WASHINGTON – The Pentagon awarded on Friday a multi-billion-dollar contract to Microsoft to build it a cloud storage system – a surprise move that rejected Amazon’s bid.
Amazon’s cloud division, Amazon Web Services, was widely considered favorite due to its contract with the Central Intelligence Agency and its market share of around 48 percent (Microsoft’s holds 15.5 percent).
The Joint Enterprise Defense Infrastructure (JEDI) contract could be worth up to $10 billion over a 10-year period if the Pentagon exercises all options under the deal, the defense department said late Friday.
The Pentagon contract is the military’s largest information technology contract award in history and expected to serve as an example for other government agencies, according to US media.
The process for developing and awarding the JEDI contract has been fraught, amid multiple conflict-of-interest allegations and legal challenges, as well as concerns that opting for a single-source vendor might not be best for the military.
Defense Secretary Mark Esper announced his own top-to-bottom review in early August, after President Donald Trump voiced concerns about JEDI and Amazon – a company he has frequently criticized during his presidency.
Amazon founder Jeff Bezos also owns The Washington Post, which has also been a regular subject of Trump’s ire.
After the Pentagon decision, Amazon spokesman Drew Herdener said that the company was “surprised about this conclusion.”
Microsoft had no immediate comment.
The Pentagon, for its part, said that “the acquisition process was conducted in accordance with applicable laws and regulations.”