Microsoft wins $10 bn cloud deal from Pentagon, beating AWS

Microsoft has won the Pentagon’s $10 billion cloud computing contract, the Defense Department said on Friday, beating Amazon Web Services (AWS).
AWS is the leader in the global Cloud market with 31.8 percent share. Microsoft has a cloud market share of 18.1 percent in Q2 2019, according to Calays.

The Joint Enterprise Defense Infrastructure Cloud (JEDI) contract is part of a broader digital modernization of the Pentagon meant to make it more technologically agile. Specifically, a goal of JEDI is to give the military better access to data and the cloud from battlefields and other remote locations.

Oracle had earlier expressed concerns about the award process for the contract, including the role of a former Amazon employee who worked on the project at the Defense Department but recused himself, then later left the Defense Department and returned to Amazon Web Services.

In a statement, an Amazon Web Services (AWS) spokesman said the company was surprised about this conclusion.

The company said that a detailed assessment purely on the comparative offerings would clearly lead to a different conclusion.
Cloud market share Q2 2019
AWS is considering options for protesting the award, a person familiar with the matter told Reuters.

Some companies were concerned that a single award would give the winner an unfair advantage in follow-on work. The Pentagon has said it planned to award future cloud deals to multiple contractors.

This week, U.S. Defense Secretary Mark Esper removed himself from reviewing the deal due to his adult son’s employment with IBM, one of the original contract applicants. IBM had previously bid for the contract but had already been eliminated from the competition.

In a statement announcing Microsoft as the winner, the Pentagon underscored its view that the competition was conducted fairly and legally.

“All offers were treated fairly and evaluated consistently with the solicitation’s stated evaluation criteria. Prior to the award, the department conferred with the DOD Inspector General, which informed the decision to proceed,” the Pentagon said.

The Pentagon said it had awarded more than $11 billion across 10 separate cloud contracts over the past two years.

“As we continue to execute the DOD Cloud Strategy, additional contracts are planned for both cloud services and complementary migration and integration solutions necessary to achieve effective cloud adoption,” the Pentagon said.

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