Advanced Computing in the Age of AI | Monday, April 22, 2024

Azure Overtakes AWS for $10B Pentagon JEDI Cloud Contract 

In a showdown between hyperscale giants, Microsoft was awarded the Pentagon’s $10 billion JEDI cloud computing contract over co-finalist Amazon. Earlier this year, most observers of the closely watched competition for the 10-year deal had expected AWS to win – including companies like Oracle, which filed legal claims that the playing field was tipped in AWS’s favor.

But momentum may have shifted against AWS in July when President Trump – an avowed adversary of Amazon founder and CEO Jeff Bezos, who also owns the Washington Post – and other prominent Washington political figures called for a review of the JEDI contract award process. In August, Secretary of Defense Mark Esper announced that a review would take place.

“I’m getting tremendous complaints about the contract with the Pentagon and with Amazon,” Trump said in July. “They’re saying it wasn’t competitively bid. I will be asking them to look at it very closely to see what’s going on.”

Jeff Bezos

President Trump

The deal for the Joint Enterprise Defense Infrastructure contract initially lasts two years with options to extend it over 10 years. The controversy surrounding the award process included objections to the RFP calling for a single-source cloud services provider, which several vendors said favored Amazon’s bid, as well as conflict of interest charges. Esper himself withdrew from the contract review over conflict of interest concerns due to his son working for IBM, an early bidder for the contract.

More controversy centered on charges around former AWS employee Deap Ubhi’s work for DoD on the JEDI program. Ubhi subsequently returned to AWS, and his role in the process led Oracle to file, unsuccessfully, a claim in U.S. federal court; Oracle has appealed the decision. The Pentagon itself announced Ubhi’s role did not undermine the integrity of the contract process. The fate of Oracle’s legal fight is unknown, nor the impact of a partnership between Oracle and Microsoft announced in June for integration and interoperability of the two companies’ technology stacks across Azure and Oracle Cloud.

Also unknown is whether Amazon will file a formal protest against the JEDI decision. In a prepared statement, AWS spokesperson Doug Stone said Amazon was surprised by the decision. “AWS is the clear leader in cloud computing and a detailed assessment purely on the comparative offerings clearly lead to a different conclusion,” he said. “We remain deeply committed to continuing to innovate for the new digital battlefield where security, efficiency, resiliency and scalability of resources can be the difference between success and failure.”

JEDI is intended as an overarching cloud capability to streamline management among the hundreds of clouds used by DoD and to make new technologies -- including AI and machine learning -- available to the Pentagon.

"The JEDI cloud contract is a significant step forward for the DoD in migrating to next-generation technologies in order to gain the security, reliability, and efficiency needed to operate," said Chris Smith, VP of Cloud Architecture at Unitas Global. "The selection of Microsoft's Azure cloud platform is a stand-out in terms of AI technology and the company’s increased focus on partnerships with other organizations over the past year to give customers access to a collaborative platform with a wider base of services and capabilities. The DoD's technology migration will be one to watch as future phases incorporate dependent data and applications as well as secure high-performance network connectivity. The JEDI contract will propel Microsoft to the forefront of the cloud wars by allowing them to invest, innovate and execute on their continually growing public cloud environment."

The news comes after Amazon announced earlier this year it would place its new “HQ2” (second headquarters) in Arlington, VA, which is near the Pentagon. It also comes amid new market research from analyst firm Intersect360 that hyperscale companies – led by Google and Amazon – purchased $57 billion in IT gear last year. According to the latest research from industry watcher Gartner, AWS holds a commanding lead in the IaaS industry with 47.8 percent market share, followed by Microsoft at 15.5 percent. AWS is projected to total $33 billion in public cloud revenues this year. The public cloud market last year, according to IDC, totaled $176 billion.