Big news: Microsoft beats Amazon to win the $10B US Defense JEDI contract

We recently reported that the competition between Amazon and Microsoft for the Department of Defense’s lucrative $10 billion Joint Enterprise Defense Infrastructure (JEDI) contract was nearing its conclusion as a judge dismissed claims of inappropriate behavior on the part of Amazon. That was until Donald Trump became involved. Later, we reported that Defense Secretary Mark Esper has agreed to review the contract, putting its assignment on hold. Today, the US Department of Defense announced that Microsoft has been awarded with this contract with a ceiling value of $10,000,000,000 over a period of 10 years, if all options are exercised.

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.

Most people in the industry were really surprised by this announcement as everyone was expecting Amazon to win the JEDI contract. This is a huge news for Microsoft Cloud platform. Even though $10 billion is a significant amount of money, the network effect that will be created for Azure through this contract will be more significant.

Amazon AWS team gave the following statement regarding Microsoft’s victory on the JEDI contract.

“We’re surprised about this conclusion. AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion. We remain deeply committed to continuing to innovate for the new digital battlefield where security, efficiency, resiliency, and scalability of resources can be the difference between success and failure.”

In terms of cloud tech capabilities, Amazon AWS was clearly ahead of Azure and even the contract requirements were designed specifically around AWS capabilities. The US DoD did not reveal any details on why it selected Microsoft over other cloud companies, especially Amazon AWS. My guess is “trust”. Amazon was accused of malpractices related to this contract process and because of which Defense Secretary reviewed the contract at the last moment. May be the Defense Secretary found something wrong about Amazon and decided to award the contract to only other player, Microsoft. We will get more details on this front in the coming weeks.

Source: US DOD