Pentagon Calls Off Deal With Microsoft That Went to Court

The Pentagon said Tuesday it canceled a disputed cloud computing contract with Microsoft that could eventually have been worth $10 billion. The Defense Department will instead pursue a deal with both Microsoft and Amazon and possibly other cloud service providers, the AP reports. "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 statement. The statement did not directly mention that the Pentagon faced extended legal challenges by Amazon to the original contract awarded to Microsoft. Amazon argued that the Microsoft award was tainted by politics, particularly then-President Trump's antagonism toward then-CEO Jeff Bezos. Bezos owns the Washington Post, often criticized by Trump.

John Sherman, the Pentagon's chief information officer, told reporters Tuesday that during the lengthy legal fight with Amazon, "the landscape has evolved," with new possibilities for large-scale cloud computing services. So it was decided to start over and seek multiple vendors, he said. Sherman said that JEDI will be replaced by a new program, Joint Warfighter Cloud Capability, and that both Amazon and Microsoft likely will be awarded parts of the business, though neither is guaranteed anything. Sherman said the three other large cloud service providers—Google, IBM, and Oracle—might qualify, too. Microsoft issued a statement expressing understanding of the Pentagon's reasoning. "The DoD faced a difficult choice: Continue with what could be a years-long litigation battle or find another path forward," the statement said. (Other competitors had objected to the contract going to Microsoft.)