President Donald Trump speaks with Satya Nadella, CEO of Microsoft, and Jeff Bezos, CEO of Amazon during an American Technology Council roundtable at the White House state cafeteria in Washington on June 19, 2017.
Jabin Botsford | Washington Post | Getty Images
The Pentagon said Friday it will stick to a major cloud computing contract with Microsoft, which has been contested in court for months.
The JEDI, or Joint Enterprise Defense Infrastructure, deal has become one of the most controversial contracts for the Department of Defense. The contract is designed to modernize the colossal IT infrastructure of the Pentagon and can be valued at up to $ 10 billion for services provided over a full 10 years.
“The Department has completed a comprehensive re-evaluation of the JEDI Cloud offerings and determined that Microsoft’s offering continues to provide the most value to the government,” the Pentagon said in a statement. “The JEDI Cloud Contract is a fixed price, indefinite delivery / indefinite quantity contract that will make the full range of cloud computing services available to the Department of Defense. However, the contract will not begin immediately due to a preliminary injunction issued by the Federal Claims Court on February 13, 2020, the Department of Defense is ready to provide this opportunity for our men and women in military uniform. ”
Microsoft shares rose during Friday’s trading session after the announcement.
The result is a loss to Amazon, which challenges the contract award after the Pentagon gave it to Microsoft in October. An Amazon spokesman did not immediately respond to a request for comment.
“We appreciate that after a thorough review, the Department of Defense has confirmed that we offered the right technology and the best value. We are ready to get started and make sure those who serve our country have access to this much needed technology, ”a Microsoft spokesman told CNBC by email.
In November, Amazon Web Services, Amazon’s cloud computing division, filed a claim in the US Federal Claims Court, challenging the JEDI decision. The company claimed that President Donald Trump’s bias against Amazon, and its CEO Jeff Bezos influenced the Pentagon to hand over the contract to Microsoft. During the litigation, the Pentagon asked Amazon and Microsoft to reconsider and resubmit their contract proposals. A Justice Department spokesman was not available for comment immediately following the Pentagon’s announcement.
Today’s decision could lead to new litigation.
The lucrative contract, which was originally slated for a September 2018 deal, has garnered attention after Trump announced last year that he was seriously considering taking a look at the JEDI contract…
“I’ve never had something more people complain about,” Trump told reporters at the White House in July 2019. “Some of the world’s greatest companies are complaining about this,” he added, naming IBM, Microsoft and Oracle. The White House declined to comment.
Trump’s potential impact on the deal got into focus when a book describing the tenure of then Secretary of Defense James Mattis at the Pentagon alleged that the president told Mattis to “get Amazon” out of the contract.
The billionaire CEO who owns The Washington Post has become a constant source of frustration for Trump. The president regularly criticizes the publication for its coverage of his administration. Trump has also targeted Amazon on several occasions because he claims not pay your share of taxes and rob the US Post Office…
Earlier this year, the Pentagon Inspector General released a report that said the award appears not to have been influenced by the White House…
However, the inspector general noted in his April 313-page report that he had limited cooperation from White House officials throughout the review and, as a result, was unable to complete his assessment of the ethical conduct allegations.
Read more: Pentagon observers say the White House did not influence the decision to deny Amazon a $ 10 billion cloud contract
At the time, Defense Department spokesman Lt. Col. Robert Carver told CNBC in a statement that the inspector general’s report confirmed the Pentagon’s JEDI cloud procurement process was “fair and in accordance with the law.”
An AWS spokesman then suggested that the report did not reveal everything.
“It is clear that political interference could not be assessed in this report because several DoD witnesses were instructed by the White House not to respond to IG questions about links between the White House and DoD officials,” the spokesman wrote in a statement emailed CNBC. “The White House’s refusal to cooperate with the IG investigation is another blatant attempt to avoid meaningful and transparent renegotiation of the JEDI contract award,” the person added.
In December, AWS Amazon head Andy Yassi told CNBC that the cloud computing contracts were unfairly handed down.
“You know, there has been significant political interference here,” Yassi explained of the JEDI award.
“When you have an incumbent president who is willing to openly declare that he does not like the company and the CEO of that company, it is difficult for government agencies, including the US Department of Defense, to make objective decisions without fear of reprisals. And I think it is dangerous and risky for our country, ”he told CNBC’s John Fortt.
This story is developing. Please stay tuned.
