The U.S. Department of Defense today announced that it is canceling the controversial $10 billion JEDI cloud computing contract and will replace it with a new procurement program known as the Joint Warfighter Cloud Capability.

According to multiple reports, the new program could involve multiple providers. 

“The Department has determined that, due to evolving requirements, increased cloud conversancy, and industry advances, the JEDI Cloud contract no longer meets its needs,” the Defense Department said in a statement.

The DOD launched the JEDI, or Joint Enterprise Defense Infrastructure, contract as part of an effort to modernize its technology infrastructure. The plan was for the Pentagon to move many internal applications to a public cloud platform as a way of increasing operational efficiency. JEDI was set to be worth as much as $10 billion over 10 years.

The DOD had been widely expected to select cloud market leader Amazon Web Services Inc. for the project, but it eventually chose Microsoft Corp.’s competing Azure platform in 2019. The surprise decision to go with Azure set off a high-profile legal battle that was still ongoing as of earlier this year. AWS charged that the move to award JEDI to Microsoft was influenced by political interference from former President Donald Trump and has argued that Microsoft’s winning bid should be disqualified.

As the litigation drew on, signs emerged that DOD officials were looking at scrapping JEDI. In a report to Congress dated Jan. 28, officials wrote that the ongoing litigation over JEDI could become an issue if it were to turn into a prolonged legal battle. “The prospect of such a lengthy litigation process might bring the future of the JEDI Cloud procurement into question,” the report stated. 

On April 30, Deputy Defense Secretary Kathleen Hicks stated during a security conference that “we’re going to have to assess where we are with regard to the ongoing litigation around JEDI and determine what the best path forward is for the department.”

With the cancellation of JEDI now official, the DOD is looking to take its technology modernization efforts in a new direction. The department said today that it will launch a new cloud computing procurement project to replace JEDI that will be known as the Joint Warfighter Cloud Capability. According to CNBC, the program will be multivendor contract. In other words, instead of selecting a single public cloud provider as the Defense Department did with JEDI, it plans to use multiple platforms.

The department will solicit bids from Microsoft and Amazon Web Services for the contract “as available market research indicates that these two vendors are the only Cloud Service Providers (CSPs) capable of meeting the Department’s requirements,” the Defense Department stated today.

Another, particularly notable detail is that officials have apparently left open the possibility of bringing additional cloud providers into the fold. The Defense Department will conduct assessments to “determine whether any other U.S.-based hyperscale CSPs can also meet the DoD’s requirements,” according to an excerpt from the department statement published this morning by FedScoop. 

That’s potentially good news for Oracle Corp., which along with AWS and Microsoft was among the original bidders for JEDI. Oracle has been litigating for more than a year to invalidate the JEDI contract, calling the deal an “illegal single-source award” at one point. Single-source award is a term used to describe a technology contract awarded to a single provider.

Microsoft, the winner of the JEDI contract, responded to the Defense Department’s decision to scrap the deal in a lengthy blog post today. 

“We understand the DoD’s rationale, and we support them and every military member who needs the mission-critical 21st century technology JEDI would have provided,” Toni Townes-Whitley, the president of Microsoft’s U.S. Regulated Industries group, wrote in the post.

“It’s clear the DoD trusts Microsoft and our technology, and we’re confident that we’ll continue to be successful as the DoD selects partners for new work,” Townes-Whitley added. “Their decision today doesn’t change the fact that not once, but twice, after careful review by professional procurement staff, the DoD decided that Microsoft and our technology best met their needs.”

For Amazon’s part, a spokesperson said it agrees with the DoD’s decision. “Unfortunately, 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,” the company said. “Our commitment to supporting our nation’s military and ensuring that our warfighters and defense partners have access to the best technology at the best price is stronger than ever. We look forward to continuing to support the DOD’s modernization efforts and building solutions that help accomplish their critical missions.”

“At this point, one has to worry more about the aging IT infrastructure at the U.S. military than probably anything else,” Constellation Research Inc. analyst Holger Mueller told SiliconANGLE. “One can only hope the new RFP will consider what enterprises know already: The future is multicloud – especially for mission-critical applications that need redundancy — and what is more mission-critical than military infrastructure and next-generation applications?”

Mueller said a bette process might have been to add the same contract to bid out to the next-best cloud provider and become multicloud as enterprises have, one cloud at a time. “Now the concern is more delays, more lawsuits while the military IT infrastructure ages and the taxpayer gets less and less return of tax dollars,” he said.

Shares of AWS parent Amazon.com Inc. are up more than 4% in today on the news of JEDI’s cancellation, while Microsoft is down slightly. The decision to replace the contract with a multiprovider project is a major win for AWS because the move could enable the cloud giant to secure a bigger chunk of the Defense Department’s technology spending in the coming years. Given that the Defense Department was planning to spend up to $10 billion on JEDI, the revenue opportunity is significant.

With reporting from Robert Hof

Photo: gregwest98/Flickr