Microsoft scores $10bn Pentagon cloud contract

Ruben Fields
March 27, 2020

A challenge to the Defense Department's award announced Friday is widely expected by legal experts, analysts and consultants, especially after President Donald Trump publicly derided Amazon's bid for the high-stakes contract.

Microsoft has said it will continue to pursue government and military work, despite objections from some employees.

"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", the company spokesperson added. Nor, however, does an upheld JEDI award necessarily mean the future of cloud at DOD belongs to Microsoft.

"But for Microsoft it signals a new era of growth in cloud", he said.

It was definitely considered early on because of AWS' previous contract with the Central Intelligence Agency back in 2013, and Amazon being certified at the highest existing security clearance level, while Microsoft has been playing catch up.

Amazon CEO Jeff Bezos has been also steadily increasing his presence and influence in the area in the years prior, buying the Washington Post in 2013 and buying a home in Washington, DC, in 2016.

In the past year, Azure has racked up some large deals from Kroger Co.to AT&T Inc., but a customer as big, demanding and secretive as the Pentagon will go a long way toward cementing Azure's reputation as a serious contender.

Amazon chose to open a second headquarters in Northern Virginia ahead of what was expected to be the award of a massive $10 billion contract from the Pentagon. The company will now work with the Pentagon to deliver secure cloud services for no less than ten years.

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A new book written by a former aide to Defense Secretary James Mattis alleges that Trump called Mattis in the summer of 2018 and directed him to "screw Amazon" out of the contract. Mattis declined to do that, according to the book. The company did not respond to requests for comment on its next steps.

In a statement released later Friday night, the Defense Department said that "the acquisition process was conducted in accordance with applicable laws and regulations".

As a technical matter, companies have 10 days after a debrief to file a protest with the Government Accountability Office. Nearly from the beginning, AWS was hit with complaints that it was improperly influencing the Pentagon's decision making process in an effort to get its thumb on the scale.

The Defense Department is investing in commercial cloud services, which host computing power and storage in remote data centers, to improve data security and speed real-time sharing of information across the military.

Microsoft's task: Microsoft is tasked with overhauling DoD's entire IT infrastructure, creating a globally available and responsive network, and providing ongoing monitoring of issues like bugs and breaches.

Work will occur at the contractor's place of performance and is expected to be completed on October 24, 2029.

Bloomberg's Naomi Nix, John Harney and Amy Thomson contributed.

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