The U.S. Department of Defense (DoD) has pulled back the Joint Enterprise Defense Infrastructure (JEDI) contract it had awarded Microsoft in 2019. The Trump-era contract was part of a broader digital modernization of the Pentagon.
The DoD has not scrapped the JEDI contract, but instead, merely stopped Microsoft from being the sole vendor. Moving ahead, the defense department will adopt a multi-cloud infrastructure in which multiple large tech giants will offer their services.
Why did Microsoft lose out on the $10 Billion JEDI contract?
The U.S. Department of Defense (DoD) has announced they will not move forward with the Joint Enterprise Defense Infrastructure (JEDI) contract. Instead, they will pursue a new procurement to meet its cloud computing needs.
Microsoft has posted a rather long blog post attempting to explain why it lost the $10 Billion JEDI contract. Incidentally, the entire contract is halted. It is not scrapped but merely postponed.
Perhaps the easiest and most direct reason that could explain the development is the extensive delay in executing the work or initiating work on the contract. Needless to mention, upgrading the nation’s defenses is a time-critical job.
— Reuters (@Reuters) July 6, 2021
At the onset, only Amazon and Microsoft were truly qualified to work on the JEDI contract. However, as with any bidding process, Microsoft proposed a lower asking price and won the contract.
Amazon clearly lost but refused to admit defeat. The eCommerce giant repeatedly knocked on the U.S judiciary’s doors. As a direct result, Microsoft could never initiate work on the $10 Billion JEDI contract.
With almost two years delay, the cybersecurity scenario and the cyberthreats have evolved significantly. Hence, even the needs of the U.S. Department of Defense (DoD) have changed significantly.
— Ars Technica (@arstechnica) July 6, 2021
As such, even if Microsoft would have begun work on the contract this year, the deployments may not have sufficed. Even a DoD spokesperson mentioned the same:
“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.”
Simply put, the extensive delays simply outdated the terms, and requirements, of the JEDI contract. Hence, the DoD will have to once again go back to the drawing board.
U.S. Department of Defense (DoD) will draw up an entirely new contract, and Microsoft could still be a big part of the same:
It is important to note that even in the new Joe Biden administration, Microsoft and Amazon are still the only companies that can meet the department’s requirements. In fact, the Defense Department had re-evaluated the contract proposals back in September 2020 and had concluded that Microsoft’s submission was the best.
Moving ahead, the Pentagon will draw up an entirely new JEDI contract. The DoD will certainly not base the new contract on the current one, obviously because the needs and expectations have changed.
The most obvious change within the new contract is the “multi-cloud” approach. Simply put, the DoD is hoping that several large tech giants would come forth and build the next-gen defense network of the United States. This is in stark contrast to the earlier approach wherein the Pentagon had launched the solicitation by insisting on using a single vendor.
BREAKING: The Pentagon said it has canceled a cloud-computing contract with Microsoft that could eventually have been worth $10 billion and will instead pursue a deal with both Microsoft and Amazon. https://t.co/Xik6ll0nYd
— The Associated Press (@AP) July 6, 2021
Although Microsoft and Amazon would obviously be the leading competitors, other companies such as Oracle, IBM, and Google could rise to the challenge. At least that’s what the DoD appears to be hoping.