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Pentagon Scraps $10 Billion Contract With Microsoft, Bitterly Contested By Amazon

The Defense Department is canceling its mammoth cloud contract won by Microsoft and long litigated by Amazon.
Richard Drew, Ted S. Warren
The Defense Department is canceling its mammoth cloud contract won by Microsoft and long litigated by Amazon.

Updated July 6, 2021 at 4:22 PM ET

The Defense Department is scrapping its $10 billion cloud-computing contract with Microsoft, ending the award process that's been mired in a legal battle with Amazon.

The Pentagon's announcement on Tuesday ends what has been a complicated and highly politicized saga of one of the most lucrative military tech contracts in U.S. history.

Amazon has been litigating the contract — known as JEDI — since 2019 when the company was stunned by its loss of the lucrative 10-year award to Microsoft. Amazon's legal strategy has included a call for testimony from former President Donald Trump, arguing his disdain for company founder Jeff Bezos swayed the bidding process.

The Defense Department on Tuesday said the JEDI contract — short for the Joint Enterprise Defense Infrastructure — no longer met its needs "due to evolving requirements, increased cloud conversancy, and industry advances."

The agency said it planned instead to pursue a contract with multiple companies instead of a winner-take-all approach with JEDI, which long faced criticism from lawmakers and experts. The Pentagon said it would solicit bids for the new multi-cloud contract from Amazon and Microsoft as the two are the only companies at the moment that can meet the military's requirements.

"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," Microsoft executive Toni Townes-Whitley wrotein a blog post on Tuesday, adding: "When one company can delay, for years, critical technology upgrades for those who defend our nation, the protest process needs reform."

Amazon in a statement on Tuesday argued once again that JEDI's award to Microsoft was a result of "outside influence," rather than the merits of the company proposals.

"We understand and agree with the DOD's decision," an Amazon representative said about Tuesday's cancellation of JEDI. "Our commitment to supporting our nation's military and ensuring that our warfighters and defense partners have access to the best technology at the best price is stronger than ever."

Editor's Note: Amazon and Microsoft are among NPR's recent financial supporters.

NPR's Tom Bowman and Shannon Bond contributed to this report.

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Alina Selyukh is a business correspondent at NPR, where she follows the path of the retail and tech industries, tracking how America's biggest companies are influencing the way we spend our time, money, and energy.