

      As someone who spent 10 years in Army communications, this is a very bad take. Prior to a system called WIN-T (Warfighter Information Network-Tactical), the military relied on proprietary systems developed by big contractors like General Dynamics. This resulted in us having no data capability and a barely functional voice capability in a tactical environment (meaning forward or deployed, not on an existing base) all the way into the mid-2000's. In 2006 or so that all changed when we started using COTS equipment and moved to Cisco network gear, Redcom and Promina telephone gear (both quickly replaced by Cisco Call Manager), and upgraded to satellite terminals with Ka and Ku band data capabilities. We literally went from telephone operators to network admins nearly overnight. It was revolutionary. The fact is the government will always rely on SOMEONE to build their technology, it's just a question of whether or not that's some proprietary behind the times mess or industry leaders with cutting edge technology.

      • scottcc

        "As someone who spent 10 years in Army communications, this is a very bad take."

        The bigger question is, why does the military have to have such a large budget or need for cutting edge anything, period. The days of World Wars and Cold Wars and the US trying (and succeeding!) to be world police are long gone. We've been fighting in middle of nowhere middle east for two decades now, for no good reason. Frankly, I don't care if the extent of the military's tech is old radio/analog-based phone telecom and glorified fax systems, or dated OS and database designs from the 60s/70s. The military budget should be close to zilch, and we don't need trillions dumped into a DoD account for them to spend willy nilly. With all the backdoors and closed room dealings between the Govt and big tech, that worries me more than them using 80s-era OSs to regulate aircraft carriers or handle base communications. Laugh at North Korea's Red Star OS all you want, but at least they are smart enough to not blindly use Windows. Meanwhile in the US, friggin Obama was using a Blackberry and Trump was using a smartphone and Twitter like a moron for years. Neithe rone should have even had anything but a locked down crappy 1999-era feature phone.

        You being in the Army system for 10+ years does not make your claims or viewpoint any more valid or trustworthy. Of COURSE you're going to sing the praises of a former employer that gives you a leg up on everyone in the US, provided you don't get your leg blown off by friendly fire and then VA refuses to give you a decent prosthetic or rehab. It's 2021 - it's time for bloated US military budgets to shrink considerably.

        • red.radar

          Thumb down. There is so much ignorance sourced from what is a baseless prejudice in the parent post.

          Moving from Ham radio to Digitally switched Telephony is a radical transformation to be able to communicate and deploy your resources. That is something needed for any organization whether the wield Guns, Hammers or Bandages. Even if you believe that war is a construct of the past you have to agree that Military still serves peace keeping rolls and those needs change and those changes generate problems to which cutting edge solutions are needed to solve.

          • scottcc

            >"you have to agree that Military still serves peace keeping rolls and those needs change and those changes generate problems to which cutting edge solutions are needed to solve."

            No I do not. Military serves no purpose in 2021 except to steal billions if not trillions from governments annually and prop up outdated/dangerous governments that need to change with the times. For example, take away North Korea's army and the citizens wouldn't have to resort to cannibalism while starving on a regular basis - Kim Jong Un would be gone, overnight. And here in America? For the trillions each decade wasted on military garbage, every person could get free college education, enough food to eat via assistant programs, and most medical stuff covered literally overnight, if the US wanted it. Instead, we waste all that time and money on more missiles, wasteful battleships, murderous drone strikes and other stupid things. But sure, ARMY FOREVER BRO! TRUMP MAGA 2024! WOO HOO!

  2. javial

    The reality of all this and the real problem is that none of the Pentagon computers meet the requirements of Windows 11, hence they have decided to cancel the contract.

  3. red.radar

    I think the DoD is thinking it will be faster to rebid than defend the litigation. Also they can take what they have learned and the cards that Amazon has shown and update the bid process to nullify the complaints. Also the recent security exploits in subcontractor/vendor points in the supply chain probably required the architectural nature of the RFQ to change.

    • anoldamigauser

      Agreed. This is easier than dealing with the litigation. I imagine the specs when rebid, will clearly state that they will not accept proposals from retail businesses.

      The stupid thing is, that a $10 billion fixed price contract over 10 years, is not material to the revenues and profits of either Microsoft or Amazon, and it is not even a rounding error in the Pentagon budget.

    • Greg Green

      But won’t cancelling the contract simply cause new litigation from MS?

      • red.radar

        Depends on killpoint clause in the contract. DoD likely had a clause that said: We can terminate this agreement at any point for any reason. Microsoft likely has no legal recourse.

  4. StevenLayton

    Both the Sith and Jedi both understand the rule of two. A master and apprentice. The same should be true with a major infrastructure project :)

  5. chrisrut

    "But it does change the fact that Microsoft won the lucrative and high-profile JEDI contract. And while it’s reasonable to believe that the software giant might play some role in a future award, it’s perhaps more obvious that a contract this important needs multiple players."

    No, Microsoft still won the contract, but the win was disputed until it became irrelevant. That happens in elections and contracts.

    And, in security, the notion that two providers are better than one is questionable at best.

    I agree with Microsoft's assertion which you quote.

  6. codymesh

    Not a good precedent to set. Now if any other company wins a similar contract over Amazon, they can do the same and theoretically get every one cancelled too. Not only are they saying the process was corrupt, they outright suggest that the DoD doesn't know what it wants, which is not something that should be taken seriously.

    I don't believe that such a large contract should be in one piece, but a deal is a deal. It was over. Amazon is just mad that it didn't go their way.

  7. curtisspendlove

    The only thing worse than having one vendor working on a government project is having more than one vendor (supposedly working together) on a government contract.

  8. sott3

    Not sure I want the safety of the country dependent on Azure AD.

    • lvthunder

      Not sure I want the safety of the country dependant on any form of computers.

  9. peterc

    This is all just cronyism and politics with public tax payer money and a display of epic double standards. Been going on for decades.

    Whenever I read about US Govt state financing US based tech companies, sorry... awarding legitimate contracts to, US companies for "services" it makes me feel all safe and cosy knowing my use of the same companies products is not at all compromised by their tie ins to the US miliatry/inteligence/security state financing program. Double standards people....

  10. nyghtfall

    I think it's the Pentagon's response to discovering their PC's won't run Windows 11. ;)

  11. lvthunder

    Microsoft should sue the DOD to get the money they spent going after this contract back if they weren't already paid for it. I bet they spent a million or two during the proposal phase to win this contract. This is nothing but the current administration doing everything they can to undo anything (even the good) the previous administration did.

    • bob25

      They (MSFT) probably will. Although I think maybe Bezos should have to pay for all the taxpayer dollars he caused to be wasted being a poor loser.

    • beckoningeagle

      I agree 100%, they won the bid fair and square even after being reviewed by the courts. This is political.

  12. waethorn

    No doubt this has to do with the recent cyber attacks.

    One can only imagine if these attacks weren't from the plot line of some corporate cyberwar sci-fi novel.

    • lvthunder

      I have doubts. I think this is purely political. This administration is trying to undo everything they possibly can that the previous administration did. Even the good stuff.

      • waethorn

        Biden got rid of the underprivileged opportunity zones and the price caps on prescriptions drugs on day one.

      • toukale

        You acting like this is something new. If I am not mistaken the last administration did a lot of the same thing.

        • waethorn

          The former admin didn't sign 40-50 executive orders on its first day in office to eliminate the previous admins EO's just for spite.

        • bbennett40

          You act like that makes it acceptable.

          • toukale

            I said no such thing, just pointing out that's the way the game is played. If you don't like it then do something about it, not just when your the other side is doing it.

  13. ebraiter

    All that wasted time [and lawsuits] because some orange bozo didn't like Amazon. Think of the taxpayer money spent building this proposal only to sit around for 2+ years and become outdated.

    This is political only because of the orange man's ego.

    It will go back to the drawing board where there will be proper bidding.