Pentagon Scraps JEDI in Win for Amazon at Microsoft’s Expense


Officials say they will renegotiate the massive contract with a multi-vendor approach

WASHINGTON—Pentagon officials on Tuesday terminated the massive JEDI cloud-computing contract and said they would start fresh with a new project, capping a yearslong initiative that had become mired in litigation from Inc. and a barrage of objections from Congress.

In terminating the contract with Microsoft Corp. , Department of Defense officials focused largely on technical reasons, saying advances in cloud computing and the Pentagon’s own evolving needs had made the Joint Enterprise Defense Infrastructure scheme obsolete.

“The evolving landscape is what has driven our thinking,” said John Sherman, the Pentagon’s acting chief information officer. “JEDI was the right approach at the time,” he added, but with changing circumstances “we’re in a different place.”

The decision will open up the new cloud project—rebranded as Joint Warfighter Cloud Capability—to all qualified bidders, Pentagon officials said. In addition to Microsoft and Amazon, officials said qualified bidders could include Alphabet Inc.’s Google, Oracle Corp. and IBM Corp.

Bidders are expected to be identified by about October, the officials said, with the new contract expected to be awarded in spring 2022. The new contract will run for no more than five years, the Pentagon said. Its value wasn’t immediately determined, although officials said it would be worth billions of dollars.

Microsoft said it accepted the decision.

“The DoD faced a difficult choice: Continue with what could be a yearslong litigation battle or find another path forward,” Microsoft said in a posting on its blog. “Because the security of the United States through the provision of critical technology upgrades is more important than any single contract, we respect and accept DoD’s decision to move forward on a different path.”

An Amazon spokesperson said the company supported the decision, saying “the contract award was not based on the merits of the proposals and instead was the result of outside influence that has no place in government procurement.”

Amazon has contended in court that then-President Donald Trump exerted improper pressure on the Pentagon to keep the contract from going to Amazon because it was led by founder Jeff Bezos.

Mr. Trump has blamed Mr. Bezos for what he viewed as unfavorable coverage of his administration in the Washington Post, which Mr. Bezos bought in 2013 for $250 million. The Post says its editorial decisions are independent.

At the time, the Trump White House referred questions to the Pentagon, which denied that Mr. Trump or administration officials had any impact on the selection process.

Pentagon officials said that Microsoft would have an opportunity to submit a termination proposal to recover some of its costs, but they could not estimate how much those would be, and Microsoft couldn’t immediately provide an estimate. A Pentagon fact sheet noted that Microsoft had been working on JEDI under a task order designed to meet the minimum guaranteed amount for the contract, which was $1 million.

The JEDI project was awarded to Microsoft, over the objections of Amazon, which had been favored to win the bidding. The original contract, which has been valued at up to $10 billion over 10 years, was designed to allow the Pentagon to consolidate its current patchwork of data systems, give defense personnel better access to real-time information and put the Defense Department on a stronger footing to develop artificial-intelligence capabilities that are seen as vital in the future.

The rebooting of the JEDI project became increasingly likely after a federal judge in April refused the Pentagon’s motion to dismiss much of Amazon’s case, a decision that promised to extend the litigation for months or even years. A few days later, Deputy Defense Secretary Kathleen Hicks said the department would review the project.

Some lawmakers and government-contracting experts have long contended that JEDI’s original single-vendor approach should be scuttled because it was inappropriate and outmoded for mammoth enterprises like the Department of Defense.

These people have said the Pentagon should move to an increasingly popular approach to enterprise cloud-computing that includes multiple companies as participants. Spreading out the work also reduces the risk of legal challenges from excluded companies, they say.

Pentagon officials sought to play down the direct impact of the lengthy court battle on their decision to go with a multi-vendor approach. They said the litigation allowed time for the multi-vendor approach to show it would better meet the Pentagon’s growing needs.

Before the latest court fight, Oracle—one of the original bidders—had sued to halt the contract awarding process. Its 2019 lawsuit claimed that an Amazon employee who worked for the Pentagon in 2016 and 2017 helped steer the procurement process to favor Amazon, which then hired him back.

A judge subsequently rejected those allegations, allowing the bidding process to move forward.

Amazon has maintained that it got no favorable treatment from the Pentagon at any point, but the issue resurfaced in May, with Sen. Mike Lee (R., Utah) and Rep. Ken Buck (R., Colo.) sending a letter requesting a Justice Department investigation into alleged conflicts by that employee and others.

Earlier this year, Sen. Chuck Grassley (R., Iowa) wrote a letter to Pentagon officials raising concerns about the agency’s oversight of the project and seeking more details about alleged conflicts of interest and possible improprieties, which some critics and rival companies say might have skewed the initial procurement steps in Amazon’s favor.

Several of the concerns raised in both letters had been reviewed previously. A federal judge in 2019 concluded that the former Amazon employee “did not taint” the program.

A Pentagon inspector general report last year determined that the Pentagon adviser didn’t violate any ethical obligations or give preferential treatment to Amazon.

It’s not unheard of for the Pentagon to reconsider contract awards. Boeing Co. won a high-profile U.S. Air Force refueling plane contract after challenging a deal the Pentagon had struck with a team of Northrop Grumman Corp. and European plane maker Airbus SE.