This week a federal court judge ruled that Amazon’s lawsuit claiming interference in the Joint Enterprise Defense Infrastructure (JEDI) cloud contract awarded last year to Microsoft can proceed. This is a huge government deal valued at $10 billion over ten years. While many remain hopeful that Amazon may prevail our take is slightly different.
Amazon wants the DOD Cloud Contract that Microsoft won
The JEDI DoD cloud contract has two main threads:
One—For the government, back in 2013 Amazon was exclusively awarded a $600 million contract with the CIA for their Commercial Cloud Services (C2S) through a deal handled mostly in private. Following the award, IBM filed a bid protest and the General Accounting Office (GAO) investigated and ruled that the CIA needed to re-open the bidding process. Amazon sued the federal government petitioning the court to overturn the GAO decision. Following a federal court judge ruling in Amazon’s favor, IBM decided to back down and dropped their bid protest.
Two—Amazon wants badly to win this deal. They are claiming faulty procurement—that former President Trump interfered with the bid in favor of Microsoft. To be clear, the defense department has solid procurement procedures with very strict rules on RFPs and Contracts. The DoD procurement team originally awarded the contract to Microsoft in 2019, and immediately after Amazon filed a bid protest. The DoD went back and re-evaluated the bids and awarded the contract a second time to Microsoft in 2020, leading to the Amazon Lawsuit. The DoD inspector general investigated this matter and concluded there was no undue pressure placed on the DoD procurement teams to choose Microsoft.
Microsoft’s win in Project JEDI exemplifies the importance of balancing providers in government data centers.
The CIA Goes Multi-Cloud
In another setback to Amazon, in late 2020 the CIA awarded the follow-on contract of its C2S program dubbed C2E (Commercial Cloud Enterprise) to five cloud vendors (Amazon, Microsoft, Google, Oracle, and IBM). This will eliminate their exclusive reliance on Amazon as their sole cloud provider after 2023 when the original C2S contract runs out. Details on the deal have not been released, however this contract is also is expected to be worth tens of billions of dollars over the next decade.
Will Amazon Prevail?
To us, we feel it is highly unlikely that Amazon will prevail in this case. Other bidders such as Oracle were eliminated earlier in the bidding process and lost their own prior legal challenges. Perhaps once the federal court judge releases the reasons for upholding the injunction things will become clearer.
The Bottom Line—Balance of Trade Is Important
Putting the bid aside, it is important for the US federal government to have separate data centers across different agencies. Microsoft met the terms of the bid but the larger benefit to the US federal government is that it will have independent data centers to run its DOD applications and data storage. This concept of leveraging multi-cloud providers is a good best practice not just for government agencies but for enterprises as well to ensure data and service redundancy.
Update on 05/11/21:
The Pentagon is reportedly considering cancelling the Jedi program outright due to the lengthy legal delays imposed on the program by the Amazon lawsuit. The modernization of our Department of Defense infrastructure will continue to remain mission critical so the cancellation of the Jedi project would most likely result in a re-bidding of the proposal once again to the major cloud providers and other government contractors. If the CIA’s C2E contract award is the new model to follow, expect the project to eventually be awarded to multiple cloud providers.