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Microsoft Loses $10 Billion Contract for Pentagon's JEDI Project

The Pentagon announced on Tuesday the cancellation of the controversial cloud-computing contract with Microsoft Corporation (NASDAQ:MSFT). Q2 2021 hed...

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This story originally appeared on ValueWalk

The Pentagon announced on Tuesday the cancellation of the controversial cloud-computing contract with Microsoft Corporation (NASDAQ:MSFT).

ColossusCloud / Pixabay via Valuewalk

 

Q2 2021 hedge fund letters, conferences and more

Pentagon to open new tender process

The Joint Business Defense Infrastructure project (JEDI) was awarded to Bill Gate’s company during the Trump Administration, and has been called off to be tendered for new players such as Amazon Web Services and other Big Five cloud companies.

As reported by CNBC, JEDI would have potentially been worth $10 billion.

“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 Tuesday.

A controversial contract

The bidding for JEDI had been a controversial one, as Amazon (NASDAQ:AMZN) complained about Donald Trump’s intrusion to have the project awarded to Microsoft, amid the former’s antagonism with Jeff Bezos.

The legal situation, however, is not the trigger for this decision, Bloomberg informs.

John Sherman, the Pentagon’s CIO, has assured that the cancellation is a question of “the needs of the mission.” Since The JEDI program was conceived three and a half years ago, Sherman said, the department has moved in a different direction.

As reported by Bloomberg, the U.S. Defense Department argues that “it is clear that the JEDI contract, which has been ostensibly delayed, no longer meets the requirements to improve the department’s needs.”

"Enemies" who will have to work side by side?

The Pentagon has canceled the contract leaving Microsoft without exclusivity in the development of the technology of the American military and intelligence bastion.

However, the company founded by Bill Gates may choose to jointly develop it with Amazon Web Services in a new contract that will change its acronym to JWCC.

The Pentagon has established that Microsoft and Amazon are the only companies capable of responding to their requirements and will have to submit their proposals for this new project where they will be assigned different tasks.

Still, other major players in the cloud market such as Oracle Corporation (NYSE:ORCL), Google – Alphabet Inc Class A (NASDAQ:GOOGL), and IBM Common Stock (NYSE:IBM) might be on the cards. Both Google and IBM assured Reuters on Tuesday that they were interested in working with the federal government, but did not confirm whether they would enter the bidding process.

The Pentagon has priced the contract in the billions, even though it is still determining its maximum value, and expects it to last 5 years at the most, as CNBC reports.

Amazon and Google are part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders’ families.