The Pentagon Cancels $10 Billion Cloud Contract That Amazon and Microsoft Won

Amazon was front-runner to win JEDI contract

Amazon was considered a front-runner to win the JEDI contract, which will allow the military to use its cloud computing services. Its cloud computing service is widely regarded as the market leader in the cloud computing industry. However, Amazon filed suit to challenge the Pentagon's decision, claiming the process was unfair and politically motivated. As a result, the Pentagon is revaluating the decision and may cancel the JEDI contract altogether.

In the cloud computing business, Amazon is a leader, with 48 percent of the market share. Its cloud services are used by many federal and military agencies, including the CIA. Microsoft is the second largest cloud provider, with 15.5% of the market share. Amazon was a front-runner in this contest because it has experience working with the government. Amazon has already won a $600 million contract with the CIA, and introduced the Secret Region service for CIA. That service allows users to work with classified data at "Secret" level.

The government's JEDI contract is a $10 billion process. Only one company will be awarded the contract in April 2019. Amazon is the front-runner to win the contract, but other cloud providers are also in the running for the contract.

Trump's interest in tech giants

Tech giants are hugely powerful in the United States and the world. With monopoly power, huge funds, and a slew of lawyers and lobbyists at their disposal, they are able to exert a tremendous amount of influence over political outcomes. The tech giants don't want the government to interfere with their business practices, and they do not want users to engage in political discourse.

The tech giants' fortunes have increased sharply during the Trump era. In the first year of his presidency, Microsoft's stock has increased by more than 225%. Its revenue has increased by double digits in each of the past three fiscal years. And by 2020, Microsoft is projected to generate $150 billion in revenue, 60 percent more than four years ago. Moreover, the stock's net income has nearly doubled.

In addition to the tech industry, the US government is also keen on helping non-Chinese infrastructure equipment makers. This is evidenced in discussions between the administration and two US networking companies, Nokia and Ericsson. The Trump administration wants to make the US the world leader in wireless.

Trump's influence on procurement process

Despite the current US-China trade war, the effects of President-elect Trump's administration on the procurement process could be limited to the short-term. The reversal of trade measures is expected to make the procurement process more flexible and affordable, as the duties on imported goods will be reduced. The two countries are also both trying to fight climate change, so there may be room for collaboration. Procurement organizations should prepare for this collaboration to gain a competitive advantage.

As the new president-elect takes office, procurement teams must pay close attention to environmental policy changes. These changes could impact domestic manufacturing and local supply markets. They may also want to keep offtake agreements with domestic strategic supply partners in mind. However, the effects will vary based on the industry.

Pentagon's decision to award sole provider

The Pentagon's decision to award a $10 billion cloud contract to a single provider is causing a controversy. Two senators, Ron Johnson and Marco Rubio, have asked the Pentagon to delay the award and consider a more competitive process. President Donald Trump has also addressed the issue directly. The Pentagon believes that Microsoft and Amazon Web Services are the only vendors who can meet its cloud requirements. Its new contract may last up to five years and could cost billions of dollars.

Several cloud companies vying for the contract have expressed interest in working with the Pentagon, including Google, Oracle and IBM. The Pentagon said that companies other than Microsoft would need to meet unnamed requirements, likely involving data security. Amazon Web Services, which is a major cloud provider, had been expected to win the sole provider contract. However, the Pentagon awarded the contract to Microsoft last year, and Amazon has filed a lawsuit against the Pentagon.

The Pentagon's decision to award a $10 billion cloud contract to Microsoft may have come under political pressure from the White House. Despite the controversy over the contract, the Pentagon's inspector general's office said the award process was fair and legal and followed government procurement standards.