The Pentagon has reportedly canceled the JEDI cloud contract. The $10 billion cloud deal was the subject of a legal battle between Microsoft and Amazon.
The Department of Defense announced the decision on July 6, but it added that a new contract is underway.
The Department of Defense added it is now soliciting proposals from Amazon and Microsoft, and both will likely be rewarded.
Pentagon Cancels JEDI Cloud Contract
The Joint Enterprise Defense Infrastructure or JEDI deal was one of the most controversial contracts for the Department of Defense, especially after Microsoft and Amazon fought for the position to get it.
The Pentagon said in a press release that due to the evolving requirements, the increased cloud conversancy, and numerous industry advances, the contract can no longer meet its IT needs.
After the announcement of the cancellation of the contract, Microsoft's shares were down 0.4%, and Amazon's shares were up 3.5%, according to NBC News.
However, the fight over a cloud computing project is not over yet. The Pentagon stated that it still needs enterprise-scale cloud capability and announced a new multi-vendor contract called Joint Warfighter Cloud Capability.
The Pentagon said that it plans to solicit proposals from Amazon and Microsoft for the contract, adding that they are the only cloud service providers to meet its need.
But the Pentagon will continue to do market research to see if other companies could meet its specifications.
Amazon vs. Microsoft
The JEDI contract was intended to modernize Pentagon's IT operations. Microsoft was eventually awarded the contract in 2019, defeating Amazon Web Services.
A month after Microsoft got the contract, Amazon filed a lawsuit in the U.S Court of Federal Claims regarding the decision.
The company said that President Donald Trump's bias against Amazon influenced the Pentagon's decision to give the JEDI contract to Microsoft.
In 2020, the Pentagon's inspector general released a report stating that the White House did not influence the award.
However, he noted in a report that it had limited cooperation from White House officials throughout its review. As a result, it could not complete its assessment of allegations of misconduct.
The Department of Defense said that its cloud vendor for the new contract would need to meet several criteria, like working on three classification levels: unclassified, secret, and top secret. The vendor should also be available around the world and have impressive cybersecurity controls.
The Department of Defense added that the new contract value is expected to be in multi-billions, though it is still finalizing the maximum value. It expects the contract to last up to five years, according to CNBC.
The Pentagon expects the contract to be announced around April 2022, complete with new requirements, new instructions, and new contract value.
In the meantime, the contract will be offered to Amazon and Microsoft, but around 2025, the Pentagon will broaden the competition to give other vendors a chance to win the contract.
Related Article: Microsoft Beats Amazon in $10-Billion Contract
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Written by Sophie Webster