Pentagon Cancels $10 Billion JEDI Cloud-Computing Contract

The 10-year contract had been awarded to Microsoft in 2019 after a fight among Amazon and other tech giants for the deal.

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The Pentagon cancels its $10 billion JEDI cloud-computing contract.

The Pentagon had warned Congress in January that it might walk away from the contract.Credit…Charles Dharapak/Associated Press

July 6, 2021, 1:22 p.m. ET

The Defense Department said on Tuesday that it would no longer pursue a lucrative cloud-computing contract that had become the subject of a contentious legal battle amid claims of interference by the Trump administration.

The Pentagon had warned Congress in January that it would walk away from the contract if a federal court agreed to consider whether former President Donald J. Trump interfered in a process that awarded the $10 billion contract to Microsoft over its tech rival Amazon, saying that the question would result in lengthy litigation and untenable delays.

The Defense Department said Tuesday in a news release that the contract for the Joint Enterprise Defense Infrastructure, known as JEDI, “no longer meets its needs,” but it would solicit bids from Amazon and Microsoft on future cloud-computing contracts.

A senior administration official said that soon after the Biden administration took office, it began a review that quickly concluded the lengthy arguments over JEDI had been so costly that the old architecture would be outdated as soon as it was deployed.

“With the shifting technology environment, it has become clear that the JEDI cloud contract, which has been long delayed, no longer meets the requirements to fill the DoD’s capability gaps,” the Pentagon said in an announcement.

The new architecture will be called the Joint Warfighter Cloud Capability. And the Pentagon made clear that only Microsoft and Amazon Web Services, which currently provides cloud services to the C.I.A., had the capacity to build the new architecture.

But security concerns played a role as well, officials say. Recent breaches of cloud services have made it clear that there are vulnerabilities, and the Pentagon did not want to be dependent on one company for its technology.

The 10-year JEDI contract was awarded to Microsoft in 2019 after a fight among Amazon and other tech giants for the deal to modernize the military’s cloud-computing systems.

But Amazon sued to block the contract, arguing that Microsoft did not have the technical capabilities to fulfill the military’s needs and that the process had been biased against Amazon because of Mr. Trump’s repeated criticisms of Amazon’s founder, Jeff Bezos, who also owns The Washington Post.

The Washington Post aggressively covered the Trump administration, and Mr. Trump referred to the newspaper as the “Amazon Washington Post” and accused it of spreading “fake news.”

Mr. Trump said other companies should be considered for the JEDI contract, and Amazon argued he used “improper pressure” to sway the Pentagon as it selected a technology vendor. An Amazon spokesman did not immediately respond to a request for comment.

The Defense Department said Mr. Trump had not played a role in the decision. Microsoft said that Amazon’s claims of bias lacked evidence and that it was prepared to provide the necessary technology to the military.

In April, a federal court said it could not dismiss the possibility the Mr. Trump had meddled in the process. The court’s ruling set the stage for the Pentagon to walk away from the contract.

“The D.O.D. faced a difficult choice: Continue with what could be a years-long litigation battle or find another path forward,” Toni Townes-Whitley, Microsoft’s president of U.S. regulated industries, wrote in a blog post responding to the decision. “We stand ready to support the D.O.D. as they work through their next steps and its new cloud computing solicitation plans.”

Much of the military operates on outdated computer systems, and the Defense Department has spent billions of dollars trying to modernize those systems while protecting classified material. The Defense Department has argued that the extensive delays surrounding the contract caused national security concerns.

This is a developing story. Check back for updates.

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