Tech

Pentagon Cancels $10 Billion Contract With Microsoft Amid Legal Battle

(Photo by Jeenah Moon/Getty Images)

Michael Ginsberg General Assignment Reporter
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The Department of Defense (DOD) canceled a cloud-computing contract with Microsoft that is the subject of a current lawsuit.

“With the shifting technology environment, it has become clear that the JEDI Cloud contract, which has long been delayed, no longer meets the requirements to fill the DOD’s capability gaps,” the Pentagon said in a Tuesday press release. Microsoft signed the contract with DOD in 2019, agreeing to produce a cloud computing technology that could be used for personnel data, intelligence information and other government needs.

The contract was immediately challenged in court by Amazon, which also bid to produce the Joint Enterprise Defense Infrastructure (JEDI) Cloud. Amazon argued that then-President Donald Trump’s feud with then-Amazon CEO Jeff Bezos was the reason that it did not receive the contract.

Then-Defense Secretary Mark Esper reviewed and ultimately scuttled a proposed deal between the DOD and Amazon after Trump claimed to have received “tremendous complaints about the contract with the Pentagon and with Amazon. They’re saying it wasn’t competitively bid.” He also referenced complaints filed by IBM and Oracle alleging that the contracting process was not fair. (RELATED: Trump’s Acting DOD Secretary Weighs In On A Cloud Contract Conservatives Loathe)

Amazon sued again in January 2020, after the DOD re-awarded the contract to Microsoft. A federal judge kept the claim alive in an April 2021 ruling.

“The security of the United States is more important than any single contract, and we know that Microsoft will do well when the nation does well. Because the security of the United States through the provision of critical technology upgrades is more important that any single contract, we respect and accept DOD’s decision to move forward on a different path to secure mission-critical technology,” Microsoft President of US Regulated Industries Toni Townes-Whitley said in response to the announcement.

The DOD confirmed in its statement that both Amazon and Microsoft would be eligible to bid for a new cloud computing contract.