AWS 'surprised' over losing out on $10bn US JEDI cloud deal to Microsoft

Amazon Web Services (AWS) has expressed surprise over the decision by US government defence chiefs to award a lucrative 10-year, $10bn cloud contract to its arch-rival Microsoft.

The US Department of Defense (DoD) confirmed on Friday 25 October that Microsoft had secured sole supplier status for its controversial decade-long Joint Enterprise Defense Infrastructure (JEDI) cloud contract.

This means the Redmond software giant will be responsible for providing the department with a general-purpose cloud environment where its applications and systems can be hosted, as part of its push to downsize its datacentre estate and modernise its IT setup.

In a statement, the DoD said the contract is an important part of its continued efforts to update and reform its IT systems and infrastructure, which has seen it spend more than $11bn to-date across 10 separate cloud-related contracts.

“The National Defense Strategy dictates that we must improve the speed and effectiveness with which we develop and deploy modernised technical capabilities to our women and men in uniform,” said DoD’s CIO Dana Deasy.

“The DoD Digital Modernisation Strategy was created to support this imperative. This award is an important step in the execution of the Digital Modernisation Strategy.”

Previously, Microsoft had faced pressure from its own staff to drop out of the running for the contract, over concerns it would pave the way for the firm’s technologies to be used in the waging of wars, and contribute to loss of life in combat situations.

These misgivings were presented to the firm in the form of an open letter, and it remains to be seen at this point in time whether or not there will be any follow-up action from its staff in light of its appointment by the DoD.

Meanwhile, Toni Townes-Whitley, president of  the US regulated industries division at Microsoft, said the company is proud of the fact that its technologies will be forming the cornerstone of the DoD's overall cloud strategy, which marks a continuation of its 40-plus year  supplier relationship with the government department. 

“As was articulated throughout the JEDI procurement, the DoD has a singular objective - to deploy the most innovative and secure commercially available technology to satisfy the urgent and critical needs of today’s warfighters. We look forward to expanding our longstanding partnership with DoD and support our men and women in uniform at home, abroad, and at the tactical edge with our latest unique and differentiated Azure cloud capabilities," said Townes-Whitley, in a statement. 

Meanwhile, representatives from AWS have spoken out about the DoD’s decision to award the contract to the firm, given Amazon has been widely tipped to win the deal ever since it was announced in September 2017.

“We’re surprised about this conclusion. AWS is the clear leader in cloud computing, and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion,” said an AWS spokesperson in a statement.

“We remain deeply committed to continuing to innovate for the digital battlefield where security, efficiency, resiliency, and scalability of resources can be the difference between success and failure.”

It is not just Amazon that is likely to be surprised by this turn of events. Other suppliers – including Oracle and IBM – had previously accused the DoD of unfairly favouring AWS during the procurement process, while also competing against Microsoft and Amazon for the deal.

These claims later translated into legal action on Oracle’s part, with the firm challenging the need for the contract to be fulfilled by a single supplier, with a US federal court judge ruling In July 2019 that the procurement had been neither subject to bias nor any conflicts of interest.  

A month later, Oracle confirmed it would be launching a fresh legal challenge over the procurement, which it claims has seen AWS unfairly favoured throughout.